Tax Relief for Fraud Victims Act

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6999 Introduced in House (IH)]

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119th CONGRESS
  2d Session
                                H. R. 6999

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.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                            January 9, 2026

    Mr. Miller of Ohio (for himself and Mr. Suozzi) introduced the
 following bill; which was referred to the Committee on Ways and Means

_______________________________________________________________________

                                 A BILL

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.

    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) Effective Dates.--
            (1) In general.--Except as provided in paragraph (2), the
        amendments made by this section shall apply to losses sustained
        in taxable years beginning after December 31, 2025.
            (2) Distributions relating to theft losses involving fraud,
        deceit, or misrepresentation.--The amendment made by subsection
        (c) shall apply to distributions made after December 31, 2025.
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