Wounded Veteran Gets Loan Forgiveness and $62 K Tax Bill

BATH TOWNSHIP, Mich.— The I.R.S. is asking a wounded veteran from Michigan to pay $62,000 in income taxes on the federal government’s cancellation of his student loans.

First Lt. Will Milzarski served two tours in Afghanistan that left him with a traumatic brain injury, post-traumatic stress disorder and hearing loss. The federal government canceled $223,000 in student loan debt after deeming him totally and permanently disabled.

The 47-year-old veteran, who said the debt is largely attributed to his law degree, told the Lansing State Journal that the tax notice surprised him.

“One part of government says, ‘We recognize your service, we recognize your inability to work,’” Milzarski said. “The other branch says, ‘Give us your blood.’ Well, the U.S. Army already took a lot of my blood.”

Michigan State University’s Low-Income Tax Clinic has agreed to take on the issue. Joshua Wease, a law professor from the clinic, said the tax in Milzarski’s case isn’t logical.

“If an individual has been deemed disabled and unable to pay their student loans, it seems incredible that they wouldn’t also be deemed unable to pay the taxes on the forgiveness of those same student loans,” Wease said.
Wease said the I.R.S. rejected an offer to pay a lower amount and the clinic is appealing the decision, which may take months. He said the clinic is first working with the federal government because Michigan taxes are based on federal decisions about income.

Milzarski said he’s also turned to his state and congressional representatives about the issue.

Republican state Sen. Rick Jones said Thursday he’s drafting a bill that would exempt loan forgiveness for wounded vets under state law. The bill likely wouldn’t help Milzarski because it won’t be retroactive, but the veteran said he’ll be glad to see the legislation passed.

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