The House passed H.R. 9500, the Tax Relief for Fraud Victims Act, by a vote of 408-17 on Sept. 16, 2026. The bill would open the tax code’s theft-loss deduction to people who lost money to scams, and it now moves to the Senate. It is not law. Nothing in the bill takes effect unless the Senate passes it and the president signs it.
A 408-17 House vote and a Senate committee next
According to the House Ways and Means Committee, the bill cleared the committee 39-0 before the full House approved it 408-17 on Sept. 16. It moved as part of a taxpayer-rights package that also included H.R. 9496, H.R. 9498 and H.R. 9499. The bill was on the House floor schedule for the week of Sept. 14.
The official text records the next stop. GovInfo lists the Senate-referred version of H.R. 9500, dated Sept. 16, 2026, as sent to the Senate Committee on Finance. That committee has not acted on it in any record read for this article. The bill belongs to the 119th Congress, second session, and its latest recorded action is the House passage.
How a scam victim ends up taxed on stolen money
The bill targets what Rep. Jimmy Panetta, who backed the proposal, calls a “scam tax.” His press release says the fix reinstates the nonbusiness casualty and theft loss deduction for victims of theft. The committee’s summary describes the barrier: personal casualty and theft losses are tied to federally or state-declared disasters, and a private-sector fraud is not one.
The problem is easiest to see with a hypothetical. A person is talked into moving retirement savings to a scammer’s account. The withdrawal itself is income, so a tax bill can arrive for money that no longer exists, and without a deduction for the theft there is nothing on the return to offset it. Panetta put the objection in one line: “Victims of scams and fraud should not be forced to pay federal taxes on stolen money.”
What the bill would change if it became law
The Ways and Means summary lists several changes. The bill would eliminate the requirement that a personal casualty or theft loss be tied to a declared disaster. It would allow deductions for losses from private-sector fraud, including Ponzi schemes, identity theft and investment scams, and it would make fraud-related theft losses deductible retroactively for losses incurred after Dec. 31, 2020. Panetta’s release describes the retroactive window as 2021 through 2025.
It would also extend the time for filing claims and refunds tied to theft losses and provide what the committee calls flexible reporting. A further provision would permit special distributions from retirement plans, with refund options for taxes previously paid. Every one of these is a proposal. None applies to any tax return today.
The retirement account piece
For victims who drained retirement accounts, the last provision is the one that matters most. The committee’s description says the bill would let those special distributions carry a way to get back taxes already paid. The pages read do not spell out the mechanics, such as time limits or whether early-withdrawal penalties are waived, and this article does not fill those in.
The gap is also a reminder of how early the process is. The House-passed text will go before the Senate Finance Committee, and senators can change it. A provision described in a House release on Sept. 16 may not read the same way in a version the Senate passes.
What the sponsors and the chairman said
Ways and Means Chairman Jason Smith framed the package as a matter of fairness. The committee’s release quotes him saying that “no American” should be subject to IRS tax penalties or held liable for the crimes committed against them. The remark is about the package as a whole, which also includes a bill on tax penalties for American hostages.
The Panetta release adds the view of Rep. Jamie Raskin, who said that “when scammers cheat our people, the government shouldn’t re-victimize survivors with taxes.” The release also quotes Bill Sweeney, AARP’s senior vice president for government affairs, who said victims “shouldn’t feel re-victimized again by the IRS on losses experienced.” Support in the House was lopsided, with 17 votes against, but the Senate has its own calendar and its own rules.
What is on record as of Sept. 30
The committee’s release, the GovInfo record and the House floor schedule agree on the essentials: H.R. 9500 passed the House on Sept. 16, 2026, by 408-17, and it sits with the Senate Finance Committee. The bill’s status page on Congress.gov could not be read for this article because the site blocks automated access. No Senate vote is recorded. Until one occurs and the president signs, the tax treatment of stolen money stays as it is under current law.
Where an IRS refund gets held up, shrunk or lost
Refund problems often come down to a gap between what the IRS sent and what a household understood: a notice with an unfamiliar code, a check that never arrived, or a refund left unclaimed past the limit. The kit below is written for readers stuck at one of those three points.
The IRS Refund Recovery Kit is a 13-page kit that combines a notice decoder, the refund-trace steps for Form 3911 and the 3-year refund deadline.
Sort out a stalled IRS refund with The IRS Refund Recovery Kit →
AI tools assisted in drafting this article, and its bill details were checked against the House and GovInfo records cited.
