Coast Guard Combat-Injured Tax Fairness Act

This bill corrects tax refund issues for Coast Guard veterans with combat-related injuries by clarifying which federal agencies handle tax refunds when the Coast Guard operates outside the Navy (e.g., under Homeland Security or Transportation). It amends the 2016 Combat-Injured Veterans Tax Fairness Act to explicitly include the Secretaries of Homeland Security and Transportation in agency responsibilities for identifying and refunding improperly withheld taxes. The bill requires these agencies to identify past improperly withheld amounts and report findings within one year of enactment, while also preventing future withholding starting immediately. It directly affects Coast Guard veterans who received severance payments but had taxes incorrectly withheld due to the Coast Guard’s operational structure.