House Passed Legislation to Aid Fraud Victims

The House approved bills restoring tax protections for scam victims and funding local law enforcement investigations.

Updated on Sept. 21, 2026 in Financial Crime

Bold flat-color editorial illustration of a metallic police shield and a brass lock, symbolizing legal protections and financial security. — The U.S. House of Representatives passed bipartisan legislation on September 15 to restore tax deductions for fraud victims and boost funding for local financial crime investigations. AI Illustration. Upload story photo >

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Should the government end taxes on retirement funds stolen in financial scams?

The U.S. House of Representatives passed the Tax Relief for Fraud Victims Act and the GUARD Act on September 15, 2026. These measures aim to provide financial relief to victims of theft and equip local police with necessary tools to combat sophisticated financial scams.

Why it matters

The Tax Relief for Fraud Victims Act addresses a legislative gap created by the 2017 Tax Cuts and Jobs Act, which eliminated the casualty and theft loss tax deduction. Meanwhile, the GUARD Act seeks to fill the resource void in local law enforcement agencies currently struggling to manage the rising tide of international fraud.

The Tax Relief for Fraud Victims Act and the GUARD Act have passed the U.S. House of Representatives. Both pieces of legislation now await further consideration in the U.S. Senate.

The players

Lori Flowers

She is a fraud victim who filed for Chapter 13 bankruptcy after losing $600,000 to a pig-butchering scam.

U.S. House of Representatives

This is the lower chamber of the United States Congress responsible for passing federal legislation.

The details

Victim Lori Flowers lost $600,000 to a pig-butchering scam, leading to a $225,000 tax and penalty debt on her retirement funds and a subsequent Chapter 13 bankruptcy filing. The proposed legislation would allow victims to reclaim tax deductions for theft losses and provide federal support to local authorities for investigating complex scams.

Congress passed the Tax Cuts and Jobs Act in 2017.
Lori Flowers lost $600,000 to a scam in 2022.
The theft loss deduction repeal was made permanent in 2025.
The House approved the Tax Relief for Fraud Victims Act on September 15, 2026.

Legal Context

The proposed legislation represents a direct legislative response to the 2017 Tax Cuts and Jobs Act, which inadvertently hampered the ability of crime victims to claim financial losses. This pivot reflects a growing pressure from constituents to address the gap between current tax policy and the realities of modern financial scams.

These bills could provide essential tax relief to thousands of Americans who currently face severe penalties on retirement funds stolen by scammers. The GUARD Act may also improve local safety by providing law enforcement with the specialized technology required to track and dismantle international fraud networks.

The takeaway

Victims of financial fraud often face double trauma when tax liabilities arise from stolen retirement accounts. These legislative updates aim to provide a crucial safety net for those who have already lost their life savings.