IN THE CASE OF:	  

		BOARD DATE:	  17 January 2013

		DOCKET NUMBER:  AR20120004406 


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 termination of the recoupment of his Special Separation Benefit (SSB) and reimbursement of funds collected thus far. 

2.  The applicant states he has inquired several time with the Defense Finance and Accounting Service (DFAS) concerning the SSB he received in 1992 when he separated from active duty.  He contends that based upon Department of Defense Financial Management Regulation (DODFMR), Volume 7A, Chapter 4, paragraph 0406, SSB, subparagraph 0406 B, he believes he is entitled to no recoupment action for the $44,934.75 that is currently being deducted from his retirement pay since August 2010.  He further contends that paragraph 0406 B also stipulates no Federal taxes should be recouped based on Public Laws 104-201 and 105-178. 

3.  The applicant provides:

* two letters he sent to DFAS
* a letter and extract from DODFMR, Volume 7A, Chapter 4 sent to a U.S. Senator by DFAS in response to an inquiry made on the applicant's behalf

CONSIDERATION OF EVIDENCE:

1.  The applicant's records show he was born on 1 August 1958 and enlisted in the Reserve Officers' Training Corps on 25 August 1981.  On 16 December 1983, he was appointed as a Reserve commissioned officer of the Army with concurrent call to active duty.
2.  On 30 September 1992, he was honorably released from active duty and transferred to the U.S. Army Reserve (USAR) Control Group (Reinforcement) under the provisions of Army Regulation 635-120 (Officer Resignations and Discharges), chapter 3.  The narrative reason for his separation was "Resignation with SSB."

3.  On 20 October 1992, he enlisted in the Arkansas Army National Guard (ARARNG).

4.  On 5 February 2006, the Deputy Chief of Staff, Personnel, Office of the Adjutant General, Military Department of Arkansas, Camp Robinson, North Little Rock, AR, notified the applicant he had completed the required years of service to be eligible for retired pay upon application at age 60.

5.  On 1 September 2006, he was honorably retired from the ARARNG and transferred to the Retired Reserve.  There is no indication he was retired for medical disability.

6.  He provides:

	a.  a self-authored letter addressed to DFAS, dated 31 January 2010, wherein he essentially informed DFAS he received a lump sum payment for SSB when he separated from active duty in September 1992 and then went on to serve in the ARNG until he retired.  That morning, he noticed his Retiree Account Statement (RAS) reflected his $44,934.75 SSB as a miscellaneous debt.  He expressed his understanding that Public Law 105-178, section 653, indicated that Federal Income Tax Withholding from the SSB should not have been repaid and asked how he could ensure the Federal Income Tax withheld from his SSB in September would not be recouped from his DFAS Retirement Pay. 

	b.  a letter, dated 12 March 2010, rendered by Deputy Director, Operations, DFAS, in response to an inquiry from a U.S. Senator regarding the applicant's SSB recoupment from his military retired pay account.  The Deputy Director informed the Senator that in accordance with Title 10, U.S. Code, Section 1174(h), all members who receive separation pay and later become eligible for retired pay shall have an amount deducted from their monthly retired pay until the gross amount of separation pay is recouped.  Section 1174(h)(2) further states that a member who receives separation pay and later becomes eligible for disability compensation from the Department of Veterans Affairs (DVA) shall have an amount deducted from their disability compensation until the separation pay is recouped.  No deduction may be made from DVA disability compensation for the amount of any separation pay received because of an earlier discharge or release from active duty if the disability compensation is based on a disability that was incurred or aggravated during a later period of active duty.  This is further specified in the Code of Federal Regulations (CFR) Title 38, Section 3.700(a)(5)(ii).  The Deputy Director acknowledged that the language contained within DODFMR, Volume 7B, Chapter 4, Subparagraph 040602 B does not adequately address this condition and lacks specificity and indicated changes will be made within the near future to amend the DODFMR to provide more clarity.  He apologized for any confusion caused by this lack of specificity and suggested the applicant contact DVA if he had future questions regarding the recoupment of the SSB from his disability compensation.  The Deputy Director also stated because disability compensation is non-taxable, the DVA is required to recoup the net amount of SSB from the applicant's disability compensation; however, DFAS is required to recoup the gross amount of the SSB.  He attested the applicant was not being taxed on the gross amount of the separation pay twice.  He was taxed on the full amount at the time the payment was issued.  Although DFAS is recouping the gross amount of the payment (before taxes), his monthly taxable income is reduced by the amount that is deducted toward the recoupment; therefore, he is only taxed on the amount of the payment one time.  The Deputy Director indicated DFAS would begin deducting $2,073.60 from the applicant's July 2010 (payment dated 2 August 2010) monthly entitlement.

	c.  a self-authored letter, dated 27 July 2010, rendered in response to the Deputy Director's response to the inquiry from his U.S. Senator.  The applicant contended he had three issues concerning the recoupment of SSB that had not been resolved:

		(1)  Issue One:  He attests his August 2010 RAS shows a deduction for an SSB (debt), but does not show a reduction in his taxable retiree pay.

		(2)  Issue Two:  Public Law 105-178, section 653, and DODFMR, Volume 7B, Chapter 4, subparagraph 040602 B, state Federal Income Tax withheld should not be repaid.

		(3)  Issue Three:  DODFMR, Volume 7B, Chapter 4, subparagraph 040602 B, further states no recoupment of SSB is required, regardless of when paid, if the disability for which the member receives DVA compensation was incurred or aggravated during a period of later active duty.

7.  The National Defense Authorization Act for Fiscal Year 1992 established voluntary incentive programs to support the Army drawdown.  These incentive programs were designed to induce members of the Armed Forces to leave the military voluntarily.  Under both of the programs, the Voluntary Separation Incentive (VSI) and the SSB, qualifying service members who voluntarily left active duty before their retirement vested received benefits based on their salary at the time of separation and on years of service.  In order to qualify, a Soldier must:  have served on active duty for more than 6 but less than 20 years; have served at least 5 years of continuous active duty immediately preceding the date of separation; if a Reservist, be on the active duty list; and meet such other requirements as the Secretary could prescribe from time to time, which could include requirements relating to years of service; skill or rating; grade or rank; and remaining period of obligated service.

8.  Under the SSB, an eligible member of the armed forces would receive a lump sum payment equal to 15 percent of the Soldier’s annual basic pay multiplied by his years of active service.  Soldiers who applied for this incentive were required to enter into a written agreement to serve in the Ready Reserve for a period of not less than 3 years, in addition to any remaining military service obligation based in statute, following the separation from active duty.

9.  Title 10, U.S. Code, sections 1174 and 1175, state a member who has received separation pays, SSB or VSI, and later qualifies for retired pay, "shall have deducted from retired pay so much of such pay as is based on the same service."

10.  DODFMR, Volume 7B, Chapter 4, paragraph 0406, subparagraph 040602 A, states if a member who has received an SSB payment becomes eligible for retired pay, then the gross amount of SSB received will be recouped from the member.

11.  DODFMR, Volume 7B, Chapter 4, paragraph 0406, subparagraph 040602 B, states under the original SSB legislation, a member who received an SSB payment, and who subsequently qualified for benefits administered by the DVA, was subject to recoupment of the gross amount of the SSB that he or she had been paid.  Under Section 653 of Public Law 104-201, for payments of SSB that were made after 30 September 2006, the amount subject to recoupment was the total gross amount of the SSB paid, less the amount of Federal income tax withheld from such pay.  Public Law 105-178 extended the provisions of section 653 to any payment of SSB made during the period of 5 December 1991 through 30 September 1996.  The DVA administers the refund program for members affected by the retroactive period of adjustment.  No recoupment of SSB is required, regardless of when paid, if the disability for which the member receives DVA compensation was incurred or aggravated during a period of later active duty.


DISCUSSION AND CONCLUSIONS:

1.  Evidence clearly shows the applicant voluntarily elected to be separated under the provisions of the SSB incentive program and was compensated accordingly.  Both the statutory and regulatory provisions for the SSB incentive program clearly state if a member who has received an SSB payment becomes eligible for retired pay, then the gross amount of SSB received will be recouped from the member.  

2.  There is no evidence in his records and he did not provide any evidence that shows DFAS has recouped an inappropriate amount of money from his military retired pay.  Therefore, there is insufficient evidence to grant him the requested relief.

3.  It is apparent that the applicant has misinterpreted the statutory and regulatory provisions pertaining to SSB recoupment by failing to recognize that DODFMR, Volume 7B, Chapter 4, paragraph 0406, subparagraph 040602 A, pertains to military retired pay and actions performed by DFAS.  Whereas DODFMR, Volume 7B, Chapter 4, paragraph 0406, subparagraph 040602 B, pertains to benefits provided by DVA and actions performed by DVA.

4.  The applicant's concerns regarding recoupment of SSB or withholding of benefits administered by the DVA do not fall under the purview of this Board and should be addressed to the DVA directly.

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)                                         AR20120004406





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ABCMR Record of Proceedings (cont)                                         AR20120004406



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