Citation Nr: 21067658 Decision Date: 11/04/21 Archive Date: 11/04/21 DOCKET NO. 17-23 840 DATE: November 4, 2021 REMANDED Propriety of the withholding of Department of Veterans Affairs (VA) disability compensation to recoup $15,000 of separation pay is remanded. REASONS FOR REMAND The Veteran served on active duty from October 1970 to August 1980. This matter comes before the Board of Veterans' Appeals (Board) on an appeal from an April 2015 rating decision by a VA Regional Office, which is the Agency of Original Jurisdiction (AOJ). Propriety of the withholding of VA disability compensation to recoup $15,000 of separation pay. The Veteran contends that the withholding of his VA disability compensation to recoup $15,000 of separation pay was improper. He specifically contends that he only received $12,000 after taxes. He also contends that VA should have recouped the separation pay beginning when he first received VA disability compensation in August 1980. Upon review of the record, a remand is necessary in order to obtain additional pertinent records. A servicemember who has received separation pay under 10 U.S.C. § 1174, or separation pay, 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 or her receipt of such separation pay, severance pay, or readjustment pay, of any disability compensation to which he or she 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. 10 U.S.C. § 1174(h)(2); see 38 U.S.C. § 1174(g) (providing 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). 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). Where payment of separation pay was made after September 30, 1996, 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. Id.; see also VAOPGCPREC 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 upon discharge from military service). The Veteran's DD Form 214 shows that he was honorably discharged from the U.S. Army in August 1980 and lists the reason for separation from service as failure of selection, temporary promotion. The DD Form 214 included 47.5 days accrued leave paid, but does not show any separation payment. Notably, on his original September 1980 application for compensation benefits, the Veteran put a question mark over whether he had received any readjustment pay. On a later October 2018 Fully Developed Claim, the Veteran indicated he did not receive any separation or severance pay, while also marking out the entire page noting the information was already on file. However, the record includes a November 2012 VETSNET print-out, which showed the Veteran received separation pay in a gross amount of $15,000. In response, in December 2012, the AOJ contacted the Defense Finance and Accounting Service (DFAS) to confirm the validity, nature, and correct amount of the Veteran's separation pay. There is no response of record from DFAS to this request. The AOJ then sent another request to DFAS to confirm the separation pay in March 2013. The record includes duplicates of this request, but does not include a response from DFAS. Thereafter, in September 2013, the AOJ notified the Veteran that it had received notification from DFAS that he had received $15,000 in separation pay, and that it was proposing to withhold his disability compensation to recoup this pay. Then, in April 2015, the AOJ began withholding the Veteran's compensation, and the current appeal followed. In his statements pertinent to the appeal, the Veteran indicated that he received $12,000 in separation pay after taxes. Importantly, the AOJ stated it received information from DFAS that the Veteran had received $15,000 in separation pay, which was the basis of the withholding. However, in the April 2015 notification letter and a March 2017 statement of the case, the AOJ identified a March 2013 response from DFAS confirming the separation pay. However, the document indicated as a response from DFAS is, in fact, the request sent to DFAS. Implicit in any analysis of the validity or creation of the debt is an accurate accounting. There is no response from DFAS in the record confirming the nature and amount of the Veteran's separation pay. It is unclear whether DFAS responded to any of the requests; therefore, a remand is necessary in order to obtain relevant records pertaining to the Veteran's reported separation pay from DFAS, or any other relevant source. The matter is REMANDED for the following action: 1. Obtain verification from DFAS, or any other relevant source including obtaining personnel records or a Military Master Pay Account, of the nature and amount of any separation, severance, or readjustment pay the Veteran received upon separation from service in August 1980. Efforts to obtain these records must continue until it is determined that they do not exist or that further attempts to obtain them would be futile. The non-existence or unavailability of such records must be verified, and this should be documented for the record. Required notice must be provided to the Veteran and his representative. J. B. FREEMAN Veterans Law Judge Board of Veterans' Appeals Attorney for the Board Jonathan M. Estes The Board's decision in this case is binding only with respect to the instant matter decided. This decision is not precedential and does not establish VA policies or interpretations of general applicability. 38 C.F.R. § 20.1303.