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Combat Zone Tax Forgiveness

If a member of the U.S. Armed Forces dies while in active service in a combat zone or from wounds, disease, or other injury received in a combat zone, the decedent’s income tax liability is forgiven for:

  • The tax year in which death occurred, and
  • For any earlier tax year ending on or after the first day the member served in a combat zone in active service. If the individual served in more than one combat zone prior to his or her death, no tax is imposed for the years preceding the death starting with the year the individual first served in a combat zone. However, imposition of the statutory time limits for claiming refunds could limit the years for which tax already paid may be refunded. (CCM 200447035)

Note, again, that these regulations only apply if the death occurred in a combat zone OR was directly related to combat zone activity.

Any forgiven tax liability for the year of death that has already been paid will be refunded, and any unpaid tax liability for that year at the date of death will be forgiven. In addition, any unpaid taxes for prior years will be forgiven and any prior year taxes paid after the date of death will be refunded (see "Claims for Tax Forgiveness"). This provision also applies to a member of the Armed Forces serving outside the combat zone if the service:

  • Was in direct support of military operations in the zone, and
  • Qualified the member for special military pay for duty subject to hostile fire or imminent danger.
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