H.R. 9500
Tax Relief for Fraud Victims Act
Sponsor: Max L. Miller
2 cosponsors
Official summary
Written by the Congressional Research Service.
Tax Relief for Fraud Victims Act
This bill expands the federal tax deduction for personal casualty and theft losses by eliminating certain limits, including the requirement that such losses arise from certain disasters. The bill also extends the tax refund deadline and modifies certain retirement plan rules related to certain fraud losses.
The bill repeals the limit on the federal tax deduction for personal casualty losses (not attributable to a trade, business, or transaction entered into for profit) that allows such losses only if arising from a federal or state declared disaster or to the extent that such losses offset personal casualty gains.
The bill allows 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 such 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
- waives the 10% penalty,
- extends the deadline for filing a refund claim and eliminates certain restrictions on the amount of such refund, and
- allows one year (beginning on the day after the theft loss is discovered) to repay such early distributions.
Text of the bill
Where this section came from
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Jun 29, 2026 · Introduced in House Referred to House Committee on Ways and Means, Jun 29
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Sep 15, 2026 · Engrossed in House Marked up by House Committee on Ways and Means, Jul 1 Committee members' individual votes aren't in our records. On Motion to Suspend the Rules and Pass, as Amended — Passed, 408–17 · Roll Call 305
… 27 unchanged passages …
(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
subsection
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,
2025
2020
. (
3
4
)
Pyrrhotite-related
Extension of period of limitation for credit or refund claims for specified
personal casualty losses. (A)
In
Fraud-related
general
personal casualty losses
. In the case of any
pyrrhotite
fraud
-related personal casualty loss,
paragraph
if
(1)
the
shall
taxpayer
be
discovers
applied
such
by
loss
substituting
before
December
the
31,
date
2020
of
for
the
December
enactment
31,
of
2025.
this section—
(
B
i
)
Pyrrhotite-related
section
personal
165(h)(4)(F)(i)
casualty loss. For purposes
of
this
the
paragraph,
Internal
the
Revenue
term
Code
pyrrhotite-related
of
personal
1986
casualty
(as
loss
added
means
by
any
this
personal
section)
casualty
shall
loss
be
(as
applied
defined
by
in
substituting
section
the
165(h)(3)(B)
date
of the
Internal
enactment
Revenue Code
of
1986)
this
arising
subparagraph
in
for
connection
the
with
date
damage
on
to
which
a
the
principal
taxpayer
residence
discovers
(within
such
the
loss,
meaning
and
of
(ii)
section
121
72(t)(2)(O)(iii)(I)
of such Code
(as added by this section
)
shall be applied
by
reason
substituting
of
the
deterioration
date
of
a
the
concrete
enactment
foundation
of
adversely
this
impacted
subparagraph
by
for
pyrrhotite.
the
(C)
date
Extension
on
of
which
period
the
of
taxpayer
limitation
discovers
for
the
credit
loss
or
described
refund
in
claims
clause
for
(i).
pyrrhotite
(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
by reason of subparagraph (A)
for any pyrrhotite-related personal casualty loss—
… 2 unchanged passages …
(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.
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A markup is a committee meeting where members go through a bill and vote on changes before sending it to the full chamber.
(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.