Tax Relief for Fraud Victims Act
- Bill Number
- H.R. 9500
- Origin Chamber
- House
- Congress
- 119th Congress, Session 2
- Policy Area
- Taxation
- Status
- Introduced
- Latest Action
- 2026-07-01: Ordered to be Reported in the Nature of a Substitute by the Yeas and Nays: 39 - 0.
- Last Updated
- 2026-07-07T18:56:38Z
AI-Generated Summary
Purpose This legislation aims to provide tax relief to individuals affected by personal casualty losses and certain thefts involving fraud, deceit, or misrepresentation by amending the Internal Revenue Code of 1986.
Key Provisions
- Repeals the existing limitation on deductions for personal casualty losses under Section 165(h).
- Allows taxpayers to elect treating theft losses from fraud, deceit, or misrepresentation as occurring in the year the loss happens, rather than when discovered.
- Extends the time limit for filing claims for tax credits or refunds related to these theft losses to one year after discovery, without applying certain restrictions.
- Permits penalty-free withdrawals from retirement accounts (such as IRAs) to cover these theft losses, with options to repay the amount within a one-year period after discovery.
- Includes special rules for pyrrhotite-related damage to home foundations, making the changes apply to losses starting from 2020, along with extended claim periods.
Significant Changes to Existing Law
- Removes the cap previously limiting personal casualty loss deductions.
- Alters the timing rule for recognizing certain theft losses, giving taxpayers a choice in when to claim them.
- Lengthens the statute of limitations for refund claims on these losses and related retirement account distributions.
- Adds new exceptions to the 10% early withdrawal penalty for qualified distributions tied to fraud-related theft losses.
Potential Impacts
- On citizens: Expands opportunities for tax deductions and refunds for victims of fraud or specific property damage, potentially reducing their tax burdens.
- On government agencies: Increases the volume of claims processed by the IRS and extends review periods for certain tax filings.
- No direct effects on international relations are outlined.
Main Stakeholders Affected
- Individual taxpayers who suffer personal casualty losses or thefts involving fraud.
- Holders of retirement accounts making related withdrawals.
- The Internal Revenue Service, which administers the updated deduction and claim rules.
Notable Legal, Constitutional, or Political Implications
- Modifies federal tax law by changing deduction timing and limitations, which could affect how courts interpret loss claims.
- Creates retroactive relief for specific cases like pyrrhotite damage, potentially leading to additional administrative reviews.
- Introduced with bipartisan support in the House, focusing on taxpayer relief without altering constitutional tax authority.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Cosponsors (1)
Rep. Suozzi, Thomas R. [D-NY-3]
Recent Actions
- 2026-07-01: Ordered to be Reported in the Nature of a Substitute by the Yeas and Nays: 39 - 0.
- 2026-07-01: Committee Consideration and Mark-up Session Held
- 2026-06-29: Referred to the House Committee on Ways and Means.
- 2026-06-29: Introduced in House
- 2026-06-29: Introduced in House
Bill Versions
- Tax Relief for Fraud Victims Act — issued 2026-06-29 — PDF (7 pages)