Revised June 10, 2026
X.v.2.D.1.aCreation 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 balance in 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.bReviewing 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 Status | Significance |
|---|---|
| Authorized | The beneficiary’s payments are active. |
| Terminated | The beneficiary is either deceased or currently not entitled to benefits. |
| Suspended | The 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.cAccounts 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.dInformation 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.
| Code | Transaction Label | Action |
|---|---|---|
| 75A | One-time payment | Releases the payment to the beneficiary. |
| 75B | Apply to accounts receivable | Applies the payment to the beneficiary’s account receivable balance. |
| 75C | Return to appropriation | Removes 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
- fiscal transactions, see M24-1, Chapter 01, Part 03, Appendix H, and
- when to send the Proceeds Memorandum __ to the finance activity, see M21-1, Part X, Subpart v, 2.D.2.b-d.
2Releasing Proceeds
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.
Revised June 10, 2026
X.v.2.D.2.aGeneral 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.bProceeds 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.
| Step | Action |
|---|---|
| 1 | Attempt 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?
|
| 2 | Follow 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?
|
| 3 | Is the direct deposit information available?
|
| 4 | Was an updated address identified?
|
| 5 | Process 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. |
| 6 | Does the beneficiary’s PAY STATUS field show Authorized , and the PROCEEDS BALANCE table display No Proceeds Balance Items Found?
Reference: For more information on reviewing the beneficiary’s PAY STATUS field or PROCEEDS BALANCE table, see the Proceeds Workflow Job Aid. |
| 7 | If the PAY STATUS field shows Suspended or Terminated , or a CADD completed in Step 5 did not release the proceeds,
References: For more information on
|
| 8 | After authorizing the claim, validate that the beneficiary’s PAY STATUS field shows Authorized , and review the PROCEEDS balance field. Were the proceeds released?
Reference: For more information on reviewing the beneficiary’s PAY STATUS field or PROCEEDS BALANCE table, see the Proceeds Workflow Job Aid. |
| 9 | Complete 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:
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 |
|
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.cProceeds 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.
| Step | Action |
|---|---|
| 1 | Is the beneficiary entitled to the proceed balance?
|
| 2 | Was the proceed balance removed by the award termination?
|
| 3 |
Reference: For more information on resuming benefits by award action, see the VBMS-A User Guide. |
| 4 | After authorizing the claim, validate that the beneficiary’s PAY STATUS field shows Authorized , and review the PROCEEDS BALANCE field. Were the proceeds released?
Reference: For more information on reviewing the beneficiary’s PAY STATUS field or PROCEEDS BALANCE table, see the Proceeds Workflow Job Aid. |
| 5 | 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:
|
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.dProceeds 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.
| Step | Action |
|---|---|
1 | Review 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?
|
2 |
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. |
3 | After authorizing the claim, validate that the beneficiary’s PAY STATUS field shows Authorized , and review the PROCEEDS BALANCE field. Were the proceeds released?
Reference: For more information on reviewing the beneficiary’s PAY STATUS field or PROCEEDS BALANCE table, see the Proceeds Workflow Job Aid. |
4 |
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. |
5 | Verify that the beneficiary’s award was terminated correctly.If the award has not been terminated, follow the instructions in
Important: 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. |
6 | Payments 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 beneficiary | the 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.
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 beneficiary | return 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. |
7 | Complete 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:
|
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.
3Reissuing Proceeds Previously Returned to Appropriation
Revised June 10, 2026
X.v.2.D.3.aReissuing 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.
End of Part X, Subpart v, Chapter 2, Section D