Baldwin, Welch Introduce Legislation to Give Relief to Victims of Fraud, Scams, Theft, and Disasters

WASHINGTON, D.C. – Today, U.S. Senators Tammy Baldwin (D-WI) and Peter Welch (D-VT) introduced the Tax Relief for Victims of Crimes, Scams, and Disasters Act, legislation to give relief to those who have been victims of fraud, scams, thefts, accidents, and other personal casualty losses. The legislation reinstates the tax deduction for personal casualty and theft losses that were stripped away by the 2017 GOP tax law, forcing victims of scams, robberies, storms, and fires to pay taxes on stolen assets, further wiping out their hard-earned savings and financial security.

“Our tax code should be making sure big corporations and the wealthy are paying their fair share, not punishing Wisconsinites who already have been ripped off by a scam or theft,” said Senator Baldwin. “I’ve heard stories from Wisconsinites who have been victims of financial fraud, lost their hard-earned retirement savings, and then are slapped with an unexpected tax bill. I voted against the 2017 tax bill that created this nightmare, and now, I’m working to right this wrong to provide much-needed relief to those who are already facing dire circumstances.” 

“It’s outrageous that folks scammed out of their life’s savings are hit with large tax bills. It’s even more outrageous that Republicans decided to get rid of this crucial tax benefit for scam victims, just to turn around and give the ultra-wealthy and big corporations more tax breaks,” said Senator Welch. “I’m proud to introduce this bill to reinstate this important tax deduction–which never should have been repealed in the first place–to provide crucial financial relief to those victimized by scams and theft.”

Senator Baldwin voted against the 2017 GOP tax law, the so-called Tax Cuts and Jobs Act, which gave massive tax cuts to corporations while making low- and middle-class Americans foot the bill and repealed a tax deduction previously available to victims of scams, thefts, accidents, and other property casualty losses. In turn, reporting has revealed a pattern of Americans ending up with a tax bill after losing money through scams, thefts, and other similar events. One Wisconsin woman reported being scammed out of her entire savings, investments, and 401(k), more than $200,000 in total, and is now being forced to pay more than $15,000 in taxes.

Without a reinstatement of the casualty and theft loss deduction, Americans who are victims of theft and non-federally declared disasters will continue to face hefty federal tax bills that the IRS is obligated to enforce.

The Tax Relief for Victims of Crimes, Scams, and Disasters Act:

• Reinstates the tax deduction for personal casualty loss that was available prior to the Tax Cuts and Jobs Act and provides retroactive coverage to taxpayers who suffered losses in the years that followed.
• Ensures that victims who suffered losses after the 2017 law are able to file an amended tax return accounting for the personal casualty loss.

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