- 4 - (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 L. 89-718, sec. 6, 80 Stat. 1115, 1116 (1966) (repealed 1981).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Affairs) to recoup 75 percent of the separation pay when withholding disability compensation. 10 U.S.C. sec. 687(b)(6) (repealed 1981).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 toPage: Previous 1 2 3 4 5 6 Next
Last modified: May 25, 2011