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Congressman Juan Vargas

Representing the 51st District of California

Rep. Vargas Helps Ease IRS Burdens on Veterans

Feb 22, 2018
Press Release

Washington, D.C. (February 22, 2018)—Rep. Juan Vargas (CA-51) secured a victory for low-income retired service members whose military retiree payments were being levied by the Internal Revenue Service (IRS). After Rep. Vargas sent a letter to IRS Commissioner John Koskinen urging that the IRS reverse course on this policy, the IRS agreed to apply a low-income filter to military retiree payments subject to the Federal Payment Levy Program. This policy shift will help low-income veterans who face financial hardship by excluding their military retiree payments from IRS levies.

“Many of our veterans are struggling to make ends meet and depend on their military retiree payments to survive,” said Rep. Juan Vargas. “Levies placed on military retiree payments are creating hardship for our veterans. I’m pleased to know that the IRS has chosen to reverse its policy, which will ease the burden low-income veterans are facing.” 

The IRS changed its Federal Payment Levy Program (FPLP) policy to include military retirement payments as a payment stream to collect delinquent taxes. Through the implementation of the FPLP, the IRS would be able to identify those with outstanding tax liabilities. In its assessment of the FPLP, the IRS audit report acknowledged that financial hardship may come to those individuals living at or below the federal poverty line. Therefore, the low-income filter was created to protect individuals who would face financial hardship due to levies by the IRS, but this filter did not include the military retiree payments of low-income veterans.

Due to Rep. Vargas’ request, the IRS re-analyzed their data and agreed to apply the low-income filter to all military retiree payments beginning in the Fall of 2018.  In the meantime, if a levy creates a hardship, the IRS has agreed to work with the taxpayer and review the levy, and in some cases, release it.

In 2013, 93,540 retired service members were identified to have delinquent accounts with the IRS. Many retired service members often do not have a steady income or are unable to obtain full employment. Placing levies on military retiree payments, which veterans rely on, creates a burden on veterans already struggling to make ends meet.

Currently, Medal of Honor military retirees and those with disability payments are excluded from FPLP levies.