No Penalties for Victims of Fraud Act | ChamberLight
Bills · HR 2163
IN COMMITTEE· 119TH CONGRESS
House BillHR 2163Taxation
No Penalties for Victims of Fraud Act
INTRO MAR 14· LAST ACTION MAR 14
READING
3MIN
COSPONSORS
0
READER REACTIONS0 TOTAL
NO VOTES YET · BE THE FIRST
Introduced only
LEGISLATIVE PROGRESS
STEP 2 / 8
Introduced
In Committee
Reported
Passed House
Passed Senate
Conference
To President
Became Law
WHAT THE BILL DOES
AI-written
This bill matters because it addresses a significant financial hardship for victims of fraud. When someone's retirement savings are stolen or illicitly withdrawn due to a scam, they not only lose their savings but can also face an additional 10% tax penalty if they try to access or recover those funds before retirement age. This bill would remove that extra financial burden, preventing the government from essentially penalizing victims further.
If this bill becomes law, fraud victims would have one less hurdle to overcome when trying to recover or manage their finances after a traumatic event. If it doesn't pass, victims of fraud involving retirement accounts would continue to be subject to the 10% early withdrawal penalty, adding to their losses and potentially discouraging them from accessing funds they might need to cope with the aftermath of the fraud.
KEY PROVISIONS
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PROVISION 01
Waives the 10% early withdrawal penalty for distributions from retirement accounts if the individual is a victim of fraud.
This directly lessens the financial burden on individuals who have already suffered losses due to fraud.
PROVISION 02
Defines a 'victim of fraud' as someone who submits an application to the IRS and provides documentation from a law enforcement agency or court.
This sets clear requirements for who qualifies for the waiver, ensuring only legitimate fraud victims benefit.
PROVISION 03
Allows funds withdrawn due to fraud to be repaid to an eligible retirement plan, similar to other penalty-free distributions.
This provides flexibility for victims to potentially restore their retirement savings without additional tax penalties.
PROVISION 04
Requires the Secretary of the Treasury (IRS) to issue guidance on the waiver process within 180 days after the bill becomes law.
This ensures clear instructions are available for individuals to understand and claim the new waiver.
PROVISION 05
Mandates a public awareness campaign by the IRS to educate the public about the new protections and relief available.
This helps ensure that eligible fraud victims are aware of their rights and the process to claim the waiver.
This bill matters because it addresses a significant financial hardship for victims of fraud. When someone's retirement savings are stolen or illicitly withdrawn due to a scam, they not only lose their savings but can also face an additional 10% tax penalty if they try to access or recover those funds before retirement age. This bill would remove that extra financial burden, preventing the government from essentially penalizing victims further.
If this bill becomes law, fraud victims would have one less hurdle to overcome when trying to recover or manage their finances after a traumatic event. If it doesn't pass, victims of fraud involving retirement accounts would continue to be subject to the 10% early withdrawal penalty, adding to their losses and potentially discouraging them from accessing funds they might need to cope with the aftermath of the fraud.
KEY PROVISIONS
AI-extracted
high
Waives the 10% early withdrawal penalty for distributions from retirement accounts if the individual is a victim of fraud.
This directly lessens the financial burden on individuals who have already suffered losses due to fraud.
med
Defines a 'victim of fraud' as someone who submits an application to the IRS and provides documentation from a law enforcement agency or court.
This sets clear requirements for who qualifies for the waiver, ensuring only legitimate fraud victims benefit.
med
Allows funds withdrawn due to fraud to be repaid to an eligible retirement plan, similar to other penalty-free distributions.
This provides flexibility for victims to potentially restore their retirement savings without additional tax penalties.
high
Requires the Secretary of the Treasury (IRS) to issue guidance on the waiver process within 180 days after the bill becomes law.
This ensures clear instructions are available for individuals to understand and claim the new waiver.
med
Mandates a public awareness campaign by the IRS to educate the public about the new protections and relief available.
This helps ensure that eligible fraud victims are aware of their rights and the process to claim the waiver.
Not later than 180 days after the date of the enactment of this Act.
Secretary of the Treasury (IRS) shall issue guidance on the waiver process.
As soon as practicable after the date of the enactment of this Act.
Secretary of the Treasury (IRS) shall conduct a public awareness campaign.
GLOSSARY
AI-written
Internal Revenue Code of 1986
The main body of federal tax laws in the United States.
Early withdrawal penalty
An extra 10% tax on distributions (money taken out) from retirement accounts before age 59½, in addition to regular income taxes.
Retirement account
Accounts specifically designed for saving for retirement, such as 401(k)s, IRAs, and similar plans, which often have tax benefits for saving long-term.
Distribution
Money taken out of a retirement account or other financial plan.
Secretary
Refers to the Secretary of the Treasury, whose department includes the Internal Revenue Service (IRS).
Guidance
Official instructions or rules issued by a government agency (like the IRS) to help people understand and comply with laws.
Law enforcement agency
An organization responsible for enforcing laws and maintaining order, such as a police department or federal bureau of investigation.
ACTION TIMELINE
2 EVENTS
MAR 14, 25
Introduced in House
INTROREFERRAL
MAR 14, 25
Referred to the House Committee on Ways and Means.
