House Passes Tax Relief for Fraud Victims

H.R. 9500, the Tax Relief for Fraud Victims Act, introduced by Representatives Max Miller (R-OH) and Thomas Suozzi (D-NY), passed the House by a vote of 408-17. The legislation would allow taxpayers to elect to claim a tax deduction for losses arising from a theft involving fraud, deceit, or misrepresentation in the tax year such losses occur (rather than in the tax year discovered). Further, the bill extends the deadline for a refund claim related to a tax deduction for such losses to no less than one year after the date on which the losses are discovered and eliminates certain restrictions on the amount of refund.

For early distributions from a qualified retirement plan arising from a theft loss involving fraud, deceit, or misrepresentation for which a tax deduction is allowed, the bill would do the following.

• Waive the 10% penalty.

• Extend the deadline for filing a refund claim and eliminates certain restrictions on the amount of such refund.

• Allow one year (beginning on the day after the theft loss is discovered) to repay such early distributions.

The legislation has been referred to the Senate Committee on Finance for consideration.