H.R. 9500 — Tax Relief for Fraud Victims Act

This section repeals the limitation on deductions for personal casualty losses. It allows taxpayers to elect to treat theft losses involving fraud, deceit, or misrepresentation as sustained in the year the loss occurs (instead of the year of discovery). It permits penalty-free distributions from retirement plans for such losses, extends the period for filing related refund claims to one year after discovery, and requires the IRS to process claims for specified personal casualty losses within two years. The changes apply to losses in taxable years beginning after December 31, 2025, except that fraud-related and pyrrhotite-related losses qualify retroactively for taxable years beginning after December 31, 2020.