Stop Tax Penalties on American Hostages

Summary#

This bill would change the Internal Revenue Code to protect certain U.S. nationals who were unlawfully or wrongfully detained or taken hostage abroad from tax penalties and deadlines. It would treat the time the person was detained or held hostage as not counting toward tax filing, payment, or other time limits. The bill lets the Treasury abate (cancel) and refund penalties, interest, and additions to tax that were assessed or collected for the period the person was detained. It also requires the Secretary of State and the Attorney General (through the Hostage Recovery Fusion Cell) to give lists of such individuals to the Secretary of the Treasury so the Treasury can apply the rules and set up a refund program.

What it means for you#

• Who is covered: a United States national unlawfully or wrongfully detained abroad or taken hostage abroad, as identified by the Secretary of State or the Hostage Recovery Fusion Cell. The spouse is also covered.
• Time disregarded: the period the person was held will be ignored when deciding if tax acts were done on time, and when calculating interest, penalties, or refunds for affected tax periods.
• Refund program: the Treasury must create a program (by January 1, 2026) so eligible individuals, or their spouse or dependents, can apply for refunds or abatements of penalties and interest tied to the detention period.
• Notification and lists: the Secretary of State and the Attorney General must provide lists of identified individuals to the Treasury. The Treasury must notify released individuals about possible refunds within 90 days after enactment (for those already released) or within 90 days after their release (for future releases).
• Effective dates: the postponement rules apply to taxable years ending after enactment. The refund program covers the period from January 1, 2021 through the date of enactment, and the Treasury must set up the program and handle claims for that period.

Expenses#

The bill requires the Treasury to update systems, accept applications, and issue refunds or abatements for covered penalties and interest. No publicly available information on the total cost, budgetary effects, or estimated amount of refunds is provided in the bill text.

Proponents' View#

The bill states its purpose is to postpone tax deadlines and reimburse paid late fees for U.S. nationals who are unlawfully or wrongfully detained or held hostage abroad. It creates a process for identifying affected individuals, pausing time limits, and returning amounts paid because of late filing or payment during the detention period.

Opponents' View#

No publicly available information.