gladysg513
Level 1
 
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BobKamman
Level 15

Generally, you need to research "claim of right."  But specifically, it looks like IRS has some special rules for DFAS and VA related adjustments.

  1. Disallow claims based solely on the following:

    • IRC 1.122-1;

    • Pursuant to 26 CFR;

    • The veteran’s disability percentage, or

    • Publication 525, Taxable and Nontaxable Income.

    Refer to IRM 21.5.3.4.6.1, Disallowance and Partial Disallowance Procedures.

    Exception:

     

    If the VA Determination letter is included with the claim, has a table as shown above in (8), and covers the same dates for the tax year reported on the claim, verify/calculate the correct amount for the tax reduction following procedures in (8) and (9) above. The adjustment would be based on the Determination letter, not the topics listed prior to this exception.

    Note:

     

    IRC 1.122-1 or "Pursuant to 26 CFR" are provisions of the Family Protection Act of 1966 and are not applicable to VA Claims.

    https://www.irs.gov/irm/part21/irm_21-006-006r

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