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September 15, 2026
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Download official House Record PDFReturn to issue contextMr. SMITH of Missouri. 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.
The Clerk read the title of the bill.
The text of the bill is as follows:
H.R. 9500
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the “Tax Relief for Fraud Victims
Act”.
SEC. 2. REPEAL OF LIMITATION ON DEDUCTIONS FOR PERSONAL
CASUALTY LOSSES; INCREASED TAXPAYER RELIEF WITH
RESPECT TO CERTAIN THEFT LOSSES.
(a) Repeal of Limitation on Deductions for Personal
Casualty Losses.—Section
165(h) of the Internal Revenue Code of 1986 is amended by
striking paragraph (5).
(b) Certain Theft Losses Sustained During Taxable Year of
Choice; Extension of Period of Limitation for Credit or
Refund Claims for Certain Theft Losses.—
(1) Certain theft losses sustained during taxable year of
choice.—Section 165(e) of such Code is amended to read as
follows:
“(e) Theft Losses.—For purposes of subsection (a)—
“(1) In general.—Except as provided in paragraph (2), any
loss arising from theft shall be treated as sustained during
the taxable year in which the taxpayer discovers such loss.
“(2) Theft losses involving fraud, deceit, or
misrepresentation.—In the case of any loss arising from
theft involving fraud, deceit, or misrepresentation (as
defined by the Secretary), the taxpayer may elect to treat
such loss as sustained during the taxable year in which such
loss occurs.”.
(2) Extension of period of limitation for credit or refund
claims for certain theft losses.—Section 165(h)(4) of such
Code is amended by adding at the end the following new
subparagraph:
“(F) Period of limitation for credit or refund claims for
theft losses involving fraud, deceit, or misrepresentation.—
In the case of a claim for credit or refund with respect to a
deduction allowed under subsection (a) for any loss arising
from theft involving fraud, deceit, or misrepresentation—
“(i) the period of limitation prescribed by section
6511(a) for the filing of such claim shall be treated as not
expiring earlier than the date that is 1 year after the date
on which the taxpayer discovers such loss, and
“(ii) section 6511(b)(2) shall not apply with respect to
the filing of such claim.”.
(c) Distributions Relating to Theft Losses Involving Fraud,
Deceit, or Misrepresentation.—Section 72(t)(2) of such Code
is amended by adding at the end the following new
subparagraph:
“(O) Distributions relating to theft losses involving
fraud, deceit, or misrepresentation.—
“(i) In general.—Any distribution to the extent it
relates to any loss arising from theft involving fraud,
deceit, or misrepresentation for which a deduction is allowed
under section 165(a).
“(ii) Amount distributed may be repaid.—Rules similar to
the rules of subparagraph (H)(v) shall apply with respect to
an individual who receives a distribution to which clause (i)
applies, except that subparagraph (H)(v)(I) shall be applied
by substituting `1-year period beginning on the day after the
date on which the taxpayer discovers the loss described in
subparagraph (O)(i)' for `3-year period beginning on the day
after the date on which such distribution was received'.
“(iii) Period of limitation for credit or refund claims.—
In the case of a claim for credit or refund of the tax
imposed by paragraph (1) with respect to a distribution
described in clause (i)—
“(I) the period of limitation prescribed by section
6511(a) for the filing of such claim shall be treated as not
expiring earlier than the date that is 1 year after the date
on which the taxpayer discovers the loss described in clause
(i), and
“(II) section 6511(b)(2) shall not apply with respect to
the filing of such claim.”.
(d) Cross Reference.—Section 6511(i) of such Code is
amended by adding at the end the following new paragraph:
“(8) For a period of limitations for credit or refund in
the case of theft losses involving fraud, deceit, or
misrepresentation, see sections 72(t)(2)(O)(iii) and
165(h)(4)(F).”.
(e) Claim Processing Deadline.—In the case of a claim for
credit or refund with respect to a deduction allowed under
section 165(a) of such Code for any specified personal
casualty loss (as defined in subsection (f)(5)) or with
respect to any distribution described in section
72(t)(2)(O)(i) of such Code (as added by this section), the
Secretary of the Treasury (or the Secretary's delegate) shall
process such claim not later than 2 years after the date on
which such claim is filed.
(f) Effective Dates.—
(1) In general.—Except as otherwise provided in this
subsection, the amendments made by this section shall apply
to losses sustained in taxable years beginning after December
31, 2025.
(2) Specified personal casualty losses.—In the case of any
specified personal casualty loss, paragraph (1) shall be
applied by substituting “December 31, 2020” for “December
31, 2025”.
(3) Distributions relating to theft losses involving fraud,
deceit, or misrepresentation.—The amendment made by
subsection (c) shall apply to distributions made after
December 31, 2020.
(4) Extension of period of limitation for credit or refund
claims for specified personal casualty losses.—
(A) Fraud-related personal casualty losses.—In the case of
any fraud-related personal casualty loss, if the taxpayer
discovers such loss before the date of the enactment of this
section—
(i) section 165(h)(4)(F)(i) of the Internal Revenue Code of
1986 (as added by this section) shall be applied by
substituting “the date of the enactment of this
subparagraph” for “the date on which the taxpayer discovers
such loss”, and
(ii) section 72(t)(2)(O)(iii)(I) of such Code (as added by
this section) shall be applied by substituting “the date of
the enactment of this subparagraph” for “the date on which
the taxpayer discovers the loss described in clause (i)”.
(B) Pyrrhotite-related personal casualty losses.—In the
case of a claim for credit or refund with respect to a
deduction allowed under section 165(a) of the Internal
Revenue Code of 1986 for any pyrrhotite-related personal
casualty loss—
(i) the period of limitation prescribed by section 6511(a)
of such Code for the filing of such claim shall be treated as
not expiring earlier than the date that is 1 year after the
date of the enactment of this section, and
(ii) section 6511(b)(2) of such Code shall not apply with
respect to the filing of such claim.
(5) Specified personal casualty loss.—For purposes of this
subsection—
(A) Specified personal casualty loss.—The term “specified
personal casualty loss” means—
(i) any fraud-related personal casualty loss, and
(ii) any pyrrhotite-related personal casualty loss.
(B) Fraud-related personal casualty loss.—The term
“fraud-related personal casualty loss” means any personal
casualty loss (as defined in section 165(h)(3)(B) of the
Internal Revenue Code of 1986) sustained after December 31,
2020, and before January 1, 2026, arising from theft
involving fraud, deceit, or misrepresentation (as defined by
the Secretary).
(C) Pyrrhotite-related personal casualty loss.—The term
“pyrrhotite-related personal casualty loss” means any
personal casualty loss (as defined in section 165(h)(3)(B) of
the Internal Revenue Code of 1986) sustained after December
31, 2020, and before January 1, 2026, in connection with
damage to a principal residence (within the meaning of
section 121 of such Code) by reason of deterioration of a
concrete foundation adversely impacted by pyrrhotite.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from Missouri (Mr. Smith) and the gentlewoman from California (Ms. Chu) each will control 20 minutes.
The Chair recognizes the gentleman from Missouri.
General Leave
Mr. SMITH of Missouri. 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.
The SPEAKER pro tempore. Is there objection to the request of the gentleman from Missouri?
There was no objection.
Mr. SMITH of Missouri. 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.
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.
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.
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.
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.
Ms. CHU. 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
limiting that deduction only to those losses that were incurred in a Presidential-declared disaster.
like to call the big, ugly bill—doubled down on this policy, extending it permanently.
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.
relief for those who were the victims of fraud during the time this policy was in effect.
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.
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. SMITH of Missouri. Mr. Speaker, I yield such time as he may consume to the gentleman from Ohio (Mr. Miller).
Mr. MILLER of Ohio. Mr. Speaker, I rise in support of H.R. 9500, the Tax Relief for Fraud Victims Act.
scam, a fake investment scheme, or a business email fraud, the Federal tax code adds insult to injury. It is quite ridiculous.
Ponzi schemes or cryptocurrency fraud gets absolutely no relief, while government still treats their stolen money as if it were untouched income.
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.
Mr. Speaker, I urge my colleagues to support H.R. 9500.
Ms. CHU. Mr. Speaker, I yield such time as he may consume to the gentleman from New York (Mr. Suozzi).
Mr. SUOZZI. Mr. Speaker, I rise in support of H.R. 9500, the Tax Relief for Fraud Victims Act.
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.
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.
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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.
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.
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. SMITH of Missouri. Mr. Speaker, I yield such time as he may consume to the gentleman from Wisconsin (Mr. Grothman).
Mr. GROTHMAN. 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.
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.
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.
expanding access to personal casualty and theft loss deductions and giving qualifying victims additional flexibility and time to seek refunds.
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.
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.
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.”
Ms. CHU. 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. SMITH of Missouri. 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.
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.
The SPEAKER pro tempore. The question is on the motion offered by the gentleman from Missouri (Mr. Smith) that the House suspend the rules and pass the bill, H.R. 9500, as amended.
The question was taken.
The SPEAKER pro tempore. In the opinion of the Chair, two-thirds being in the affirmative, the ayes have it.
Mr. SMITH of Missouri. Mr. Speaker, on that I demand the yeas and nays.
The yeas and nays were ordered.
The SPEAKER pro tempore. Pursuant to clause 8 of rule XX, further proceedings on this motion will be postponed.