IG: Combat-zone tax rules lead to errors

[unhappycamper]

IG: Combat-zone tax rules lead to errors
By William H. McMichael - Staff writer
Posted : Wednesday Oct 28, 2009 17:55:21 EDT

Hundreds of thousands of troops and civilians who have served in combat zones may not have received all their earned tax benefits or have continued to receive benefits to which they are not entitled, a recent audit found.

According to the audit by the Treasury Inspector General for Tax Administration, “active combat zone indicators” remained on the 2007 tax records of some 339,027 taxpayers beyond the date of their departure from a combat zone. That was 40 percent of the total number of taxpayers with combat zone indicators on their records for that tax year.

The IRS initially reversed the indicators for those taxpayers, based on the exit dates provided by the Pentagon in monthly reports to the IRS, but reactivated the indicators when those taxpayers annotated “combat zone” on their tax returns.

Service members and civilians can self-identify as serving in a combat zone by annotating their tax return or calling or e-mailing the IRS. The IRS, the IG said, has required no proof to support such claims.

In addition, the IRS records on combat zone tax indicators do not differentiate between military and civilian taxpayers — which can result in civilians being granted tax relief benefits to which they are not entitled, the IG said. The wages of civilians supporting the military in war zones are not excluded from federal tax, but such civilians are entitled to other benefits, such as extensions of time to file their tax returns.


Rest of article at: http://www.armytimes.com/news/2009/10/military_combatzone_taxes_102809w/