Ronald Neil and Makbule Robinson - Page 4

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                    (2) A member who has received separation pay under                
               this section, or severance pay or readjustment pay                     
               under any other provision of law, based on service in                  
               the armed forces shall not be deprived, by reason of                   
               his receipt of such separation pay, severance pay, or                  
               readjustment pay, of any disability compensation to                    
               which he is entitled under the laws administered by the                
               Department of Veterans Affairs, but there shall be                     
               deducted from that disability compensation an amount                   
               equal to the total amount of separation pay, severance                 
               pay, and readjustment pay received.  Notwithstanding                   
               the preceding sentence, no deduction may be made from                  
               disability compensation for the amount of any                          
               separation pay, severance pay, or readjustment pay                     
               received because of an earlier discharge or release                    
               from a period of active duty if the disability which is                
               the basis for that disability compensation was incurred                
               or aggravated during a later period of active duty.                    
               [10 U.S.C. 1174(h)(2) (Supp. IV 1992); emphasis added.]                
               Under the recoupment statute, separation pay is subject to             
          total recoupment when the recipient is subsequently awarded                 
          disability compensation by the Department of Veterans Affairs.              
          Although it may seem unfair to petitioner that taxable separation           
          pay is recouped by withholding nontaxable disability                        
          compensation, total recoupment without tax relief was clearly               
          intended by Congress.                                                       
               Prior to the enactment of 10 U.S.C. sec. 1174(h), separation           
          pay recoupment was governed by 10 U.S.C. sec. 687(b)(6) (as                 
          enacted by Pub. L. 89-718, sec. 6, 80 Stat. 1115, 1116 (1966)               
          (repealed 1981).  The prior statute required the Veterans'                  
          Administration (now the Department of Veterans Affairs) to recoup           
          75 percent of the separation pay when withholding disability                
          compensation.  10 U.S.C. sec. 687(b)(6) (repealed 1981).                    
          Recoupment of only 75 percent of the separation pay was to                  




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