Congress churns out thousands of bills, but what’s really in them, and how could they affect you? DBS BILL BRIEF breaks down two bills a day IN PLAIN ENGLISH.
IN PLAIN ENGLISH
Getting cheated out of your savings is bad enough. Discovering the tax code offers limited relief can make the experience even more frustrating.
A new congressional proposal would expand tax deductions for qualifying victims of scams.
The Scams Tax Relief Act, H.R. 10891, introduced October 22 by Rep. Joseph Morelle, Democrat of New York, would expand deductions for theft losses arising from fraud, deceit, or misrepresentation.
And here’s a significant provision: Eligible taxpayers would not necessarily have to itemize deductions to qualify.
WHAT’S IN THE BILL?
The proposal addresses how the federal tax code treats specified losses caused by fraudulent conduct.
Under the legislation, qualifying taxpayers could deduct covered scam-related losses under the expanded rules.
It would also make those qualifying deductions available to taxpayers who use the standard deduction rather than itemizing.
That matters because many Americans don’t itemize deductions. A tax benefit restricted to itemizers may be of little use to someone who takes the standard deduction each year.
The proposed change would potentially make relief accessible to a broader group of qualifying victims.
HERE’S THE CATCH
A deduction is not a refund of the money a scammer stole.
Tax deductions generally reduce the amount of income subject to taxation. Their financial value depends on the taxpayer’s circumstances and the applicable law.
If somebody loses $20,000 to fraud, a $20,000 deduction does not automatically mean the federal government sends that person a $20,000 check.
There is another important limitation: The introduced proposal would apply to qualifying losses sustained after enactment.
It would not automatically provide retroactive relief to everyone who suffered a scam in previous years.
WHO WOULD BENEFIT?
People suffering qualifying theft losses through fraud or misrepresentation could potentially obtain more favorable tax treatment.
But eligibility would still depend on the statutory definitions and applicable tax requirements.
The proposal should not be interpreted as making every regrettable investment, bad purchase, or personal financial dispute deductible.
HAVEN’T WE HEARD THIS BEFORE?
Federal tax law already contains provisions addressing theft losses, but their availability and application can be complicated.
This legislation would seek to expand relief for specified scam victims rather than create the entire concept of tax deductions for theft from scratch.
WHERE DOES IT STAND?
H.R. 10891 was introduced October 22, 2026, and referred to the House Committee on Ways and Means.
At the latest source check used for this article, the legislation had not passed the House.
Bottom line: Congress is considering new tax relief for certain scam victims, including people who don’t itemize. But victims should not confuse a proposed deduction with reimbursement for stolen savings.
DBS BILL BRIEF SOURCES
- Official introduced text — H.R. 10891
- Congress.gov — Legislative record
- IRS — Theft losses
- Official legislative-status record
Behind the Brief: We use modern research tools to help unpack Washington’s fine print, relying on official legislative records for the facts.
