KIYC: Lawmakers mull legislation to help scam victims
Four months after a Kane In Your Corner investigation found some scam victims are being forced to pay taxes on money that was stolen from them, local lawmakers are proposing legislation to help them
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A Kane In Your Corner investigation found that fraud victims who lost their life savings were sometimes being forced to pay taxes on the money that was stolen.
Now, some local lawmakers are trying to provide relief.
In April, Kane In Your Corner spoke with Madhu Anat, who lost over $1 million as a result of a scam.
“I feel terrible in terms of having lost everything that I had earned and saved for my old age,” she says.
“It might be that we may never end up paying this off before our time is done on this earth," said her husband, Mark Urso.
Because Anat cashed in her retirement to pay the scammers, the money she received was taxable income. She now owes hundreds of thousands of dollars in taxes on money she lost.
Scam victims never used to have to pay income taxes on their losses. But that changed as part of a provision in the tax cut legislation passed by Congress in 2017. The bill said losses due to theft would no longer be tax deductible.
But victims like the Ursos may soon get a break. Several local lawmakers are working on legislation to restore the tax deduction.
“Those sorts of crimes are despicable and should be stopped,” says Rep. John Riley (D – New York). “And for the victims of those crimes, we shouldn't be punishing them by taxing them for their losses.”
The Ursos say they can’t afford to wait for new legislation. They are currently negotiating with both the Internal Revenue Service and the New Jersey Division of Taxation, hoping those agencies will forgive the taxes owed.
