The bill, called the "End Tax Penalties on American Hostages Act," aims to amend the Internal Revenue Code to postpone tax deadlines for individuals wrongfully detained abroad or held hostage. It allows the disregarding of the period during which an individual was unlawfully detained when determining tax liability and establishes a program for eligible individuals to apply for refunds or abatements of penalties and fines paid before the enactment of the Act. The program involves consultation with the Secretary of State and the Attorney General and extends the limitation period for issuing refunds. The amendment applies to taxable years ending on or before the enactment of the Act.
End Tax Penalties on American Hostages Act
This bill extends certain federal tax deadlines for U.S. nationals who are unlawfully or wrongfully detained abroad or held hostage abroad and their spouses. The bill also allows for an abatement and refund of additional taxes, interest, and penalties assessed to such individuals for failing to meet a federal tax deadline during a period of detention.
Specifically, under the bill, the time period during which a U.S. national is unlawfully or wrongfully detained abroad or held hostage abroad is disregarded in determining certain federal tax deadlines, including deadlines for
- filing a return for and paying federal income, estate, gift, employment, or excise taxes;
- a tax credit or refund claim; and
- the determination, assessment, and collection of additional taxes, interest, or penalties.
The bill requires the Department of State and the Department of Justice to annually provide the Internal Revenue Service (IRS) with lists to identify U.S. nationals who qualify for an extension.
The bill also requires the IRS to (1) abate and refund additional taxes, interest, and penalties assessed for any tax year ending during a period of detention for which an extension of a federal tax deadline is permitted; and (2) establish a program allowing U.S. nationals unlawfully or wrongfully detained abroad or taken hostage abroad (or their spouse or dependent) to claim a refund of additional taxes, interest, and penalties assessed for any tax year ending during a period of detention from 2021 to the bill’s enactment date.