Thousands of Veterans Lied About Income, Audit Finds : Pensions: Computer check of tax records finds discrepancies. U.S. will demand explanations of fraudulent benefit claims.


A federal computer audit has disclosed that thousands of veterans have filed fraudulent claims to qualify for pension benefits intended for the poorest former members of the armed forces, the General Accounting Office reported Tuesday.

A cross-check of Internal Revenue Service records and Department of Veterans Affairs benefit rolls showed that 116,000 veterans receiving pensions on the basis of need failed to disclose about $338 million in 1989 income from savings accounts, stock dividends or rents.

The VA said it will demand explanations from 60,000 beneficiaries concerning discrepancies between the amount of income declared to the IRS and the amount listed on applications for pensions or other benefits. Another 56,000 veterans will be questioned after earnings records are supplied to the agency later this month by the Social Security Administration.

The GAO, which reviewed the audit data compiled by the VA, said that about 13,600 veterans had under-reported their income by at least $4,000 in 1989, while 5,500 had received at least $10,000 more than they reported to the VA in making pension claims.

"One individual had not reported over $300,000 in unearned income received in 1989," the GAO said in a report to Congress.

Before instituting the computer checks, the VA relied on potential beneficiaries to accurately report their own income in order to establish their eligibility for pensions, disability payments and medical benefits.

The GAO reported that VA pension rolls declined by more than 13,000--at a savings of $9 million per month--after the VA notified benefit recipients that it was going to verify their reported income by reviewing IRS and Social Security records.

"VA officials believe this decrease in the pension rolls and benefit payments is at least partly a result of beneficiaries voluntarily informing VA of unreported income before verification began," the GAO said.

"These beneficiaries now either no longer qualify for pension benefits or qualify for a reduced level of benefits," its report said. "Significant savings should result from the actions taken, and more savings should follow."

But the GAO added that the VA should apply the same income-verification checks to almost 1 million veterans who receive VA medical care and who might be subject to co-payment requirements if their income is above a specified level.

Under present plans, VA hospitals will start collecting more information about patients' income next March so the figures can be checked against IRS and Social Security files.

Under the law, no action can be taken by the VA to reduce, suspend or halt benefits without 60 days' notice to beneficiaries of a reported discrepancy between income reported to the IRS or subject to Social Security taxes and the figures provided to the VA.

If disagreements cannot be resolved with the beneficiaries, VA officials have told the GAO, verification will be sought from banks and other financial institutions, or from present and former employers.

The VA now pays about $4 billion a year to needy wartime veterans with disabilities not related to their military service or to their survivors. These benefits are generally reduced, dollar for dollar, by other income received by the beneficiary.

Another major VA program provides $1.3 billion to veterans with service-connected disabilities who are judged unable to work. Unreported income could reduce an individual's benefits by as much as 63%.

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