WeVote
Log In

Bill

Bill

HR 6999

Tax Relief for Fraud Victims Act

119th Congress Introduced by Max Miller and 1 co-sponsor

The bill lets fraud-related theft losses be treated as sustained in the year of the loss (not just discovery) and extends the window to claim refunds, broadening deductibility for

Introduced in House
0
WeVote Research Nonpartisan
Bill Summary · HR 6999

Summary of HR 6999 — Tax Relief for Fraud Victims Act

Purpose and intent

  • The bill aims to provide greater tax relief for individuals who suffer theft losses, specifically theft involving fraud, deceit, or misrepresentation.
  • It also repeals a current limitation on deductions for personal casualty losses, broadening the scope of deductible losses under the Internal Revenue Code.

Key provisions and changes

  1. Repeal of limitation on personal casualty loss deductions

    • Repeals the limitation in Section 165(h)(5) of the Internal Revenue Code.
    • This effectively broadens the ability of taxpayers to deduct personal casualty losses from their taxes.

  2. Theft losses: treatment and timing (Section 165(e))

    • General rule: Theft losses are treated as sustained in the year the taxpayer discovers the loss.
    • Special election for fraud-related theft losses: For theft losses involving fraud, deceit, or misrepresentation, a taxpayer may elect to treat the loss as sustained in the year the loss occurs (rather than when discovered).
    • This creates flexibility for taxpayers whose fraud-related theft losses are discovered after the year in which they occurred.

  3. Extension of limitation period for credit or refund claims (theft losses)

    • Adds a new subparagraph (F) under Section 165(h)(4) addressing theft losses involving fraud, deceit, or misrepresentation.
    • For such theft losses, the filing period for a tax credit or refund claim:
      • Shall be treated as not expiring earlier than 1 year after the date the taxpayer discovers the loss.
      • This provision also modifies the normal 6511(b)(2) deadline as it applies to these claims.

  4. Distributions related to theft losses involving fraud (Section 72(t)(2))

    • Adds a new subparagraph (O) to address distributions to taxpayers related to theft losses that involve fraud, deceit, or misrepresentation.
    • Provisions include:
      • General rule: Any distribution to the extent it relates to such a theft loss, for which a deduction is allowed, is treated under the new rules.
      • Repayment rules: Similar to existing rules for other distributions, with adjustments to reference the discovery date for fraud-related losses.
      • Extension of the limitation period for credits or refunds: The period for filing claims for such distributions is aligned with the discovery rule (1 year after discovery), and the standard 3-year look-back period is not applied in the same way as other distributions.

  5. Cross-reference updates

    • Adds references to the new rules in Section 6511(i) to ensure the extended timelines for fraud-related theft losses are recognized.

  6. Effective dates

    • General effective date: Losses sustained in taxable years beginning after December 31, 2025.
    • Fraud-related distribution timing: Applies to distributions made after December 31, 2025.

Who/what would be affected

  • Individual taxpayers who incur theft losses, especially those due to fraud, deceit, or misrepresentation.
  • Taxpayers who suffer personal casualty losses and previously were subject to the limitation in the personal casualty deduction.
  • Taxpayers filing claims for credits or refunds related to theft losses (with fraud-related elements) would gain extended and potentially different timing rules.
  • Taxpayers who receive distributions related to fraud-related theft losses would have altered repayment and reporting timelines.

Procedural and timeline considerations

  • Applies to tax years beginning after December 31, 2025, with fraud-related timing changes applying to distributions after that date.
  • Provides new election options on when to treat fraud-related theft losses as sustained (year of occurrence vs. year of discovery).
  • Extends the period to file claims for credits or refunds tied to fraud-related theft losses (discovery-based extension of the statute of limitations).
  • Introduces new cross-references to ensure the altered timelines are integrated into existing code sections.

Practical implications

  • Taxpayers affected by fraud-related theft losses may experience earlier recognition of losses and longer windows to claim refunds.
  • The repeal of the personal casualty loss limitation could broaden deductibility, potentially reducing taxable income for affected individuals.
  • Financial and tax planning considerations will need to account for the new election and extended statute of limitations related to fraud-related theft losses.

Compiled from official sources — confirm details with the bill’s official record.

Sign in to ask a question.