December 10, 2018
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Angus King bill targets tragic tax on parents, if their child dies with college debt

Courtesy Nora Brennen | BDN
Courtesy Nora Brennen | BDN
The Brennen family (from left: Shawn Eary, Jovan Eary, Nora Brennen, Keegan Brennen, Donald Brennen) at Jovan Eary's wedding in August 2012. U.S. Sen. Angus King has sponsored the Stop Taxing Death and Disability Act after hearing from Nora and Donald Brennen of Topsham, whose son, Keegan Brennen, died in August 2012. Although $78,000 in federal and private student loans were forgiven following Keegan's death, his parents are required to pay income tax on that amount.

TOPSHAM, Maine — The tragic experience of a Topsham couple facing a huge tax bill after the death of their 22-year-old son, for whom they co-signed student loans, is now the subject of federal legislation brought by Sen. Angus King.

Donald and Nora Brennen’s son, Keegan Brennen, was a 2008 graduate of Mt. Ararat High School in Topsham. He was born with an immunodeficiency and underwent IV therapy every four to six weeks for most of his life.

But when he turned 17, Nora Brennen said “his body finally kicked in,” and he no longer needed the treatments. With the assistance of his parents, he took out federal and private loans to attend the New Hampshire Institute of Art. He graduated in May 2012 with a degree in creative writing.

After graduation, Keegan Brennen was planning to exhibit his paintings in an oxygen bar in New Hampshire.

“Everything was looking good for him,” Nora Brennen said.

But, then, Keegan Brennen died suddenly in November of that year of a brain aneurysm, which his family believes was unrelated to his previous health conditions.

After his death, they learned the federal government and private lenders would forgive their son’s $78,000 in student loans. However, because the Brennens had co-signed, the Internal Revenue Service considered that forgiveness also as taxable income.

As a result, the Brennens ended up owing nearly $27,000 in federal taxes and $6,300 in state taxes, they said, an amount they’re still steadily repaying after working out a deal with the IRS.

The Brennens’ ordeal prompted King on Thursday to sponsor the Stop Taxing Death and Disability Act, which would eliminate tax penalties for families whose student loans are forgiven after the death or permanent disability of their child.

“Suddenly, in the midst of your grief, you’re faced with an enormous tax bill,” King said. “It makes no sense. It’s literally adding insult to tragic injury … it’s taking a tragic situation and making it worse.”

King’s bill, co-sponsored by Republican Sen. Rob Portman of Ohio and Democratic Sen. Chris Coons of Delaware, would exempt any federal or private student loan discharged because of the death of a child or total and permanent disability from income taxes. It also would allow a parent whose child develops a total and permanent disability to qualify for student loan discharge.

King said Monday his staff’s research indicates several thousand such cases exist across the country and 150,000 people are affected by the “egregious” law each year. As the bill stands, it’s not likely the Brennens would find relief if it’s enacted, according to the couple and King.

The Brennens started a petition at Whitehouse.gov and called the White House hotline, but they only got a form letter back, Nora Brennen said. During the last congressional session, they worked with U.S. Rep. Chellie Pingree, D-Maine, on a bill that would allow the taxes to be repaid over 15 years, Nora said, but it died in the House Ways and Means Committee.

Pingree spokesman Willy Ritch said Monday that Pingree is searching for a Republican co-sponsor and “would like to reintroduce it this session.”

The Brennens are both retired military. Donald Brennen retired from the Navy after 20 years, then worked at Bath Iron Works. Nora Brennen retired from the Navy after 10 years as an aircraft electrician, and she now works for the Veterans Administration.

“I tell everyone, I feel like they’re profiting from my son’s death,” Nora Brennen said. “If my son had lived, they would get nothing.”

 


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