Walorski secures fair IRS treatment for military retirees

U.S. Rep. Jackie Walorski (R-IN) has successfully convinced the Internal Revenue Service (IRS) to treat military retirees as fairly as it treats other retirees when collecting unpaid taxes.

“All Americans have an obligation to pay the taxes they owe, but those who risked their lives for our country should be treated fairly and equally by the IRS,” said Rep. Walorski, who serves on the House Ways and Means Committee, which has jurisdiction over taxation matters.

IRS Acting Commissioner David J. Kautter wrote in a Jan. 12 letter to Walorski that the IRS plans to implement her requested change to the Federal Payment Levy Program (FPLP), which recovers unpaid taxes via automated levies on taxpayers who receive certain payments from the federal government. Generally, taxpayers with incomes below 250 percent of the federal poverty level are excluded from the program’s automatic levies, according to Walorski’s office, but in 2017 the IRS changed the FPLP and didn’t apply that criteria to military retirees.

In her Nov. 17, 2017 letter to Kautter, the congresswoman requested that the IRS use its so-called low-income filter for military retirement payments so that retirees would be spared undue economic hardship. Walorski pointed out in the letter that the practice would conform with how the IRS currently handles other federal retirement benefit payments. Using the low-income filter means a taxpayer won’t be left with too little money for living expenses after a levy triggers the automatic fund collection.

Under the FPLP, the IRS automatically levies federal payments to collect on taxes still unpaid after several notices and opportunities to make payment arrangements, according to the agency. The IRS added military retirement payments from the Defense Financing and Accounting Service to the FPLP last May, according to Walorski’s letter. Military disability payments and payments to Medal of Honor recipients were also exempted. But the filter didn’t get applied to military retirement payments, prompting the congresswoman to write her letter.

“I apologize for the delay in responding, but we took some additional time to re-analyze our data and position on this matter,” Kautter wrote. “I am writing to share with you that we will change the FPLP program in line with your request.”

Based on the data, he wrote, the number of military retirees who would qualify for exclusion from the FPLP based on the low-income filter is high enough that the IRS will apply the filter to all military retiree payments “as soon as we can make the necessary changes to our information technology systems and procedures.”

The current budget situation, Kautter added, which has limited IRS technology resources, means such changes are estimated to take place later this fall. But the IRS will work with taxpayers during the interim if a levy creates a hardship, he said.

“I am pleased the IRS has decided to protect low-income military retirees — many of whom spent decades serving in uniform — from unnecessary economic hardship,” said Rep. Walorski.