Tax Relief for Fraud Victims Act

Mr. Speaker, I rise in support of H.R. 9500, the Tax Relief for Fraud Victims Act.

I would first like to thank my colleagues on the other side of the aisle for partnering with me on this bipartisan, commonsense bill, which will ensure that Americans do not have to pay taxes on money that they were defrauded out of.

Mr. Speaker, Americans are being scammed at incredible rates. According to the Federal Trade Commission, last year, 3 million American consumers reported over $15 billion in fraud losses, the highest for any year on record. This is an increase of over 25 percent from the previous year.

That spike is driven by a rise in six-figure scams. Imagine losing the money that you were saving for a down payment, the money you had built up for your kid's education, or even a savings account that helps you sleep better.

Our seniors are among the most vulnerable to scams. According to the AARP, which has endorsed this bill, 4 out of 10 older Americans have lost money to fraud. Last year, Americans aged 60 and older reported $7.7 billion in losses, a dramatic 60 percent more than the previous year.

These numbers don't account for the widespread underreporting. The Federal Trade Commission estimates that Americans could be losing as much as $200 billion to criminal fraudsters every year. These aren't abstract numbers. These are our grandparents, small business owners, and the neighbor next door.

When a victim uncovers a scam, they have to contend with the immediate ramifications, not only the devastating financial loss but also the shame they may feel. Then, after the scammer takes their money, the IRS comes for them, too. Imagine, you earn money or you withdraw it from your 401(k); you get cheated, defrauded; and then you have to pay taxes on those lost earnings or your lost 401(k) distributions.

It is unfair. It pours salt in the wound of an already painful and incredibly stressful situation.

This wasn't always the case, as was mentioned by Ms. Chu. Prior to the passage of the Tax Cuts and Jobs Act in 2017, victims of scams could deduct their losses from their taxes, but since then, these victims have been on the hook for hundreds of thousands of dollars in payments to the IRS despite their already precarious financial situation.

It gets worse. Many scam victims who took money out of their 401(k) or IRA account to pay the scammer still have to pay the income taxes on the money they withdrew, and if the victim is under the age of 60, they get hit with an additional 10 percent early distribution penalty. They lose their retirement savings, then they get hit with a tax bill on top of that.

Mr. Speaker, this is unfair, plain and simple. It is simply not right to make anyone pay taxes on money they don't have, especially after a traumatic event like discovering you were the victim of a scam.

We have the opportunity tonight to right this wrong by supporting H.R. 9500, the Tax Relief for Fraud Victims Act.

This bill would restore the theft loss deduction so that victims of a scam or fraud are not taxed on money that was stolen from them. This bill would also waive the 10 percent early withdrawal penalty when a victim was forced to pull money from their retirement account because of fraud. Most importantly, this bill provides retroactive relief for Americans who fell victim to scams or fraud while this deduction was unfairly restricted.

Mr. Speaker, this is not a partisan issue. The Federal Government should not tax stolen money. That is why this bill passed through the Ways and Means Committee under Chairman Smith and Ranking Member Neal with unanimous support.

By supporting this bill, Congress can right a wrong and make sure the government is not coming after victims who have lost everything to criminals.

Mr. Speaker, I urge my colleagues to support H.R. 9500, the Tax Relief for Fraud Victims Act.

Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 9500) to amend the Internal Revenue Code of 1986 to repeal the limitation on deductions for personal casualty losses and to provide for increased taxpayer relief with respect to theft losses involving fraud, deceit, or misrepresentation, as amended.

Mr. Speaker, I ask unanimous consent that all Members have 5 legislative days to revise and extend their remarks and submit extraneous material on the bill under consideration.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I rise today in support of H.R. 9500, the Tax Relief for Fraud Victims Act, introduced by Representative Miller of Ohio.

Many of our fellow Americans have been the victims of fraud and suffered tremendous losses, both financial and otherwise. The hardship these victims endure in rebuilding their finances or recovering from identity theft is made all the worse by the fact that under current law they are also required to pay taxes on their scam-related losses.

This legislation provides much-needed relief for victims of fraud by allowing taxpayers to deduct the losses related to the fraud scheme that stole from them. Moreover, it recognizes that not all crimes are discovered at the time that they occur. The bill gives taxpayers more time to amend previous tax returns in order to receive credits and refunds on their losses.

I appreciate Representative Miller's tireless efforts to not only combat fraud and punish the bad actors who scam taxpayers but to go the extra mile and find solutions for the victims of such fraud so that they are not penalized by the IRS.

Lastly, I must mention the valuable input that our Ways and Means colleagues, Representatives Steube and Panetta, had in crafting this legislation. During its markup, we agreed to work together to improve the underlying policy to allow for retroactive deductibility of fraud- related losses. I am pleased that this bill reflects that additional bipartisan approach.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield such time as he may consume to the gentleman from Ohio (Mr. Miller).

Mr. Speaker, I yield such time as he may consume to the gentleman from Wisconsin (Mr. Grothman).

Mr. Speaker, I yield myself the balance of my time.

Mr. Speaker, we know that bad actors and fraudsters prey on Americans every day by stealing money, identities, and harming livelihoods. The relief included in this legislation will ensure the IRS is not adding insult to injury.

It is another strong, bipartisan effort by the Ways and Means Committee and this Congress to do right by American taxpayers. That is why the bill received unanimous approval by the Ways and Means Committee. I urge all my colleagues to do the same and support this legislation.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, on that I demand the yeas and nays.

Mr. Speaker, I yield myself such time as I may consume.

I rise today in support of H.R. 9500, the Tax Relief for Fraud Victims Act. I would like to thank my colleagues, Mr. Miller and Mr. Suozzi, for their leadership on this bill.

This bill corrects a longstanding policy mistake in the tax code. During President Trump's first administration, Republicans passed the Tax Cuts and Jobs Act--or what Democrats like to call the Trump tax scam--where

they chose to limit the deduction for casualty and theft losses by limiting that deduction only to those losses that were incurred in a Presidential-declared disaster.

Then, the so-called One Big Beautiful Bill Act--or what we Democrats like to call the big, ugly bill--doubled down on this policy, extending it permanently.

This policy left many financially harmed taxpayers even worse off beyond just their financial losses. Victims of theft, victims of fraud, and those that suffered casualty losses due to no fault of their own were now unable to deduct those losses from their taxes, a double whammy after suffering such a loss.

I am glad to see that my Republican colleagues have seen the error of their ways and have decided to reverse this policy.

Additionally, I am glad to see that the policy allows retroactive relief for those who were the victims of fraud during the time this policy was in effect.

Additionally, I acknowledge the tireless work of my colleagues, Representatives John Larson and Joe Courtney, who for years have been advocating on behalf of their constituents who suffered significant losses due to crumbling foundations in their homes as a result of pyrrhotite in a local quarry. Under this bill, these taxpayers will also be eligible for retroactive relief.

In sum, this bill is a long overdue reversal of a policy that harmed many taxpayers, and I am glad to support this change to give taxpayers, who may have suffered an unfortunate life event, fair treatment by our tax system.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield such time as he may consume to the gentleman from New York (Mr. Suozzi).

Mr. Speaker, I yield myself the balance of my time.

Mr. Speaker, by reversing this misguided policy, survivors of fraud, theft, and tremendous loss will no longer be penalized by the tax code and will still receive the fair treatment that they so rightfully deserve.

Mr. Speaker, I urge my colleagues on both sides of the aisle to support this bill, and I yield back the balance of my time.

Mr. Speaker, that was a good speech by Mr. Suozzi.

Mr. Speaker, I rise in support of H.R. 9500, the Tax Relief for Fraud Victims Act. For many Americans, financial security means decades of hard work, setting aside money paycheck after paycheck, saving for retirement and making sacrifices so their family will always have something to fall back on. A criminal can take away that security in a matter of days.

Financial scammers can involve someone posing as a trusted adviser, a fraudulent investment, or online relationship built around deception. By the time a victim discovers what happened, the money is gone and the person responsible may be difficult to find.

These people are experts at gaining people's trust. For an older American living on a fixed income, there may be little opportunity to replace those savings. The consequences can affect everything from paying the mortgage to affording everyday expenses.

Our tax laws should provide a fair opportunity for these victims to claim relief and begin rebuilding. Unfortunately, restrictions on personal theft

loss deductions can prevent victims from deducting qualifying losses. Refund deadlines can create another obstacle when someone discovers the fraud years after it occurred.

The Tax Relief for Fraud Victims Act would address these problems by expanding access to personal casualty and theft loss deductions and giving qualifying victims additional flexibility and time to seek refunds.

The bill recognizes the damage these crimes can do to retirement savings. It would provide relief from the early withdrawal penalty for qualifying retirement distributions connected to theft losses and allow eligible amounts to be repaid into retirement accounts.

In addition to losing money, you can be penalized right now with early withdrawal penalties.

These provisions would help people who are trying to put their finances back together after being deceived. I have dealt with some of these people. They are so crafty. Even surprisingly intelligent people can be taken advantage of.

A tax deduction cannot restore everything, but Congress can make sure that unnecessary tax burdens do not make an already difficult recovery even harder. We should continue pursuing the criminals responsible while ensuring that their victims receive fair treatment under the tax code.

Mr. Speaker, one more time, I thank Chairman Smith and Congressman Miller for their work on this legislation, and I urge my colleagues to vote ``yes.''

Mr. Speaker, I rise in support of H.R. 9500, the Tax Relief for Fraud Victims Act.

Right now, if a scammer steals your life savings through a romance scam, a fake investment scheme, or a business email fraud, the Federal tax code adds insult to injury. It is quite ridiculous.

Current law largely bars victims from deducting those losses unless they are tied to a Federal- or State-declared disaster.

That means every American who loses their retirement accounts to Ponzi schemes or cryptocurrency fraud gets absolutely no relief, while government still treats their stolen money as if it were untouched income.

Per the FBI's 2025 Internet Crime Report, cyber-enabled crimes defrauded Americans of nearly $21 billion in just 2025 alone, a 26- percent jump in losses from 2024, with seniors hit hardest, at $7.7 billion.

Our constituents are being victimized twice: once by the criminal and again by the tax code. H.R. 9500 fixes this. It restores the deduction for theft losses involving fraud and deceit. It extends the deadline for victims to claim refunds once fraud is discovered. It removes harsh penalties on retirement funds stolen by scammers.

I am proud to have introduced this commonsense legislation alongside my colleague Representative Suozzi.

Mr. Speaker, I urge my colleagues to support H.R. 9500.