Baldwin, Moody, Welch Introduce Bipartisan Bill to Give Tax Relief to Victims of Fraud, Scams, Theft, and Disasters

WASHINGTON, D.C. – Today, U.S. Senators Tammy Baldwin (D-WI), Ashley Moody (R-FL), and Peter Welch (D-VT) introduced legislation to give relief to those who have been victims of fraud, scams, thefts, accidents, and other personal casualty losses. The Tax Relief for Victims of Crimes, Scams, and Disasters Act reinstates the tax deduction for personal casualty and theft losses and ensures victims of scams, robberies, storms, and fires do not have to pay taxes on stolen assets and further wipe out their hard-earned savings and financial security.

“When Wisconsinites fall victim to a fraud or scam, the last thing they should have to worry about is being slapped with an unexpected tax bill once tax season rolls around,” said Senator Baldwin. “I am proud to work with my Republican and Democratic colleagues to introduce this commonsense bill to help make sure if someone is down and out, they have one less thing to worry about than being hit with a tax bill.”

“As hurricane season is around the corner, I will continue supporting policies that protect Floridians from scammers and fraudsters,” said Senator Moody. “My Tax Relief for Victims of Crimes, Scams and Disasters Act will provide commonsense tax relief for victims, often seniors, who have been financially devastated by scams, crimes or destruction from disasters. This legislation will help folks get back on their feet when they experience hardship. When I was Attorney General of Florida, I made sure to fight for Floridians who fell victim to scams, and I will continue bringing this fight to D.C. so that folks have the protections they need.”

“It’s outrageous that folks scammed out of their life’s savings are hit with large tax bills. I’m proud to introduce this bill to reinstate this important tax deduction to provide crucial financial relief to those victimized by scams and theft,” said Senator Welch. “Vermont experienced catastrophic floods in July of 2023 and 2024. We know firsthand that victims of floods, storms, and fires go through so much—the last thing they should worry about is being penalized for a natural disaster.”

Companion legislation will be introduced in the U.S. House by Representatives Jamie Raskin (D-MA-08) and Greg Steube (R-FL-17).

“Americans who fall prey to scams and rip-offs deserve relief, not massive tax bills from the IRS,” said Rep. Raskin. “Our bipartisan legislation will help millions of Americans, including one of my constituents who was defrauded out of her entire retirement savings and then hit with an enormous tax penalty. I am proud to work with my colleagues on both sides of the aisle in the House and the Senate to bring a measure of justice to victims of scams, thefts and disasters.”

Until 2018, the federal government allowed victims of crimes and unexpected, uninsurable disasters to deduct these losses from their taxes with a provision called the Casualty and Theft Loss Deduction. Today, scam victims and homeowners are on the hook for tens or hundreds of thousands of dollars in federal taxes unless their misfortunes meet a narrow set of criteria.

The growing sophistication of cybercriminal networks has led to a rapid proliferation in fraud for the past five years. In 2024 alone, American taxpayers reported $16.6 billion in cyber fraud to the FBI. The average victim of elder fraud lost $83,000. Natural disasters are also on the rise during a period of increasing insurance premiums and unexpected claim denials.

Senator Baldwin introduced this legislation last year after hearing the story of one Wisconsin woman who was scammed out of her entire savings, investments, and 401(k), more than $200,000 in total, and was 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 and provides retroactive coverage to taxpayers who suffered losses in the years that followed.
• Ensures that victims who suffered losses since 2017 are able to file an amended tax return accounting for their personal casualty loss.

“The Elder Justice Coalition commends Senators Baldwin, Moody and Welch for introducing the Tax Relief for Victims of Crimes, Scams, and Disasters Act,” said Bob Blancato, National Coordinator of the Elder Justice Coalition. “It is unconscionable that older scam victims who lose hundreds of thousands of dollars face the compounded misery of having to pay taxes on the money lost. Scams are rampant in this nation and serve to exploit the most vulnerable older adults. We hope Senator Baldwin’s bill can be made part of a future tax package. Tax relief for scam victims is tax fairness.”

“The Financial Services Institute (FSI) is proud to support the Tax Relief for Victims of Crimes, Scams and Disasters Act,” said Dale Brown, President & CEO of Financial Services Institute. “Owing taxes on stolen retirement funds makes an already painful situation worse. Main Street Americans cannot afford to lose their life savings, which they rely upon for a financially secure retirement. This bill will provide some relief to victims and mitigate damages as they work with their trusted financial advisor to recover losses and regain their financial footing.”

“With widespread financial fraud and scams impacting many Americans’ retirement security and financial livelihoods, CFP Board enthusiastically supports this critical piece of legislation that would lessen the impact of financial loss. We look forward to seeing this bill get to the finish line,” said Erin Koeppel, Managing Director of Government Relations and Public Policy Counsel at CFP Board.

“Victims of disasters and theft are taken advantage of far too often,” said Shannon McGahn, EVP & Chief Advocacy Officer for the National Association of REALTORS®. The National Association of REALTORS® is grateful to Representatives Steube and Raskin, along with Senators Moody and Baldwin, for reintroducing the Tax Relief for Victims of Crimes, Scams, and Disasters Act, bipartisan legislation to restore the Casualty and Theft Loss Deduction. This deduction, if reinstated, would ensure that homeowners—especially seniors—who fall victim to uninsurable and unexpected disasters or theft can deduct their losses from their federal taxes. The legislation would protect homeowners from becoming victims again after a disaster, and NAR applauds Congress for putting this legislation forward again.

“For many years, the AICPA has urged Congress to enact timely, uniform and permanent tax legislation, rather than providing delayed tax relief through separate individual bills following each disaster,” said Melanie Lauridsen, Vice President of Tax Policy and Advocacy, American Institute of CPAs. “Disasters regularly affect taxpayers at all times of the year. However, our current system does not provide fair and reliable tax relief for victims of casualties and thefts. We commend Representatives Steube and Raskin and Senators Moody and Baldwin on introducing legislation that will finally right this wrong, and we look forward to working with them to bring this long overdue relief to American taxpayers.”

The legislation is endorsed by the AARP, The Elder Justice Coalition, the National Association of Consumer Advocates, AICPA-CIMA, National Association of Enrolled Agents, National Association of Realtors, American Land Title Association, CFP Board, Investment Advisers Association, Financial Services Institute, Aspen Institute Financial Security Program, Association of Mature American Citizens, National Association of Government Defined Contribution Administrators, Operation Shamrock, SPARK Institute.

A one-pager on this legislation is available here. Full text of the bill is available here.

NOTE: This press release was submitted to Urban Milwaukee and was not written by an Urban Milwaukee writer. While it is believed to be reliable, Urban Milwaukee does not guarantee its accuracy or completeness.