IN THE CASE OF:	  

		BOARD DATE:	    31 May 2011

		DOCKET NUMBER:  AR20100022084 


THE BOARD CONSIDERED THE FOLLOWING EVIDENCE:

1.  Application for correction of military records (with supporting documents provided, if any).

2.  Military Personnel Records and advisory opinions (if any).


THE APPLICANT'S REQUEST, STATEMENT, AND EVIDENCE:

1.  The applicant requests tax-exempt status for his Career Status Bonus (CSB).

2.  The applicant states:

* He requested the CSB on 28 July 2009 and was told since he would be in a combat zone receiving combat pay in Iraq the entire $30,000.00 CSB would be tax free
* When he received the $30,000.00 payment (while still in Iraq) it was taxed
* He completed the necessary form while he was still at Fort Lewis
* He had dated the form prior to departing Fort Lewis
* Defense Finance and Accounting Service (DFAS) says because Section VI (Service Recording of Election), Item 16 (CSB Election Effective Date), of his DD Form 2839 (CSB Election) was dated 28 July 2009, a date prior to his arrival in Iraq, the bonus had to be taxed
* He was never informed of this rule   

3.  The applicant provides:

* DD Form 2839
* Emails between himself, Fort Lewis Retirement Services Officer (RSO) office, and Fort Lewis finance




CONSIDERATION OF EVIDENCE:

1.  He enlisted in the Regular Army (RA) on 16 September 1993.  

2.  A DD Form 4 (Enlistment/Reenlistment Document - Armed Forces of the United States) shows he reenlisted in the RA for an indefinite period on 
1 October 2004 to allow him to serve up to the retention control point for his rank.  At the time he had completed 11 years and 15 days of total active service.

3.  He was promoted to sergeant first class on 1 January 2009.

4.  His DD Form 2839 shows in:

   a.  Section II (Determination of Eligibility) he was eligible to elect the CSB;

   b.  Section IV (Eligible and Electing to Receive the CSB), item 12, in pertinent part, "I elect to receive the Career Status Bonus payment,…My election is effective once received and accepted at the 15th year of service."  Block a (I Elect to Receive the CSB as follows) shows an "X" was placed in item 1 "A Single Lump Payment of $30,000."   The applicant placed his signature in item 12b of this section with a date of 28 July 2009;

   c.  Item 13 (Witness) that a captain placed his signature in this section with a date of 28 July 2009; and

   d.  Section VI (Service Recording of Election - To be completed by Service Official after member makes an election to receive the bonus):

   	(1)  Item 16 (CSB Election Effective Date) is dated 28 July 2009 and

   	(2)  Item 17 (Recording Official) that a captain placed his signature in this section with a date of 28 July 2009.

5.  DFAS records shows he received hostile fire/imminent danger pay and combat zone tax exclusion (CZTE) for service in Kuwait from 5 August 2009 through 12 August 2010.

6.  He provided a letter, dated 21 May 2010, from the RSO at Joint Base Lewis-McChord, WA.  He requests the applicant be reimbursed for the taxes taken from his CSB.  His letter states:


* the applicant completed his DD Form 2839 on 28 July 2009 prior to his deployment to Iraq
* the applicant had not completed 15 years of active duty and was [not] eligible to receive the $30,000.00 bonus "until" 16 September "2009"
* while in Iraq the applicant contacted the RSO to submit his CSB
* the applicant dated his DD Form 2839 28 July 2009
* the applicant and RSO understood as long as he was in a combat zone his entire CSB would be tax free
* the applicant should receive his entire CSB tax free and not be penalized just because of an administrative error
* the applicant is serving his country in a combat zone receiving all benefits to include tax free pay and this should include his CSB     

7.  In the processing of this case, an advisory opinion was obtained from the Incentives and Budget Branch, Enlisted Accessions Division, Office of the Deputy Chief of Staff, G-1.  That office recommended the applicant's request be denied.  The advisory opinion states:

	a.  Paragraph 26 of Military Pay E – Message 08-062 provided by the applicant indicates the "effective date of the election" is the determining factor in whether the CSB will receive the combat zone tax exclusion.

	b.  Paragraph 7-6b of Army Regulation 600-8-7 (Retirement Services Program) states "If a Soldier elects CSB/REDUX after the 15 year mark of active service (rare occasions), combat zone eligibility is based on where the Soldier is physically located the month he/she makes the election.  If the Soldier is in the combat zone that month, the CSB (any increments) is tax-exempt."

	c.  The applicant reached 15 years of active service on 16 September 2008.

	d.  He signed the DD Form 2839 on 28 July 2009 so that date became the "effective date of election."

	e.  In that month, he was physically located outside the combat zone; therefore, DFAS was correct in withholding taxes. 

8.  The advisory opinion was furnished to the applicant for his review and possible rebuttal.  However, he did not respond within the given time frame.  

9.  Army Regulation 600-8-7 prescribes policies governing military personnel retirement services.  Chapter 7 (CSB/Reduced Retired [REDUX] Pay Plan) sets forth the tasks, rules, and steps for processing applications for Soldiers making a choice under the CSB/REDUX.
   a.  Paragraph 7-2 (Background) provides that Soldiers who are eligible under current Service regulations to serve continuously to 20 years, must choose between the High-3 and the CSB/REDUX between years 14 1/2 to 15 years of active duty, although retirement will not occur until the Soldier has completed 20 years of service.  The Soldier's basic active service date (BASD) serves as the basis when calculating for the 14 1/2 to 15 years of active duty.

   b.  Paragraph 7-3 (Rules for processing requests for a choice under the plan) provides that installation commanders are required to conduct monthly or individual CSB/REDUX briefings for eligible Soldiers once they complete 14 1/2 years of active duty to help them decide between the CSB/REDUX or High-3 retirement plans.  The options for CSB are:

* one payment of $30,000
* two annual installments of $15,000 each
* three annual installments of $10,000 each
* four annual installments of $7,500 each
* five annual installments of $6,000 each

   c.  Paragraph 7-4 outlines the steps required to process a Soldier's request to make a choice under the CSB/REDUX.  It shows for:

		(1)  Step 1 - Responsibility:  Personnel - provide eligible Soldier with written notification at the 14 1/2 year of active duty.  Personnel will include procedures for electing the CSB and an explanation of the effect that electing the CSB will have on the computation of retired pay if and when the Soldier becomes eligible,

		(2)  Step 2 - Responsibility:  Soldier - Soldier has 6 months to decide to either remain under High-3 or elect CSB/REDUX,

		(3)  Step 3 - Responsibility:  Personnel - a lieutenant colonel or the designated representative in the Soldier's chain of command must sign item 13 and item 17 of the DD Form 2839.  The same person must sign both blocks, and

		(4)  Step 4 - Responsibility:  Soldier - Soldier gives completed DD Form 2839 to the personnel officer.

   d.  Paragraph 7-6 (CZTE) shows the CSB/REDUX has a unique set of rules for CZTE eligibility.  The tax exemption is based on two dates instead of the one date, as follows:


   	(1)  If a Soldier elects CSB/REDUX before the 15th year of active service, combat zone eligibility is based on where the Soldier is physically located the month the 15-year mark is reached.  If the Soldier is in the combat zone that month, the CSB (any increments) is tax-exempt.
   
   	(2)  If a Soldier elects CSB/REDUX after the 15-year mark of active service (rare occasions), combat zone eligibility is based on where the Soldier is physically located the month he/she makes the election [emphasis added].  If the Soldier is in the combat zone that month, the CSB (any increments) is tax-exempt.

DISCUSSION AND CONCLUSIONS:

1.  He contends his CSB should be tax-exempt.

2.  Although the RSO at Joint Base Lewis-McChord, WA contends the applicant had not completed 15 years of active duty prior to completing his DD Form 2839, he reached his 15-year mark of active service on 16 September 2008.  

3.  He completed a DD Form 2839 and chose CSB on 28 July 2009.

4.  The governing Army regulation is clear regarding CZTE for a Soldier who elects CSB/REDUC after the 15-year mark of active service.  It states combat zone eligibility is based on where the Soldier is physically located the month he/she makes the election.  The applicant clearly was in CONUS when he made his CSB election on 28 July 2009.  

5.  Therefore, in view of all of the foregoing, there is insufficient evidence to support his request for tax-exempt status for his CSB.

BOARD VOTE:

________  ________  ________  GRANT FULL RELIEF 

________  ________  ________  GRANT PARTIAL RELIEF 

________  ________  ________  GRANT FORMAL HEARING

___X____  ___X___  __X_____  DENY APPLICATION




BOARD DETERMINATION/RECOMMENDATION:

The evidence presented does not demonstrate the existence of a probable error or injustice.  Therefore, the Board determined that the overall merits of this case are insufficient as a basis for correction of the records of the individual concerned.




      _______ _   X_______   ___
               CHAIRPERSON
      
I certify that herein is recorded the true and complete record of the proceedings of the Army Board for Correction of Military Records in this case.



ABCMR Record of Proceedings (cont)                                         AR20100022084





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ABCMR Record of Proceedings (cont)                                         AR20100022084



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