Members of the Armed Forces


M

manhattan.bob

Thanks to anybody who's willing to take a stab at this...
I'm not looking for an answer to my question so much as
suggestions on how I might go about getting an answer from
the IRS, other than by their sueing me for tax evasion...

I'm a civilian employee of the (US) Department of Defense,
unaffiliated with any of the military services. Last year,
however, I deployed to a combat zone and therefore my pay
from that time period might be tax exempt. For personnel
falling under the tax exemption, the way it works is that
your W2 simply does not reflect that you ever earned the
exempt income. (I think it's only box 1 that doesn't show
it, but more on that shortly.)

The problem I'm encountering is twofold:
1) If your government payroll office doesn't issue a W2
properly reflecting the exempt pay (by way of not including
it) you've seemingly got nowhere to go. You can ask them
about it, but they don't really care because its not their
money.
2) Assuming I could get the payroll office to issue me a
corrected W2 if only I could get the IRS to say that I
qualified, I'm left with the problem that the IRS won't talk
to me. There seems to be no way to get official
determinations from them, except by way of lawsuit. I
called the tax helpline, but the people there seem to be
allowed only to read to you from official IRS publicatiosn.

The one option that has occured to me is to file an amended
return for 2004 now, including a corrected W2 by way of form
Form 4852 reflecting what I think my wages should have been.
Seeing as I've already paid the taxes, I don't have to
worry about any penalty should I do this, and I assume they
would investigate my claims and make a decision prior to
just sending me money. But maybe not, so that's a little
risky.

Any suggestions are kindly appreciated.

Thanks,
Bob
 
Last edited by a moderator:
A

A.G. Kalman

Thanks to anybody who's willing to take a stab at this...
I'm not looking for an answer to my question so much as
suggestions on how I might go about getting an answer from
the IRS, other than by their sueing me for tax evasion...

I'm a civilian employee of the (US) Department of Defense,
unaffiliated with any of the military services. Last year,
however, I deployed to a combat zone and therefore my pay
from that time period might be tax exempt. For personnel
falling under the tax exemption, the way it works is that
your W2 simply does not reflect that you ever earned the
exempt income. (I think it's only box 1 that doesn't show
it, but more on that shortly.)

The problem I'm encountering is twofold:
1) If your government payroll office doesn't issue a W2
properly reflecting the exempt pay (by way of not including
it) you've seemingly got nowhere to go. You can ask them
about it, but they don't really care because its not their
money.
2) Assuming I could get the payroll office to issue me a
corrected W2 if only I could get the IRS to say that I
qualified, I'm left with the problem that the IRS won't talk
to me. There seems to be no way to get official
determinations from them, except by way of lawsuit. I
called the tax helpline, but the people there seem to be
allowed only to read to you from official IRS publicatiosn.

The one option that has occured to me is to file an amended
return for 2004 now, including a corrected W2 by way of form
Form 4852 reflecting what I think my wages should have been.
Seeing as I've already paid the taxes, I don't have to
worry about any penalty should I do this, and I assume they
would investigate my claims and make a decision prior to
just sending me money. But maybe not, so that's a little
risky.

Any suggestions are kindly appreciated.
Civilian employees of the federal government do not qualify
for exempt combat pay. That privilege only goes to those
who are serving in the Armed Forces of the U.S. However, it
is possible that you are eligible for the foreign earned
income exclusion and the foreign housing exclusion and the
foreign housing deductions. Your W-2 is correct if your
wages is included in Box 1. See Chapter 4 in IRS Pub 54, Tax
Guide for US Citizens & US Residents Abroad.
 
Last edited by a moderator:
L

L K Williams

A.G. Kalman said:
(e-mail address removed) wrote:
snip
Civilian employees of the federal government do not qualify
for exempt combat pay. That privilege only goes to those
who are serving in the Armed Forces of the U.S. However, it
is possible that you are eligible for the foreign earned
income exclusion and the foreign housing exclusion and the
foreign housing deductions. Your W-2 is correct if your
wages is included in Box 1. See Chapter 4 in IRS Pub 54, Tax
Guide for US Citizens & US Residents Abroad.
I agree that civilian employees of the federal government do
not qualify for the combat pay exemption. The bad news here
is that employees of the federal government also do not
qualify for the foreign earned income exclusion!

Lanny K. Williams, CPA
Nawarat, Williams & Co., Ltd.
Income Tax Services for Expatriate Americans
 
Last edited by a moderator:
M

manhattan.bob

While I appreciate your efforts to answer my question, your
answer is unacceptable for several reasons, primarily that
whether you think I qualify or not is irrelevant because you
are not the IRS. I'm interested either in finding out how I
may determine my eligibility or a reference to some IRS
publication that clarifies the matter. It is my belief that
Publication 3, Armed Forces' Tax Guide, which summarizes 26
USC 112, is ambiguous on the matter. This is because it
refers only to "enlisted personnel" and "commissioned
officers". While I obviously am not enlisted, I may fall
under the category of commissioned officer. In particular,
this matter is confused by 26 USC 912(1) and (2) which makes
reference to "civilian officers and employees of the
Government".

However in researching my reply to your answer I did find 26
USC 7701(a)(15) which I'd somehow overlooked: "When used in
this title, where not otherwise distinctly expressed or
manifestly incompatible with the intent thereof, the term
'military or naval forces of the United States' and the term
'Armed Forces of the United States' each includes all
regular and reserve components of the uniformed services ...
"

While I may have had an admittedly weak claim to the term
'commissioned officer', I certainly am not a member of the
uniformed services.

For reference, Pub54 says the US Government employees don't
qualify for any of the exemptions that it discusses.

Thanks anyway,
Bob
 
Last edited by a moderator:
S

scott s.

(e-mail address removed) wrote in
While I may have had an admittedly weak claim to the term
'commissioned officer', I certainly am not a member of the
uniformed services.
My commission is from the President of the United States,
citing 10USC531.

scott s.
 
Last edited by a moderator:
K

Katie

While I appreciate your efforts to answer my question, your
answer is unacceptable for several reasons, primarily that
whether you think I qualify or not is irrelevant because you
are not the IRS. I'm interested either in finding out how I
may determine my eligibility or a reference to some IRS
publication that clarifies the matter. It is my belief that
Publication 3, Armed Forces' Tax Guide, which summarizes 26
USC 112, is ambiguous on the matter. This is because it
refers only to "enlisted personnel" and "commissioned
officers". While I obviously am not enlisted, I may fall
under the category of commissioned officer. In particular,
this matter is confused by 26 USC 912(1) and (2) which makes
reference to "civilian officers and employees of the
Government".

However in researching my reply to your answer I did find 26
USC 7701(a)(15) which I'd somehow overlooked: "When used in
this title, where not otherwise distinctly expressed or
manifestly incompatible with the intent thereof, the term
'military or naval forces of the United States' and the term
'Armed Forces of the United States' each includes all
regular and reserve components of the uniformed services ..."
I would refer you to Rev. Rul. 60-65, 1960-1 CB 21: A
National Guardsman on active duty is a member of the armed
forces, but a civilian surgeon performing the duties of a
commissioned officer in the U.S. Medical Corps is not.

Also NOT armed services members:

A civilian noncombatant employed by the Armed Forces in
Vietnam - Prusia, Lee, TC Memo 1969-148

A civilian navigator and pilot employed by a civilian
airline that transported personnel and materiel to Vietnam
under a DOD contract - Smith, Noah, TC Memo 1972-147

You might also want to look at a U.S. Supreme Court case
from 1949: Commissioner of Internal Revenue v. Connelly, 338
U.S. 258. That case involved a $1,500 military pay
exclusion, not the combat pay exclusion, but it's basically
the same issue, i.e., whether or not the taxpayer was a
member of the armed forces. The taxpayer in that case had a
military status for some purposes, but was paid as a
civilian employee. The Court of Appeals for the District of
Columbia Circuit found that he was military and entitled to
the exclusion, but the U.S. Supreme Court overturned that
decision because he was paid as a civilian. If you want to
read the case, you can get access it on www.findlaw.com.

Katie in San Diego
 
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H

Harlan Lunsford

Thanks to anybody who's willing to take a stab at this...
I'm not looking for an answer to my question so much as
suggestions on how I might go about getting an answer from
the IRS, other than by their sueing me for tax evasion...

I'm a civilian employee of the (US) Department of Defense,
unaffiliated with any of the military services. Last year,
however, I deployed to a combat zone and therefore my pay
from that time period might be tax exempt. For personnel
falling under the tax exemption, the way it works is that
your W2 simply does not reflect that you ever earned the
exempt income. (I think it's only box 1 that doesn't show
it, but more on that shortly.)

The problem I'm encountering is twofold:
1) If your government payroll office doesn't issue a W2
properly reflecting the exempt pay (by way of not including
it) you've seemingly got nowhere to go. You can ask them
about it, but they don't really care because its not their
money.
2) Assuming I could get the payroll office to issue me a
corrected W2 if only I could get the IRS to say that I
qualified, I'm left with the problem that the IRS won't talk
to me. There seems to be no way to get official
determinations from them, except by way of lawsuit. I
called the tax helpline, but the people there seem to be
allowed only to read to you from official IRS publicatiosn.

The one option that has occured to me is to file an amended
return for 2004 now, including a corrected W2 by way of form
Form 4852 reflecting what I think my wages should have been.
Seeing as I've already paid the taxes, I don't have to
worry about any penalty should I do this, and I assume they
would investigate my claims and make a decision prior to
just sending me money. But maybe not, so that's a little
risky.

Any suggestions are kindly appreciated.
Perhaps you are a NAF employee?

Anyway, to be excempt, your income must also be subject to
your resident country's income tax. Only service members
and civil service types to my knowledge have their exempt
pay automatically accounted for in the W2

ChEAr$,
Harlan Lunsford, EA
 
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