M21-1 Manual  /  Part X, Subpart v, Chapter 2, Section D

Proceeds

M21-1, Part X, Subpart v, Chapter 2, Section D

Overview

In This Section

This section contains the following topics:
TopicTopic Name
1General Information About Proceeds
2Releasing Proceeds
3Reissuing Proceeds Previously Returned to Appropriation

1. General Information About Proceeds

Introduction

This topic contains general information on proceeds, including
  • creation of a proceed balance
  • reviewing the award status
  • accounts receivable and proceeds, and
  • information about fiscal transactions.

Change Date

June 10, 2026

X.v.2.D.1.a. Creation of a Proceed Balance

When Department of Veterans Affairs (VA) benefit payments are cancelled and/or returned after issuance by the Department of Treasury, these payments become non-negotiated benefit payments which create a proceed balancein a beneficiary’s corporate record. When a proceed balance is created, an end product (EP) 290 is established with a claim label describing the reason the payment was returned. Common proceed reason descriptions associated with EP 290 include
  • bad address
  • non-entitlement, or
  • reportedly deceased.
References: For more information on
  • proceed reason descriptions, see M24-2, Chapter 08, Section 2.03, and
  • claim labels associated with proceeds, see M21-4, Appendix C.

X.v.2.D.1.b. Reviewing the Award Status

A returned payment will often result in an automatic suspension of the beneficiary’s award. Upon receipt of the EP 290 described in M21-1, Part X, Subpart v, 2.D.1.a, review the beneficiary’s AWARD STATUS in the Veterans Benefits Management System (VBMS) as noted in the table below.
Award StatusSignificance
AuthorizedThe beneficiary’s payments are active.
TerminatedThe beneficiary is either deceased or currently not entitled to benefits.
SuspendedThe beneficiary’s payments have been discontinued effective the date shown in the LAST PAID DATE field in the CURRENT AND HISTORICAL AWARD SCREEN in VBMS.

X.v.2.D.1.c. Accounts Receivable and Proceeds

Returned payments are generally applied to any outstanding debt through system functionality when they are for the same VA benefit. However, there will be instances when a proceed balance is created and needs to be released manually.During the initial review of the claims folder, identify whether the beneficiary has an accounts receivable as discussed in M21-1, Part VI, Subpart iii, 2.B, and review for a payment plan or recurring recoupment.Release the proceeds without additional recoupment when
  • a payment plan exists, or
  • VA already collected from the returned payment.
Follow local regional office procedures to contact the finance activity for assistance in determining whether the proceed balance should be applied to an accounts receivable balance.Reference: For more information on reviewing for accounts receivable and recoupments, see the Proceeds Workflow Job Aid.

X.v.2.D.1.d. Information About Fiscal Transactions

When award action does not release a proceed balance, send the Proceeds Memorandum to the finance activity with instructions to complete a specific fiscal transaction.Detailed information about fiscal transactions to release the proceed balance is provided in the following table.
CodeTransaction LabelAction
75AOne-time paymentReleases the payment to the beneficiary.
75BApply to accounts receivableApplies the payment to the beneficiary’s account receivable balance.
75CReturn to appropriationRemoves the payment from the beneficiary’s account completely and returns the funds to VA’s overall budget for allocation of benefits.
References: For more information on

2. Releasing Proceeds

Introduction

This topic contains information on releasing proceeds, including
  • general review of the Veteran’s claims folder, and
  • proceeds created due to
    • a bad address
    • non-entitlement, and
    • the death of the beneficiary.

Change Date

June 10, 2026

X.v.2.D.2.a. General Review of the Veteran’s Claims Folder

After completing a general review of the Veteran’s claims folder, take action based on the claim label associated with the pending EP 290 as directed in M21-1, Part X, Subpart v, 2.D.2.b-d.Important: When review of all relevant evidence reveals that no proceeds exist or no action is needed to resume an award,
  • cancel the pending EP 290 as directed in M21-4, Appendix B, 1.b, using the reason Message Received, No Action Necessary, and
  • add a VBMS note explaining why no action was taken.

X.v.2.D.2.b. Proceeds Created Due to a Bad Address

Follow the steps in the table below when an EP 290 is established indicating a proceed balance was created due to a bad address.
StepAction
1Attempt to obtain a corrected address by telephone and document the results in accordance with M21-1, Part III, Subpart i, 2.D.1.e.Was an updated address obtained?
  • If yes, go to Step 5.
  • If no, go to the next step.
2Follow Steps 1 through 6 of the procedure described in M21-1, Part II, Subpart i, 2.C.6.d to obtain an updated address.Was an updated address obtained?
  • If yes, go to Step 5.
  • If no, go to the next step.
3Is the direct deposit information available?
  • If yes,
    • send a letter to the financial institution of record, requesting the beneficiary’s address, and
    • go to the next step after the 30-day suspense period for the letter expires.
  • If no, go to Step 10.
4Was an updated address identified?
  • If yes, go to the next step.
  • If no, go to Step 10.
5Process a change of address (CADD) with the updated address.Note: Notify the fiduciary hub of jurisdiction when a valid change of address or direct deposit information is received for a beneficiary that has a fiduciary, as discussed in M21-1, Part II, Subpart iii, 3.B.1.c.
6Does the beneficiary’s PAY STATUS field show Authorized, and the PROCEEDS BALANCE table display No Proceeds Balance Items Found?
  • If yes,
    • clear the EP 290, and
    • disregard the remaining steps in this table.
  • If no, go to the next step.
Reference: For more information on reviewing the beneficiary’s PAY STATUS field or PROCEEDS BALANCE table, see the Proceeds Workflow Job Aid.
7If the PAY STATUS field shows Suspended or Terminated, or a CADD completed in Step 5 did not release the proceeds,
  • take the necessary steps within VBMS – Awards (VBMS-A) to resume the payment, and
  • refer the claim to authorization.
References: For more information on
  • reviewing the beneficiary’s PAY STATUS field, see the Proceeds Workflow Job Aid, and
  • resuming benefits by award action, see the VBMS-A User Guide.
8After authorizing the claim, validate that the beneficiary’s PAY STATUS field shows Authorized, and review the PROCEEDS balance field. Were the proceeds released?
  • If yes, disregard the remaining steps in this table.
  • If no, go to the next step.
Reference: For more information on reviewing the beneficiary’s PAY STATUS field or PROCEEDS BALANCE table, see the Proceeds Workflow Job Aid.
9Complete the Proceeds Memorandum to notify the finance activity to release the proceeds and upload it to the claims folder, identifying the memorandum by entering the following information:
  • CATEGORY – TYPE: Determinations: VA Memo
  • SOURCE: User, and
  • SUBJECT: Proceeds Memo.
Disregard the remaining steps in this table.Reference: For more information on the available fiscal transactions used to release the proceed balance, see M21-1, Part X, Subpart v, 2.D.1.d.
10
  • Discontinue the beneficiary’s award as of the date in the LAST PAID DATE field on the CURRENT AND HISTORICAL AWARD INFORMATION field in VBMS-A, using Whereabouts Unknown in the DECISION field on the BASIC ELIGIBILITY tab
  • send contemporaneous notice of the discontinuation, and
  • complete the Proceeds Memorandum to notify the finance activity to return the proceeds to appropriation and upload it to the claims folder, identifying the memorandum by entering the following information:
    • CATEGORY – TYPE: Determinations: VA Memo
    • SOURCE: User, and
    • SUBJECT: Proceeds Memo.
Reference: For more information on the available fiscal transactions used to release the proceed balance, see M21-1, Part X, Subpart v, 2.D.1.d.

X.v.2.D.2.c. Proceeds Created Due to Non-Entitlement

The non-entitlement claim label does not indicate that the beneficiary is ineligible for the payment. Reasons outside of bad address and death of beneficiary automatically get assigned to this category.Conduct a thorough review of the following items to establish a timeline of events to aid in the determination of entitlement, including, but not limited to
  • beneficiary correspondence
  • documents from the finance activity
  • recent award activity, and
  • mailing and payment address history.
After conducting the review of the beneficiary’s record, follow the steps in the table below.
StepAction
1Is the beneficiary entitled to the proceed balance?
  • If yes, go to Step 3.
  • If no,
    • terminate the award, allowing for due process, as necessary, and
    • go to the next step.
2Was the proceed balance removed by the award termination?
  • If yes, no further action is needed.
  • If no, go to Step 5.
3
  • Take the necessary steps within VBMS-A to resume the payment, and
  • refer the claim to authorization.
Reference: For more information on resuming benefits by award action, see the VBMS-A User Guide.
4After authorizing the claim, validate that the beneficiary’s PAY STATUS field shows Authorized, and review the PROCEEDS BALANCE field. Were the proceeds released?
  • If yes, disregard the remaining step in this table.
  • If no, go to the next step.
Reference: For more information on reviewing the beneficiary’s PAY STATUS field or PROCEEDS BALANCE table, see the Proceeds Workflow Job Aid.
5Complete the Proceeds Memorandum to notify the finance activity to release the funds and upload it to the claims folder, identifying the memorandum by entering the following information:
  • CATEGORY – TYPE: Determinations: VA Memo
  • SOURCE: User, and
  • SUBJECT: Proceeds Memo.
Reference: For more information on the available fiscal transactions used to release the proceed balance, see M21-1, Part X, Subpart v, 2.D.1.d.

X.v.2.D.2.d. Proceeds Created Due to the Death of the Beneficiary

Follow the steps in the table below when an EP 290 is established indicating a proceed balance was created due to the death of the beneficiary.
StepAction
1Review the claims folder for evidence that the beneficiary is deceased, and/or verify the beneficiary’s death using the SSA INQUIRY command in VBMS.Is confirmation of the beneficiary’s death of record?
  • If yes, go to Step 5.
  • If no, go to the next step.
2
  • Remove any erroneous death data from Share and/or VBMS
  • resume the beneficiary’s award
  • send a decision notice, and
  • refer the claim to authorization.
Important: Review and confirm the beneficiary’s payment address using Steps 1 through 6 of the procedure described in M21-1, Part II, Subpart i, 2.C.6.d prior to resuming the award.
3After authorizing the claim, validate that the beneficiary’s PAY STATUS field shows Authorized, and review the PROCEEDS BALANCE field. Were the proceeds released?
  • If yes, disregard the remaining steps in this table.
  • If no, go to the next step.
Reference: For more information on reviewing the beneficiary’s PAY STATUS field or PROCEEDS BALANCE table, see the Proceeds Workflow Job Aid.
4
  • Complete the Proceeds Memorandum to notify the finance activity to release the funds and upload it to the claims folder, identifying the memorandum by entering the following information:
    • CATEGORY – TYPE: Determinations: VA Memo
    • SOURCE: User, and
    • SUBJECT: Proceeds Memo, and
  • disregard the remaining steps in the table.
Reference: For more information on the available fiscal transactions used to release the proceed balance, see M21-1, Part X, Subpart v, 2.D.1.d.
5Verify that the beneficiary’s award was terminated correctly.If the award has not been terminated, follow the instructions inImportant: If the beneficiary was in the Fiduciary Program, notify the fiduciary hub of jurisdiction of the award termination, as additional actions may be needed as provided in FPM, Part II, 1.D.
6Payments made to the beneficiary but not negotiated prior to death are considered non-negotiated benefits and are payable in the same manner as accrued benefits.Review the payment dates associated with the proceed balance and follow the instructions in the table below to determine how to release the proceeds.
If the proceed payment dates cover a period that ...Then ...
does not extend beyond the last day of the month preceding the month of death (MOD) of the beneficiarythe entire proceed balance is available to be paid based on relationship or reimbursement, as instructed in M21-1, Part XI, Subpart ii, 3.E.4.
  • is prior to the last day of the month preceding the MOD of the beneficiary, and
  • extends beyond the last day of the month preceding the MOD of the beneficiary
  • the proceed balance up to the MOD is available to be paid based on relationship or reimbursement, as instructed in M21-1, Part XI, Subpart ii, 3.E.4, and
  • the proceed balance that extends beyond the MOD must be returned to appropriation as directed in Step 7.
Note: The Veteran’s MOD payment is not payable under accrued benefit awards but must be addressed separately.Reference: For more information on processing MOD payments, see M21-1, Part XI, Subpart ii, 2.1.c-e.
only extends beyond the last day of the month preceding the MOD of the beneficiaryreturn the proceeds to appropriation, as directed in Step 7.Note: The Veteran’s MOD payment is not payable under accrued benefit awards but must be addressed separately.Reference: For more information on processing MOD payments, see M21-1, Part XI, Subpart ii, 2.1.c-e.
Note: Receipt of a standardized application is required prior to paying proceeds as accrued benefits. If an application is not of record, follow the instructions in M21-1, Part XI, Subpart ii, 3.C.1.c to notify individuals who are potentially entitled to funds.
7Complete the Proceeds Memorandum to notify the finance activity to return the proceeds to appropriation and upload it to the claims folder, identifying the memo by entering the following information:
  • CATEGORY – TYPE: Determinations: VA Memo
  • SOURCE: User, and
  • SUBJECT: Proceeds Memo.
Reference: For more information on the available fiscal transactions used to release the proceed balance, see M21-1, Part X, Subpart v, 2.D.1.d.

3. Reissuing Proceeds Previously Returned to Appropriation

Change Date

June 10, 2026

X.v.2.D.3.a. Reissuing Proceeds Returned to Appropriation

Proceeds that have been returned to appropriation can be reissued when evidence shows that they are owed to the beneficiary. When a beneficiary’s payments have been resumed following a terminated status, review the following items to determine whether proceeds need to be reissued:
  • documents from the finance activity
  • recent award activity
  • decision notices, and
  • mailing and payment address history.
Complete a new Proceeds Memorandum to notify the finance activity to reissue the proceeds and upload it to the claims folder, identifying the memorandum by entering the following information:
  • CATEGORY – TYPE: Determinations: VA Memo
  • SOURCE: User, and
  • SUBJECT: Proceeds Memo.
Reference: For more information on the available fiscal transactions used to release the proceed balance, see M21-1, Part X, Subpart v, 2.D.1.d.

Source: VA M21-1 Adjudication Procedures Manual, M21-1, Part X, Subpart v, Chapter 2, Section D (U.S. government work, reproduced for reference). Browse all sections →