Tax Relief for Fraud Victims Act

A new category called 'fraud-related personal casualty loss' is added, covering theft involving fraud, deceit, or misrepresentation sustained after December 31, 2020 and before January 1, 2026. This is combined with pyrrhotite-related losses under the umbrella term 'specified personal casualty loss.'

A new subsection (e) requires the Treasury Secretary to process claims for credit or refund related to specified personal casualty losses within 2 years of filing, creating a processing deadline that did not exist in the introduced version.

The effective date for specified personal casualty losses (both fraud-related and pyrrhotite-related) is changed from taxable years beginning after December 31, 2025 to after December 31, 2020, making the relief retroactive by approximately five years.

The effective date for distributions relating to theft losses involving fraud, deceit, or misrepresentation is changed from after December 31, 2025 to after December 31, 2020, also making it retroactive.

A new provision addresses taxpayers who discovered a fraud-related personal casualty loss before the bill's enactment date. For these taxpayers, certain statutory references to the discovery date are replaced with the enactment date, ensuring they can still claim relief even though they knew about the loss earlier.

The definition of pyrrhotite-related personal casualty loss is updated to explicitly include the time window 'sustained after December 31, 2020, and before January 1, 2026,' which was previously only implied through the effective date provision.