Issue: Special provisions in the verification process for a service-disabled Veteran owner who is permanently and severely disabled with regard to the role a spouse can play in the daily activities of the business.
38 CFR § 74.1(1), in pertinent part, provides that “[i]f the death of the Veteran causes the small business concern to be less than 51 percent owned by one or more Veterans, the surviving spouse of such Veteran who acquires ownership rights in such small business shall…be treated as if the surviving spouse were that Veteran for the purpose of maintaining the status of the small business concern as a service-disabled Veteran-owned small business.”
According to 38 CFR § 74.1(2), “[t]he period referred to…[in the ] definition [for surviving spouse found under 38 CFR § 74.1(1)] is the period beginning on the date on which the Veteran dies and ending on the earliest of the following dates: (i) The date on which the surviving spouse remarries; (ii) The date on which the surviving spouse relinquishes an ownership interest in the small business concern; (iii) The date that is 10 years after the date of the Veteran’s death; or (iv) The date on which the business concern is no longer small under Federal small business size standards.”
According to 38 CFR § 74.1(3), “[t]he Veteran must have had a 100 percent service-connected disability or died as a direct result of a service-connected disability.”
According to 38 CFR § 74.4(g), “[n]on-[service-disabled] Veterans may be involved in the management of an applicant or participant, and may be stockholders, partners, limited liability members, officers, or directors of the applicant or participant. With the exception of a spouse or personal caregiver who represents a severely disabled Veteran owner, no such non-[service-disabled] Veteran or immediate family member may…[e]xercise control or have the power to control the applicant or participant.”
According to 13 CFR § 125.8(c), a permanent caregiver is “the spouse, or an individual, 18 years of age or older, who is legally designated, in writing, to undertake responsibility for managing the well-being of the service-disabled Veteran with a permanent and severe disability, to include housing, health and safety. A permanent caregiver may, but does not need to, reside in the same household as the service-disabled Veteran with a permanent and severe disability. In the case of a service-disabled Veteran with a permanent and severe disability lacking legal capacity, the permanent caregiver shall be a parent, guardian, or person having legal custody. There may be no more than one permanent caregiver per service-disabled Veteran with a permanent and severe disability.”
According to 13 CFR § 125.8(d), a Service-Disabled Veteran with a Permanent and Severe Disability is “a Veteran with a service-connected disability that has been determined by the VA, in writing, to have a permanent and total service-connected disability as set forth in 38 CFR 3.340 for purposes of receiving disability compensation or a disability pension.”
Generally, non-Veterans or non-service-disabled Veterans may not exercise control or have the power to control the applicant. However, 38 CFR § 74.4(g) provides an exception for cases where a spouse or personal caregiver represents a severely service-disabled Veteran. To qualify, it must be demonstrated that all control requirements have been met by the spouse or personal caregiver. For purposes of determining eligibility of personal caregivers under 38 CFR Part 74, the Center for Verification and Evaluation (CVE) uses the definitions and other explanatory information pertaining to permanent caregivers found under 13 CFR Part 125. It must be noted that in order for a spouse to qualify under the exception found under 38 CFR § 74.4(g), the spouse must be qualified in the same manner and to the same extent as a personal caregiver.
In addition to meeting all control requirements, a service-disabled Veteran is required to show that he or she has been determined by the VA, in writing, to have a permanent and total service-connected disability as set forth in 38 CFR 3.340 the same as for purposes of receiving disability compensation or a disability pension. It has been CVE’s policy to require that the permanently and severely disabled Veteran must have been able, at the outset, to have owned and controlled the business, but for the disability.
In cases of personal caregivers which includes one’s spouse, additional requirements must be met. It is important to note that the term “caregiver” has legal implications. Referring to one’s spouse, for example, as a caregiver will require CVE to apply 13 CFR §§ 125.8(c) and (d). This means that the owner must show that: 1) a spouse or another individual is legally designated, by VBA or a court or administrative agency authorized to make such designations, to undertake responsibility for managing the Veteran’s well-being; 2) the Veteran has a permanent and severe disability; 3) the spouse or other individual is the sole permanent caregiver; and 4) the Veteran has been determined by the VA, in writing, to have a permanent and total service-connected disability as set forth in 38 CFR 3.340 the same as for purposes of receiving disability compensation or a disability pension.
Importantly, CVE does not require service-disabled Veterans to disclose the nature, severity or type of disability. The severity of one’s disability has no application to the verification process except in the case of personal caregivers.