For veterans who received severance pay related to combat, a very recent law may affect you positively.
Severance pay due to injury, just like worker's comp pay, is not included in gross income (you don't pay tax in it). However, for many years (as far back as 1991), the DOD mistakenly withheld taxes on this type of pay. If you caught this error when you filed your returns for that year and did not include the pay in your gross income, you are OK, but many assumed that the 1099's they received were correct and just lived with it.
Congress recently passed a law directing the DOD to identify those that had taxes improperly withheld, notify the servicemember, and include instructions on how to file for a refund.
Normally the statute of limitations for requesting a refund is 3 years, but a provision of this bill allows for reaching back almost 25 years and goes forward one year from when you receive any notice.
You should keep an eye out in the mail for instructions. You will need to prepare and submit an amended return for the year in question.
More details can be found here.