Incarcerated veterans:

BVA Citation Nr: 0708516

Withholding of compensation benefits by VA is required when 
the four criteria provided in the statute are established. 
If the veteran is incarcerated, and the incarceration is in a 
State penal institution, and the incarceration is in excess 
of 60 days, and the incarceration is for conviction of a 
felony, payment of veterans' benefits at no more than the 10 
percent rate is required by the statute.