The Hidden Tax Penalty on Scam Victims The nation's surge in reported scams has a lesser known consequence: taxpayers who fall prey to financial predators face not only the initial loss but also the added burden of owing taxes on the stolen money.
This tax penalty, exacerbated by changes in the 2017 Tax Cuts and Jobs Act, is a cruel twist of fate for those victimized.
The story of scam victims facing tax penalties began with the introduction of temporary restrictions on deducting losses from theft in the 2017 law.