Some Veterans May Claim
'87 Tax Refunds If They Act Fast

Some veterans who reported interest on dividends from certain government-issued life insurance policies may now want to claim a refund or 1987 taxes. For most veterans the deadline for amending 1987 returns and claiming a refund is April 1991.

Veterans of World War I and II and the Korean conflict may claim refunds if they hold a United States Government Life Insurance (USGLI) policy or a National Service Life Insurance (NSLI) policy, left the dividends and the interest on deposit with the Department of Veterans Affairs and previously reported the interest earned as income. Refunds can also be claimed for 1988, 1989 and other open years. The interest should not be reported as income for 1990.

IRS, in Revenue Ruling 91-14, recently stated that this interest earned on the dividends is not subject to federal income taxation. Previously, IRS had ruled in Revenue Ruling 57-441 that such interest was taxable. Because the latest ruling is retroactive, some veterans may now claim a refund of back taxes.

To claim a refund, affected veterans should use Form 1040X, Amended U. S. Individual Income Tax Return. Form 1040X and instructions may be ordered from the IRS by calling 1-800-829-3676 or can be picked up by visiting your local IRS offices.

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