H.R. 9496: End Tax Penalties on American Hostages Act

This bill would change how federal tax deadlines and penalties work for U.S. nationals who are wrongfully detained or held hostage abroad, and for certain family members.

What it would do

• Pause certain tax deadlines while an eligible person is being unlawfully detained, wrongfully detained, or held hostage abroad.
• Stop tax interest and penalties from building up during that period for tax liabilities tied to that person.
• Apply the same relief to the person’s spouse as well.
• Require Treasury to update its systems so it can suspend collection activity, expiration dates, interest, and penalties in these cases.

Who would count as eligible

The bill covers a U.S. national who is officially determined to be either:

• wrongfully detained abroad, or
• held hostage abroad.

The State Department and the Attorney General, through the Hostage Recovery Fusion Cell, would have to provide Treasury with lists of people who meet those definitions, starting by January 1, 2027, and then every year after that.

Refunds for past penalties

The bill would also create a program for certain people to apply for refunds or abatements of tax interest, penalties, additional amounts, or related fines that were charged or paid for periods when they were detained or held hostage.

This part would apply retroactively to the period starting January 1, 2021 through the date the bill becomes law. It would also allow a spouse or dependent of an eligible person to apply in some cases.

If someone was charged or paid tax penalties before they were officially identified as eligible, Treasury would have to cancel those assessments and refund amounts collected if the charges were tied to the covered period.

Notices and deadlines for refunds

• Treasury would have to notify eligible individuals that they may qualify for refunds or abatements.
• For people already released, notice would have to go out within 90 days after enactment.
• For people released later, notice would have to go out within 90 days after release.
• The normal deadline for filing refund claims would be extended so people have one year after notice to আবেদন for relief, and one part of the usual refund limit would not apply.

When it would take effect

The new rules for postponing deadlines and stopping penalties would apply to taxable years ending after enactment. The refund program for past penalties would apply to taxable years ending on or before enactment.

Relevant Companies

None found.