H.R. 1868: Stop Tax Penalties on American Hostages Act of 2025

This bill, titled the Stop Tax Penalties on American Hostages Act of 2025, aims to amend the Internal Revenue Code of 1986 concerning United States nationals who are unlawfully or wrongfully detained or held hostage abroad. The main provisions of the bill include:

Postponement of Tax Deadlines

The bill provides for the postponement of tax deadlines for those individuals who have been unlawfully or wrongfully detained or held hostage outside of the U.S. Specifically:

• The time period during which such individuals are detained or held hostage will not count against their tax deadlines. This means that any actions related to their tax obligations that are typically required by a specific date will be considered as postponed for the duration of the detention.
• The individual’s spouse is also eligible for these postponement provisions.

Tax Penalties and Refunds

The legislation addresses penalties and fees associated with tax liabilities for individuals who qualify under this bill:

• Any interest, penalties, or additional tax amounts that were assessed during the period of unlawful detention may be reconsidered. If it is established that these charges were applied while the individual was detained, the taxes assessed will be abated (canceled) and a refund may be issued.
• Individuals who qualify as applicable individuals (those determined as unlawfully detained or taken hostage) are to be identified by the Secretary of State and the Attorney General, and a list of these individuals will be sent to the Department of the Treasury.
• A program will be established to allow applicable individuals, their spouses, or dependents to apply for refunds or relief from penalties associated with tax liabilities incurred during their detention.

Implementation Timeline

The Secretary of the Treasury will be required to implement these provisions and update necessary databases by January 1, 2026, to ensure proper application and identification of eligible individuals.

Duration of Applicable Period

The provisions apply retroactively to taxable years ending after January 1, 2021, and remain effective for any period of unlawful detention occurring thereafter.

Clerical Amendments

Additionally, the bill includes clerical changes to the tax code to reference the new provisions effectively.

Notification of Eligible Individuals

Upon establishment of the refund program, eligible individuals will receive notification concerning the potential for recovery of amounts owed or penalties paid.

Relevant Companies

None found.