CFP Board, coalition press Senate on fraud victim tax relief

The Certified Financial Planner Board of Standards has thrown its weight behind a late-session push for fraud victim tax relief.

The Washington-based standards body has joined dozens of consumer, aging and financial-services groups urging the Senate to pass a House bill that would ease the tax hit on fraud victims, including those whose retirement savings were stolen.

The 52-member coalition – which also includes AARP, the Securities Industry and Financial Markets Association, the Investment Company Institute, the Investment Adviser Association, and the Financial Planning Association – wrote to Senate Finance Committee Chairman Mike Crapo (R., Idaho) and ranking member Ron Wyden (D., Ore.) asking them to advance the Tax Relief for Fraud Victims Act, or H.R. 9500.

The House passed the bipartisan fraud victims bill in September by an overwhelming 408-17 vote after the Ways and Means Committee cleared it without opposition. Supporters of the bill are now racing against a procedural countdown, as legislation that doesn’t clear both chambers before a Congress adjourns dies and has to be reintroduced.

“Victims of fraud should not face an additional tax burden as they work to rebuild their financial security,” Erin Koeppel, CFP Board’s managing director of government relations and public policy counsel said in a statement.

“CFP Board has worked throughout this Congress to advance this bipartisan legislation, and we urge the Senate to act before the end of the year so that victims do not have to go back to square one with the new Congress.”

What the bill would change for fraud victims

Under current law, individuals generally can deduct personal casualty and theft losses only when the loss is tied to a federally or state-declared disaster. That rule leaves most victims of investment, impostor and romance scams relatively more exposed with no deduction.

Read more: Romance scams: How financial advisors can spot red flags, guide clients to safety

H.R. 9500 would lift that restriction for qualifying theft losses. Victims would also get more flexibility in choosing which tax year to claim a fraud loss, and more time to seek refunds. In its House-passed form, the bill lets victims deduct losses above 10% of adjusted gross income in the year the fraud occurred or was discovered. Relief would reach back to losses incurred after Dec. 31, 2020.

The retirement provisions may matter most to advisors. Today, a client who's influenced to drain their IRA by a scammer ends up owing income tax on the distribution; victims under 59½ years old would also owe a 10% early-withdrawal penalty on money that is gone. The bill would waive that penalty for certain fraud-related withdrawals and open repayment and refund options for eligible distributions.

Elder fraud losses keep climbing

The campaign comes as losses among older Americans rise. Adults 60 and older reported about $3 billion in fraud losses to the Federal Trade Commission in 2025, five times the amount in 2020, and investment scams alone cost older Americans more than $1 billion, up 42%. Because most victims never report their experiences, the FTC estimates the real cost could be as high as $119.5 billion.

State regulators see the same pattern. The North American Securities Administrators Association said its members received 4,690 complaints of alleged misconduct against seniors in 2025, a 30% increase from the year before. In those cases of investment scams, crypto and digital assets were the leading product category.

Read more: Fraud concerns rise as millions of Americans report exposure

CFP Board has told lawmakers that planners often see the damage from fraud before anyone else does.

"Our organizations share a fundamental principle: individuals who suffer losses through crime or qualifying casualty events deserve fair treatment under the tax code," the joint coalition letter to the Senate Finance Committee said. "Although tax relief cannot reverse the harm they have experienced, it can alleviate additional financial burdens and support their recovery."