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Robb Supports
Tax Free
Settlements
Sen. Charles S. Robb, D-Va. and Congresswoman Leslie Byrne, D11th District, introduced legislation that will exempt from federal taxes the settlement received by Virginia federal and military retirees in a lawsuit filed against the state.
The bill would affect 186,000 retirees in the state of Virginia, who were disputing a disparity in their taxes.
“This bill will guarantee that military and federal retirees who were improperly taxes by the state won’t be improperly taxes by the federal government,” said Robb. “Now that a settlement has been reached in the lawsuit, the time is right for this leg-, islation.”
Without the bill, federal retirees may face having their settlement taxes. This tax would be in addition to the federal tax already paid when the benefits were first reported. Those who did not itemize would be taxes twice on their earnings, and for those who did itemize, the IRS would have to undergo a complicated, lengthy and costly process to determine tax liability.
Robb said the settlment retirees receive shouldn’t be subjects to “double jeopardy” and noted that the bill prevents that from happening.
“The refund shouldn’t be considers original income and shouldn’t be taxes a second time,” said Robb.
Robb and Bryne said the legislation should “clarify and simplify the issue.”
Robb will introduce the legislation in the Senate, and Byrne in the House. The measure will likely be referred to the House Ways and Means Committee and the Senate Finance Committee.
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