Tax Relief for Victims of Crimes, Scams, and Disasters Act
This bill would restore the personal casualty loss deduction under the Internal Revenue Code to how it operated before the 2017 Tax Cuts and Jobs Act (Public Law 115-97). In practical terms, it moves the tax treatment back to the pre-2018 regime, allowing individuals to claim casualty losses (including losses from crimes, scams, and disasters) with the rules that applied before 2018. The measure also provides a temporary extension of the filing deadline for amended or refund claims related to those casualty loss deductions for certain years, giving taxpayers more time to recover overpayments that were tied to the now-reinstated deduction. The changes are targeted to apply to taxable years beginning after December 31, 2017, and to extend relief for returns filed before January 1, 2025.
Key Points
- 1Reinstates the personal casualty loss deduction under Section 165(h) to the level and rules that were in effect prior to Public Law 115-97 (the TCJA), effectively restoring the deduction for non-disaster as well as disaster-related losses to the pre-2018 framework.
- 2Effective date: the reinstated deduction applies to taxable years beginning after December 31, 2017 (i.e., starting with 2018 returns and later).
- 3Extension of time to file claims: for taxpayers who filed returns for a year ending before January 1, 2025 and who could have claimed a casualty loss deduction but for its suspension, the period to file a claim for credit or refund is extended until the due date (including extensions) for filing the tax return for the year that includes the enactment date of this bill.
- 4The extension is limited: it applies only to claims related to the overpayment attributable to the personal casualty loss deduction described in 165(c)(3).
- 5Interaction with existing rules: the extension does not apply to other types of credits/refunds beyond those tied to the specified casualty loss deduction, and it clarifies that 6511(b)(2) does not apply to these extended claims.