Thomas R. Suozzi

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Mr. Speaker, I rise in support of H.R. 9500, the Tax Relief for Fraud Victims Act. I would first like to thank my colleagues on the other side of the aisle for partnering with me on this bipartisan, commonsense bill, which will ensure that Americans do not have to pay taxes on money that they were defrauded out of. Mr. Speaker, Americans are being scammed at incredible rates. According to the Federal Trade Commission, last year, 3 million American consumers reported over $15 billion in fraud losses, the highest for any year on record. This is an increase of over 25 percent from the previous year. That spike is driven by a rise in six-figure scams. Imagine losing the money that you were saving for a down payment, the money you had built up for your kid's education, or even a savings account that helps you sleep better. Our seniors are among the most vulnerable to scams. According to the AARP, which has endorsed this bill, 4 out of 10 older Americans have lost money to fraud. Last year, Americans aged 60 and older reported $7.7 billion in losses, a dramatic 60 percent more than the previous year. These numbers don't account for the widespread underreporting. The Federal Trade Commission estimates that Americans could be losing as much as $200 billion to criminal fraudsters every year. These aren't abstract numbers. These are our grandparents, small business owners, and the neighbor next door. When a victim uncovers a scam, they have to contend with the immediate ramifications, not only the devastating financial loss but also the shame they may feel. Then, after the scammer takes their money, the IRS comes for them, too. Imagine, you earn money or you withdraw it from your 401(k); you get cheated, defrauded; and then you have to pay taxes on those lost earnings or your lost 401(k) distributions. It is unfair. It pours salt in the wound of an already painful and incredibly stressful situation. This wasn't always the case, as was mentioned by Ms. Chu. Prior to the passage of the Tax Cuts and Jobs Act in 2017, victims of scams could deduct their losses from their taxes, but since then, these victims have been on the hook for hundreds of thousands of dollars in payments to the IRS despite their already precarious financial situation. It gets worse. Many scam victims who took money out of their 401(k) or IRA account to pay the scammer still have to pay the income taxes on the money they withdrew, and if the victim is under the age of 60, they get hit with an additional 10 percent early distribution penalty. They lose their retirement savings, then they get hit with a tax bill on top of that. Mr. Speaker, this is unfair, plain and simple. It is simply not right to make anyone pay taxes on money they don't have, especially after a traumatic event like discovering you were the victim of a scam. We have the opportunity tonight to right this wrong by supporting H.R. 9500, the Tax Relief for Fraud Victims Act. This bill would restore the theft loss deduction so that victims of a scam or fraud are not taxed on money that was stolen from them. This bill would also waive the 10 percent early withdrawal penalty when a victim was forced to pull money from their retirement account because of fraud. Most importantly, this bill provides retroactive relief for Americans who fell victim to scams or fraud while this deduction was unfairly restricted. Mr. Speaker, this is not a partisan issue. The Federal Government should not tax stolen money. That is why this bill passed through the Ways and Means Committee under Chairman Smith and Ranking Member Neal with unanimous support. By supporting this bill, Congress can right a wrong and make sure the government is not coming after victims who have lost everything to criminals. Mr. Speaker, I urge my colleagues to support H.R. 9500, the Tax Relief for Fraud Victims Act.