In a new twist, we have discovered that the VA is also auditing new Pension (aka "aid and attendance") claims with the IRS. In the past, VA always audited claims with the Social Security Administration. Now it appears that IRS tax records are also being consulted. By auditing a claimant's previous tax return, the VA is able to identify income and assets on new claims to locate and identify sources of income.
Why is this important? Many "pension poaching" elder law attorneys and claims agents practicing as estate and financial planners have mistakenly advised their clients that excess assets placed in "irrevocable" trusts do not have to be reported to the VA due to them being "exempt" (i.e. non-reportable) assets such as homes, cars, etc. Of course, this is not true (38 C.F.R. 3.276(b)). But now, VA is looking at tax returns of claimants during the initial adjudication process and discovering any sources of income or hidden assets not reported on the claim. At best, this discovery kicks a claim out of the express lane "expedited claim adjudication initiative" and into the development activity at VA adding months to the claims' adjudication. At worst, it results in an outright denial.
The takeaway from this activity is that the VA is absolutely stone cold serious about ensuring that any attempt to create artificial eligibility by hiding assets or "overlooking" assets is going to result in addition scrutiny and investigation.
The "pension poaching" party is just about over! and it's about time!