Veterans who received "payments under the Department of Veterans Affairs (VA) Compensated Work Therapy (CWT) program" has been determined by the IRS to be no longer taxable.
Furthermore, the Internal Revenue Service has determined that "disabled veterans who paid tax on these benefits in the past three years can now claim refunds".
Further discussion on this topic can be found by clicking the IRS link below.
Certain Payments to Disabled Veterans Ruled Tax-Free; Some May Be Due Refunds