Tax relief for victims of coerced debt and identity theft.
This bill protects individuals who are victims of coerced debt or identity theft from having to pay income tax on the forgiven debt amount. Normally, discharged debt is treated as taxable income, but this change excludes debt that a court has relieved the victim of due to coercion, fraud, or economic abuse. This ensures that victims are not burdened with an additional financial liability after being freed from the debt.
Key points
The forgiveness of debt resulting from coercion, fraud, identity theft, or economic abuse will not be counted as taxable income.
This change applies to individuals who have been relieved of liability for the debt pursuant to a court judgment.
The law applies to debt discharges occurring after December 31, 2023, and imposes no new reporting requirements on victims.
Status:
Expired
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