Rep. Haley Stevens (D-MI) Introduced Bill to Stop Government from Penalizing Fraud Victims

March 20, 2025
Press Release

Washington, D.C. – Last Friday, U.S. Representative Haley Stevens (D-MI) introduced the No Penalties for Victims of Fraud Act to make sure that victims of retirement account fraud are not charged an early withdrawal tax penalty. 

“We’ve seen a significant uptick in scams targeting Americans' hard-saved retirement funds,” said Rep. Haley Stevens (D-MI). “And for victims of fraud not yet at retirement age, it’s a double whammy of lost savings and then being hit with an early withdrawal penalty. No fraud victim should be punished for being targeted, and this critical legislation will make the burden just a little bit lighter for those who have already lost so much.”

"Fraud victims are harmed enough when criminals steal their life savings," said the National Consumers League Vice President of Public Policy, Telecommunications, and Fraud John Breyault. "The last thing victims should worry about after being scammed is a bill from the IRS. NCL is thankful for Representative Stevens' efforts to reduce the burdens fraud victims face after a crime has occurred."

“Saving for retirement takes hard work and sacrifice by our residents and they should be protected from the rising instances of fraud,” said Oakland County Executive David Coulter. “We already worry about the security and solvency of our retirement system. We shouldn’t also have to agonize about federal penalties levied after fraudulent withdrawals from our financial safety net. I appreciate U.S. Rep. Haley Stevens’ interest in solving this problem and providing some peace of mind for people as they prepare to retire.”

"We support this commonsense bill that will protect victims of fraud," said Adam Rust, director of financial services for the Consumer Federation of America. "In 2023 alone, consumers reported losing almost $5 billion of their investments to scammers. The No Penalties for Victims of Fraud Act will shield innocent people from further harm by exempting them from having to pay taxes for losing their life savings. The scale of fraud is growing, making it all the more urgent that lawmakers act now to address this oversight in our tax laws. "

The No Penalties for Victims of Fraud Act is designed to ease the financial impact on fraud victims by waiving early withdrawal penalties for those affected. Key provisions include:

  • Allowing fraud victims to avoid withdrawal penalties from eligible retirement accounts if they can document fraud losses through law enforcement or court verification.
  • Letting victims choose to repay the withdrawn amount without penalties, following guidelines similar to existing retirement account repayment options.
  • Addressing a crucial gap, providing essential financial protections for fraud victims and promoting awareness to help prevent further exploitation.

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