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.


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                    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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