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NJ Resolution Urges Congress to Prevent IRS from Taxing Forgiven Student Loans

Tucker and Pinkin Measure to Help Ease Financial Burden for Families of Deceased Vets Passes Assembly

 

            (TRENTON) – In an effort to ease the financial burdens faced by the families and friends of deceased veterans, Assemblywomen Cleopatra Tucker and Nancy Pinkin have sponsored a resolution to encourage the federal government to change its policy regarding taxation of federally-forgiven student loans. The legislation passed the full Assembly Monday, 71-0-0. New jersey politics 2 copy

The resolution (AR-97) urges Washington officials to enact the “Andrew P. Carpenter Tax Act” to prevent the Internal Revenue Service (IRS) from collecting taxes on educational loans forgiven on behalf of a deceased veteran.

Under the federal “Higher Education Act,” certain student loans are discharged when a military member dies as a result of an injury or illness they sustained on active duty. The IRS currently considers the amount forgiven to be taxable gross income and holds any loan cosigner responsible for it.

Since cosigners are often the friends or family members of that deceased veteran, Tucker and Pinkin want to change this by requesting that Congress and the President amend current law to prevent the IRS from collecting these taxes.

“The friends and family of a soldier who lost their life in the line of duty are dealt an enormous loss,” said Assemblywoman Tucker (D-Essex). “Asking them to sort out and pay extra taxes during their time of grief unnecessarily adds to their suffering, which is why federally-forgiven student loans should be exempt from taxation.”

“Anyone willing to cosign a loan to help a veteran go to college shouldn’t be penalized for supporting their efforts to obtain an education,” said Assemblywoman Pinkin (D-Middlesex). “This resolution encourages the government to do the right thing and honor that veteran’s sacrifice by preventing their loved ones from having to shoulder the financial burden of student loan taxation.”

The resolution will be filed with the Secretary of State and passed along to members of the federal government.

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