Citation Nr: 18149145 Decision Date: 11/08/18 Archive Date: 11/08/18 DOCKET NO. 16-00 269 DATE: November 8, 2018 ORDER Recoupment of special separation benefits (SSB) payment is proper; the appeal is denied. FINDINGS OF FACT 1. Upon discharge from active service in the United States Army on September 30, 1992, the Veteran received a special separation benefits (SSB) payment in the amount of $87,794.93. The net payment, applying the flat 20 percent federal tax rate, was $70,235.94. 2. Beginning June 2010, the Veteran received disability compensation benefit payments, which requires the recoupment of the special separation benefits payment. CONCLUSION OF LAW The recoupment of the special separation benefits payment by withholding disability compensation benefits in the amount of $70,235.94 was proper. 10 U.S.C. §§ 1174, 1174a; 38 C.F.R. § 3.700(a)(5)(iii). REASONS AND BASES FOR FINDING AND CONCLUSION The Veteran served on active duty in the United States Army from June 1973 to June 1975, and from March 1981 to September 1992. 1. Recoupment of special separation benefit (SSB) is proper The Veteran contends that recoupment of separation pay by withholding his compensation benefits is not proper. He wrote in his Substantive Appeal that the “SSB was not negotiated by me, the taxes were wrong and I have suffered mentally and financially as a result…The Army chose to draw down the force, issuing SSB as a financial buffer. I was never briefed that I would give up my disability claim for $87k…” He also asserted that other veterans received a waiver of recoupment. By way of background, as reflected on his Certificate of Discharge, DD-214, the Veteran was discharged from the United States Army on September 30, 1992. Upon discharge, the Veteran was entitled to a SSB payment of $87,794.93. In a May 2011 rating decision, the Veteran was awarded a 10 percent disability compensation benefit for anxiety disorder, not otherwise specified, with sub-threshold symptoms of PTSD, effective May 5, 2010, which was the date the claim was filed. The Board observes that the Veteran’s disability rating has since been increased to 30 percent. In a June 2011 letter, the Veteran was notified that his VA benefits will be withheld effective June 1, 2010 until April 1, 2053, the date recoupment of separation pay ends, based on the 10 percent disability rating in effect at that time. The letter continued that after the separation pay amount was fully recouped, the Veteran would start receiving his full VA compensation. The Veteran filed a timely Notice of Disagreement, asserting that his disability payments were based on his first period of enlistment and that the SSB payment was issued in his second period of service when he resigned his regular Army commission as an officer. The recoupment of a Veteran’s separation pay from his VA disability compensation is required as a matter of law. 10 U.S.C. § 1174 (h)(2). A member of an armed force who has received separation pay under 10 U.S.C. § 1174 (h)(2), or severance pay or readjustment pay under any other provision of law, based on service in the Armed Forces shall not be deprived, by reason of his receipt of such separation pay, severance pay, or readjustment pay, of any disability compensation to which he is entitled under the laws administered by VA, but there shall be deducted from that disability compensation an amount equal to the total amount of separation pay, severance pay, and readjustment pay received. See 10 U.S.C. § 1174a(g) (providing, in pertinent part, that the provisions of 10 U.S.C. § 1174(h) also apply to the payment of special separation benefits to members of the Armed Forces); see also 38 C.F.R. § 3.700(a)(5) (VA’s implementing regulation); VAOGCPREC 12-96 (holding that VA must recoup from a Veteran’s VA disability compensation the amount of “non-disability severance pay” received by the veteran under section 631 of Pub. L. No. 96-513). Where entitlement to VA disability compensation was established on or after September 15, 1981, a veteran who has received separation pay may receive disability compensation for disability incurred in or aggravated by service prior to the date of receipt of separation pay subject to recoupment of the separation pay. 38 C.F.R. § 3.700(a)(5). Here, the Veteran’s SSB payment pre-dated his award of disability compensation. Where payment of separation pay was made after September 30, 1996, or payment of special separation benefits under 10 U.S.C. § 1174a was made on or after December 5, 1991, as is the case here, VA will recoup from disability compensation an amount equal to the total amount of separation pay less the amount of Federal income tax withheld from such pay. The Federal income tax withholding amount is the flat withholding rate for Federal income tax withholding. 38 C.F.R. § 3.700(a)(5). As noted above, upon discharge from service in September 1992, the Veteran received special separation benefits pay totaling $87,794.93. Since the payment was made after December 5, 1991, VA must recoup the total amount of separation pay less the amount of federal income tax withheld from such pay. Here, the taxes withheld were $17,558.99. Therefore, the total amount to be recouped is $70,235.94. The recoupment of an amount equivalent to the Veteran’s separation pay, less the federal income taxes withheld, is required under 38 C.F.R. § 3.700(a)(5)(iii). The Board finds that the law, as written by Congress and implemented by VA regulation, has been correctly applied in this case. In sum, the recoupment of the special separation benefits payment, less the federal income tax withheld, through the withholding in monthly allotments payments of the disability compensation benefits, is required by law. 10 U.S.C. § 1174; 38 C.F.R. § 3.700(a)(5). The Board is sympathetic to the Veteran’s situation. However, the Board is bound by the law and is without authority to grant benefits on an equitable basis. See 38 U.S.C. §§ 503, 7104; Harvey v. Brown, 6 Vet. App. 416, 425 (1994). The Board is ultimately required to apply the law passed by Congress, and this decision is dictated by the relevant statutes and regulations discussed above. The Board also notes that waiver of SSB payment is not applicable as a matter of law. Addressing the Veteran’s assertion that other veterans have had recoupment waived, the Board notes that waivers for overpayments are potentially available (38 C.F.R. § 1.962, 1.963, 1.963a); however, SSB recoupment is not based on an overpayment and therefore, waiver is not for application. Accordingly, based on the foregoing, the appeal must be denied. L. Chu Veterans Law Judge Board of Veterans’ Appeals ATTORNEY FOR THE BOARD L. Nelson, Associate Counsel