Efforts to Restore IRS Casualty and Theft Loss Deduction
Operation Shamrock supports a return to the foundational principles in the federal tax code by reinstating the deduction for crime victims.
Operation Shamrock has contacted the leaders of the Congress Ways & Means Committee to express its deep concern regarding the proposed extension to limit the Casualty and Theft Loss Deduction in the pending legislation before the Committee.
We support the Tax Relief for Victims of Crimes, Scams, and Disasters Act (S.3776 and H.R. 6938), which restores the Casualty and Theft Loss Deduction. Restoring the deduction relieves scam victims of a tax burden on income they no longer have and helps families rebuild their homes and futures.
What Happened to the Casualty and Theft Loss Deduction?
“The Tax Relief for Victims of Crimes, Scams, and Disasters Act restores foundational principles in the federal tax code that existed from 1913 to 2017 by reinstating the Casualty and Theft Loss Deduction for victims. ”
Until 2018, the federal government allowed victims of crimes and unexpected, uninsurable disasters to deduct these losses from their taxes with a provision called the Casualty and Theft Loss Deduction. Today, scam victims and homeowners are subject to tens or hundreds of thousands of dollars in federal taxes unless their misfortunes meet a narrow set of criteria.
The growing sophistication of cybercriminal networks has proliferated scam thefts of more than $16 billion in 2024 alone, according to information reported to the FBI Internet Crime Complaint Center. The actual losses are much higher. The scale of these crimes exceeds the current capacity of federal and state law enforcement. Meanwhile, as natural disasters are rising, insurance companies are increasing their premiums and issuing unexpected claim denials.
The Tax Relief for Victims of Crimes, Scams, and Disasters Act restores foundational principles in the federal tax code that existed from 1913 to 2017. The federal government should not revictimize individuals who have already suffered devastating misfortunes.
Previous legislation suspended the loss deduction between 2018 and 2025. The suspension ends this year. Instead of extending the suspension, we support reinstatement of the Casualty and Theft Loss Deduction to support current and future crime, scam, and disaster victims.
What We’re Doing
Operation Shamrock is on the front lines of the fight against cryptocurrency-enabled scams and financial exploitation. Every week, we hear from victims who have not only lost their life savings to increasingly sophisticated fraud schemes but now face potential tax liabilities on stolen funds they never actually received or benefited from.
Our letter to the committee details our position, including the story of one of our survivor advocates, Ralph, whose case illustrates just how devastating and unjust, the current system can be. We urge the Committee to support the necessary amendment to ensure scam victims are not taxed into further ruin.
Read how Ralph’s family learned he’d been caught in an investment scam.
Who Supports the Casualty and Theft Loss Deduction?
We join a long list of other organizations supporting reinstatement of the tax deduction, including: AARP, The Elder Justice Coalition, the National Association of Consumer Advocates, AICPA-CIMA, National Association of Enrolled Agents, National Association of Realtors, American Land Title Association, CFP Board, Investment Advisers Association, Financial Services Institute, Aspen Institute Financial Security Program, Association of Mature American Citizens, National Association of Government Defined Contribution Administrators, SPARK Institute.
How You Can Help
Write to your representatives to share your support of S.3776 and H.R. 6938.
Follow Operation Shamrock on LinkedIn and Facebook to stay up-to-date.