Sue DFAS

[ElvisG]

What is the name of your state? New Mexico


I need some advice on how to resolve this issue with DFAS. I did a search and found only 1 thread about this topic back in 2002. I got out of the US Navy in Feb 24, 2003. In Jan 2005, DFAS sent me a letter stating that I owe them $2500 on taxes paid to the IRS for wages earned of $39,000 for the year of 2003. From Jan to May 2005, I called immediately each month to try to correct this issue. So each month I would receive a letter stating that I owed $2500 and then I would call and ask how I can correct this issue. DFAS said in Jan my account was being audited and to do nothing. In Feb, I received the same letter and DFAS said to send them a DD-214 and it would correct this issue. In March, I received the same letter again and DFAS said to send them my taxes for the year of 2003. Between April and May, I corresponded with a Mr. Burnes, manager of accounting for DFAS. I explained to him that this issue is a DFAS error and I supplied the required documents proving that I didn_t earn any wages from the Military past Feb, 2003. Mr. Burnes responded in May with a letter that said, "I still owed the money on the taxes because I benefited from them".

At this point, I called DFAS and talked to a supervisor about how I benefited from the taxes. The supervisor said that since they had no way of knowing that I didn_t benefit from the taxes. I explained to her that I sent the DFAS my W-2 of 2003 proving that I never even knew about the taxes earned. She said that she didn_t care and that I still owe the money. I couldn_t believe what I was hearing. She also said that this error is DFAS problem 99% of the time with taxes paid on wages after a service member left the service.

In June of 2005, I received a letter from Linebarger Goggan Blair & Sampson, LLP law firm, the collection agency for DFAS. I called the law firm and I told them that this was an error on DFAS and I didn_t owe the money. The law firm told me that I can challenge the debt. So I sent all the paper work that has received and sent to DFAS plus a letter stating that I challenge this debt because it is in error of DFAS. At this point, the IRS sent me a letter asking for $776 on taxes for the $39,000 W-2 reported by DFAS. I called the IRS and told them the same thing that the error was on DFAS behalf. The IRS said to send them a letter plus any documents that supports this. I sent the IRS all required documents and a month later the IRS cleared me of the debt. As soon as I received the letter of the debt being cleared I then sent a copy of it to DFAS in a certified letter. The law firm said that they would inform me via call or letter whenever DFAS responds to my challenge of the debt.

By Jan 2006, I called the law firm wondering whatever happen to my case. The law firm said it sent all paperwork I sent to the Department of Treasure. I called the Department of Treasure and they said that DFAS has _recalled_ my account. In May 2006, I decided to check my credit report and there was a debt of $2500 from DFAS. I tried to challenge the debt with the credit report company, I can_t remember the name, and all that happen was DFAS updated the date on the credit report.

I just don't see how it is legal for a company to say that you worked for a year and make you pay taxes on taxes on never earned wages.

I even sent a letter with all the sent and received documents to the State Attorney General and all they did was forward them to the VA office, which was no help.

1) DFAS refuses to acknowledge that this was an error on their behalf. I have repeatedly tried to work with DFAS to correct this issue. What exactly are all my options in this stance?
2) If I pay off the $2500 debt. Can I take DFAS to small claims court?
3) Do I have a case?What is the name of your state?

 

[Debt Guy]

Unless I misunderstand, DFAS is an instrumentality of the federal government. Suing the government is really hard.

Seems to me your best course of action would be to pester the VA and your congressweasel for help.

 

[ElvisG]

Dang, this is not what I wanted to hear. I know that DFAS is an entity of the government but I was hoping because they are a civilian run company I could have some recourse.

The VA tried to help but because I live so far away from a VA office I don't expect them to do much.

The local congressweasel, hehe, well I think I missed my chance when the elections took place not too long ago. I'll try to see what he/she can do but I don't expect anything to come of it.

Thanks for the reply though.

 

[Debt Guy]

I really think the congressgopher is the way to go. Play up the "served my country" and wave the flag. They like that, especially if they can get some mileage out of it.

 

[ecmst12]

My company does disability exams for the VA and we *frequently* receive notices that such-and-such is a "congressional interest case". All that means is that the vet called their congressperson who then called or sent a letter to the VA (probably not them personally but their staff). They DO intervene for vets all the time, never hurts to ask! Seems to me like you've been jerked around enough...

 

[ElvisG]

Just to give everyone an update in case someone else has the same problem.

The first step that I tried to resolve this issue with outside DFAS is Veteran Affairs and New Mexico State Attorney General. Well, both of them were useless. Then, with only one option left, I contacted my local congressman. After 4 months, it appears from reading the letter that DFAS wrote to the congressman that they still refuse to resolve this issue without me paying DFAS the taxes on the 2003 W-2.

This is a sad situation when a company can report fraudulent earning and pay taxes to the IRS and then come after you for it. I'm simply applaud that this can happen. Because, what if DFAS reported to the IRS that I made $90,000 and paid the taxes on them? My only course of action now is to seek legal counsel.

 

[ElvisG]

Update Part 2:

I tried the legal department on a local base and they were useless. They didn't even understand (I had 15 pages of documentation). The legal department said they had a local tax lawyer that did pro-bono on occasion. It's been 4 months since I last heard from the legal department. I'm a full-time student so I can't afford to pay for a lawyer right now.

Last week, I found a link that you can use to message DFAS customer service. After receiving their response, I fully understand what the situation is. It's basically this.

DFAS paid taxes to the IRS on unearned income. According to DFAS "This may not be your fault. However, the regulation states that individuals who received monetary compensation paid by a government agency or official require no rights to the money and therefore must return such funds. This ruling was supported by the court." I benefited from the W-2 somehow. My guess is that since I could possibly file that W-2 and receive funds therefore I am responsible for the taxes owed. This would be stupid of me to file the W-2 because therefore, I would owe the debt then.

Anyway, I sent DFAS this as an reply but I serious doubt they respond.
"To Whom It May Concern

Please explain to me how I received "monetary compensation" from a W-2 I never filed and will never file? If the IRS can clear me from the W-2 then why can't DFAS? Can you please give me the ruling you mention. Also, if this ruling is supported by the court then why haven't DFAS taken me to court?

If the regulation is correct then DFAS has no right to come after me for the DFAS error. I have W-2's from 2003, 2004, 2005, 2006, and 2007 proving I have never received "monetary compensation." I think this situation is unfair. DFAS has tarnish my credit in a situation were I am not at fault. If you need any documentation to clear this matter up please ask."

 

[TigerD]

Right now you need to be talking to your congressman.

DC

 

[ElvisG]

I already did that. All my local congressmen did was ask DFAS to please look into the matter. The result was that DFAS sent him a computer screen printout saying I was responsible it.

 

[TigerD]

Sorry, I may have been a little vague - you need to bribe your local congressman. They accept bribes in the form of campaign contributions and rubber chicken dinners.

DC

 

[ElvisG]

Update #3:

Well, after getting hooked up with a real lawyer and a tax lawyer I'm going to get this matter solved. What DFAS never told in 3 years was that I was suppose to file a CORRECT W-2 from 2003. It took DFAS since Jan 2005 to May 2007 to final get the corrections on a W-2 to get amended to my original 2003 W-2's. The law states that you only have 3 years to file an amendment. But if it took DFAS until May 2007 to finally get a correct W-2 the lawyer says the IRS should accept it.

What happens now you say? If the IRS let's me file the corrected W-2 then I should receive enough back to pay off DFAS. They didn't know exactly how much I should get back but it should be close to the DFAS debt. This whole situation is stupid and I'm going to be out of money because I have to pay the difference.

Bottom line, DFAS has wasted my time for 3 years and now is going to cost me money to get this debt off my credit score. DFAS customer service personal are incompetent and their managers lack the knowledge to even explain what the situation is in laymen terms. If I was told back in Jan 05 to file the amended W-2 I would have and got this resolved.

 

[Silverplum]

Just FYI:

"DFAS" is the Defense Finance and Accounting Service. It's an U.S. Air Force entity, staffed by Air Force members and lotsa civilians.

They do the pay, deductions, alimony/CS payments, EVERYTHING financial and pay-related for ALL the services, including widow/ers benefits, retirement pay, everything.

If you plan to "sue DFAS," better bring your lunch.

 

[mlane58]

Just FYI:

"DFAS" is the Defense Finance and Accounting Service. It's an U.S. Air Force entity, staffed by Air Force members and lotsa civilians.

They do the pay, deductions, alimony/CS payments, EVERYTHING financial and pay-related for ALL the services, including widow/ers benefits, retirement pay, everything.

If you plan to "sue DFAS," better bring your lunch.

Maybe some rum pudding for dessert?

 

[Silverplum]

Maybe some rum pudding for dessert?

((mlane!))


For you, definitely.

 

[Silverplum]

Bottom line, DFAS has wasted my time for 3 years and now is going to cost me money to get this debt off my credit score. DFAS customer service personal are incompetent and their managers lack the knowledge to even explain what the situation is in laymen terms. If I was told back in Jan 05 to file the amended W-2 I would have and got this resolved.

Careful now, ElvisG, you just might be talking about someone I know. I have many good friends at DFAS. And I may just get cranky and make a little phone call.






Naw, I won't call anyone. But you might want to learn to watch your mouth/typing fingers when on the 'net. Because I do know many folks at DFAS and have many phone numbers I could call...and if I do, many silent readers may as well.