§ 5301. — Nonassignability and exempt status of benefits.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 38USC5301]
TITLE 38--VETERANS' BENEFITS
PART IV--GENERAL ADMINISTRATIVE PROVISIONS
CHAPTER 53--SPECIAL PROVISIONS RELATING TO BENEFITS
Sec. 5301. Nonassignability and exempt status of benefits
(a) Payments of benefits due or to become due under any law
administered by the Secretary shall not be assignable except to the
extent specifically authorized by law, and such payments made to, or on
account of, a beneficiary shall be exempt from taxation, shall be exempt
from the claim of creditors, and shall not be liable to attachment,
levy, or seizure by or under any legal or equitable process whatever,
either before or after receipt by the beneficiary. The preceding
sentence shall not apply to claims of the United States arising under
such laws nor shall the exemption therein contained as to taxation
extend to any property purchased in part or wholly out of such payments.
The provisions of this section shall not be construed to prohibit the
assignment of insurance otherwise authorized under chapter 19 of this
title, or of servicemen's indemnity. For the purposes of this
subsection, in any case where a payee of an educational assistance
allowance has designated the address of an attorney-in-fact as the
payee's address for the purpose of receiving a benefit check and has
also executed a power of attorney giving the attorney-in-fact authority
to negotiate such benefit check, such action shall be deemed to be an
assignment and is prohibited.
(b) This section shall prohibit the collection by setoff or
otherwise out of any benefits payable pursuant to any law administered
by the Secretary and relating to veterans, their estates, or their
dependents, of any claim of the United States or any agency thereof
against (1) any person other than the indebted beneficiary or the
beneficiary's estate; or (2) any beneficiary or the beneficiary's estate
except amounts due the United States by such beneficiary or the
beneficiary's estate by reason of overpayments or illegal payments made
under such laws to such beneficiary or the beneficiary's estate or to
the beneficiary's dependents as such. If the benefits referred to in the
preceding sentence are insurance payable by reason of yearly renewable
term insurance, United States Government life insurance, or National
Service Life Insurance issued by the United States, the exemption
provided in this section shall not apply to indebtedness existing
against the particular insurance contract upon the maturity of which the
claim is based, whether such indebtedness is in the form of liens to
secure unpaid premiums or loans, or interest on such premiums or loans,
or indebtedness arising from overpayments of dividends, refunds, loans,
or other insurance benefits.
(c)(1) Notwithstanding any other provision of this section, the
Secretary may, after receiving a request under paragraph (2) of this
subsection relating to a veteran, collect by offset of any compensation
or pension payable to the veteran under laws administered by the
Secretary the uncollected portion of the amount of any indebtedness
associated with the veteran's participation in a plan prescribed in
chapter 73 of title 10.
(2) If the Secretary concerned (as defined in section 101(5) of
title 37) has tried under section 3711(a) of title 31 to collect an
amount described in paragraph (1) of this subsection in the case of any
veteran, has been unable to collect such amount, and has determined that
the uncollected portion of such amount is not collectible from amounts
payable by that Secretary to the veteran or that the veteran is not
receiving any payment from that Secretary, that Secretary may request
the Secretary to make collections in the case of such veteran as
authorized in paragraph (1) of this subsection.
(3)(A) A collection authorized by paragraph (1) of this subsection
shall be conducted in accordance with the procedures prescribed in
section 3716 of title 31 for administrative offset collections made
after attempts to collect claims under section 3711(a) of such title.
(B) For the purposes of subparagraph (A) of this paragraph, as used
in the second sentence of section 3716(a) of title 31--
(i) the term ``records of the agency'' shall be considered to
refer to the records of the department of the Secretary concerned;
and
(ii) the term ``agency'' in clauses (3) and (4) shall be
considered to refer to such department.
(4) Funds collected under this subsection shall be credited to the
Department of Defense Military Retirement Fund under chapter 74 of title
10 or to the Retired Pay Account of the Coast Guard, as appropriate.
(d) Notwithstanding subsection (a) of this section, payments of
benefits under laws administered by the Secretary shall not be exempt
from levy under subchapter D of chapter 64 of the Internal Revenue Code
of 1986 (26 U.S.C. 6331 et seq.).
(e) In the case of a person who--
(1) has been determined to be eligible to receive pension or
compensation under laws administered by the Secretary but for the
receipt by such person of pay pursuant to any provision of law
providing retired or retirement pay to members or former members of
the Armed Forces or commissioned officers of the National Oceanic
and Atmospheric Administration or of the Public Health Service; and
(2) files a waiver of such pay in accordance with section 5305
of this title in the amount of such pension or compensation before
the end of the one-year period beginning on the date such person is
notified by the Secretary of such person's eligibility for such
pension or compensation,
the retired or retirement pay of such person shall be exempt from
taxation, as provided in subsection (a) of this section, in an amount
equal to the amount of pension or compensation which would have been
paid to such person but for the receipt by such person of such pay.
(Pub. L. 85-857, Sept. 2, 1958, 72 Stat. 1229, Sec. 3101; Pub. L. 94-
502, title VII, Sec. 701, Oct. 15, 1976, 90 Stat. 2405; Pub. L. 95-479,
title III, Sec. 301, Oct. 18, 1978, 92 Stat. 1564; Pub. L. 97-295,
Sec. 4(74), Oct. 12, 1982, 96 Stat. 1310; Pub. L. 99-576, title V,
Sec. 504, title VII, Sec. 701(68), Oct. 28, 1986, 100 Stat. 3286, 3296;
Pub. L. 101-189, div. A, title XIV, Sec. 1404(b)(2), Nov. 29, 1989, 103
Stat. 1586; Pub. L. 102-25, title VII, Sec. 705(c)(2), Apr. 6, 1991, 105
Stat. 120; renumbered Sec. 5301 and amended Pub. L. 102-40, title IV,
Sec. 402(b)(1), (d)(1), May 7, 1991, 105 Stat. 238, 239; Pub. L. 102-54,
Sec. 14(d)(2), June 13, 1991, 105 Stat. 285; Pub. L. 102-83,
Sec. 4(a)(1), (2)(A)(vii), (b)(1), (2)(E), (4)(C), Aug. 6, 1991, 105
Stat. 403-405; Pub. L. 102-86, title V, Sec. 505(a), Aug. 14, 1991, 105
Stat. 426.)
Amendments
1991--Pub. L. 102-40, Sec. 402(b)(1), renumbered section 3101 of
this title as this section.
Subsecs. (a), (b). Pub. L. 102-83, Sec. 4(a)(1), substituted
``administered by the Secretary'' for ``administered by the Veterans'
Administration''.
Subsec. (c)(1). Pub. L. 102-83, Sec. 4(b)(1), (2)(E), substituted
``Secretary'' for ``Administrator''.
Pub. L. 102-83, Sec. 4(a)(1), substituted ``administered by the
Secretary'' for ``administered by the Veterans' Administration''.
Pub. L. 102-25 made a technical correction to Pub. L. 101-189. See
1989 Amendment note below.
Subsec. (c)(2). Pub. L. 102-83, Sec. 4(b)(4)(C), substituted ``that
Secretary'' for second, third, and fourth references to ``the
Secretary''.
Pub. L. 102-83, Sec. 4(b)(1), (2)(E), substituted ``Secretary'' for
``Administrator'' before ``to make''.
Subsec. (c)(4). Pub. L. 102-86 inserted before period at end ``or to
the Retired Pay Account of the Coast Guard, as appropriate''.
Subsec. (d). Pub. L. 102-83, Sec. 4(a)(1), substituted
``administered by the Secretary'' for ``administered by the Veterans'
Administration''.
Pub. L. 102-54 amended subsec. (d) as in effect immediately before
enactment of Pub. L. 102-40 by substituting ``Internal Revenue Code of
1986'' for ``Internal Revenue Code of 1954''.
Subsec. (e)(1). Pub. L. 102-83, Sec. 4(a)(1), substituted
``administered by the Secretary'' for ``administered by the Veterans'
Administration''.
Subsec. (e)(2). Pub. L. 102-83, Sec. 4(a)(2)(A)(vii), substituted
``Secretary'' for ``Veterans' Administration''.
Pub. L. 102-40, Sec. 402(d)(1), substituted ``5305'' for ``3105''.
1989--Subsec. (c)(1). Pub. L. 101-189, as amended by Pub. L. 102-25,
struck out ``subchapter I or II of'' after ``plan prescribed in''.
1986--Subsec. (a). Pub. L. 99-576, Sec. 701(68)(A), substituted
``a'' for ``his or her'' before ``benefit check''.
Subsec. (b). Pub. L. 99-576, Sec. 701(68)(B), substituted ``the
beneficiary's'' for ``his'' in four places in first sentence.
Subsec. (c). Pub. L. 99-576, Sec. 504(2), added subsec. (c). Former
subsec. (c) redesignated (d).
Subsecs. (d), (e). Pub. L. 99-576, Sec. 504(1), redesignated former
subsecs. (c) and (d) as (d) and (e), respectively.
1982--Subsec. (c). Pub. L. 97-295 inserted ``of this section'' after
``subsection (a)'', and substituted ``(26 U.S.C. 6331 et seq.)'' for
``(relating to seizure of property for collection of taxes)''.
1978--Subsec. (d). Pub. L. 95-479 added subsec. (d).
1976--Subsec. (a). Pub. L. 94-502 inserted provision which
prohibits, as an assignment, a payee of an educational assistance
allowance from designating an attorney-in-fact's address as the payee's
address for the purpose of receiving checks and benefits where the
attorney-in-fact has also been given authority to negotiate the checks
and benefits.
Effective Date of 1991 Amendment
Section 505(b) of Pub. L. 102-86 provided that: ``The amendment made
by subsection (a) [amending this section] shall apply with respect to
funds collected after September 30, 1991.''
Effective Date of 1989 Amendment
Amendment by Pub. L. 101-189 effective Apr. 1, 1992, see section
1404(b)(3) of Pub. L. 101-189, as amended, set out as a note under
section 12731 of Title 10, Armed Forces.
Effective Date of 1978 Amendment
Amendment by Pub. L. 95-479 effective Oct. 1, 1978, see section 401
of Pub. L. 95-479, set out as a note under section 1114 of this title.
Effective Date of 1976 Amendment
Amendment by Pub. L. 94-502 effective Dec. 1, 1976, see section
703(c) of Pub. L. 94-502, set out as an Effective Date note under
section 3693 of this title.
Transfer of Functions
For transfer of authorities, functions, personnel, and assets of the
Coast Guard, including the authorities and functions of the Secretary of
Transportation relating thereto, to the Department of Homeland Security,
and for treatment of related references, see sections 468(b), 551(d),
552(d), and 557 of Title 6, Domestic Security, and the Department of
Homeland Security Reorganization Plan of November 25, 2002, as modified,
set out as a note under section 542 of Title 6.
Undue Hardship Cases
Pub. L. 95-202, title III, Sec. 305(c), Nov. 23, 1977, 91 Stat.
1444, provided that Administrator could provide equitable relief to
educational institutions and accredited correspondence schools which
were in possession of a veteran's or eligible person's benefit check
payable to the veteran or person and mailed to the institution or school
for certain courses or lessons completed by the veteran or person at the
institution or school before certain dates in 1977 and which were
holding a power of attorney executed by the veteran or person before
Dec. 1, 1976, authorizing negotiation of the check.
Section Referred to in Other Sections
This section is referred to in section 1908 of this title; title 26
section 140; title 42 sections 417, 659.
