Relief for Hostages Facing IRS Penalties Bogs Down in Congress

A bipartisan common sense idea—that US citizens held hostage shouldn’t be on the hook for unpaid taxes—is bogged down in partisan squabbling in Congress.

Senate legislation introduced by Sen. Chris Coons (D-Del.) postpones certain tax filing deadlines for US nationals and their spouses, and provides relief for people who were detained and paid penalties. If Congress doesn’t take action, penalties and fines will keep piling up for people unlawfully detained as another tax season comes and goes.

“Given the fast-approaching end of this Congressional term, we fear that unless Congress acts, several dozen innocent Americans who have endured unjust captivity will continue to suffer unjustifiable tax penalties because of the actions of terrorists and rogue states who targeted them, and not because of any fault of their own,” Benjamin Gray, executive director of the Foley Foundation, said in a statement.

The group is named for American journalist James Foley, who was tortured and then killed by ISIS terrorists two years after his 2012 abduction.

For journalists like the Washington Post’s Jason Rezaian, who came home to thousands in IRS penalties after spending more than a year unlawfully detained by Iranian authorities—it would make returning to normal life a little easier. And more people are expected to be unlawfully detained in coming years, a study from the Foley Foundation found.

“Hostages and wrongful detainees like the Americans released from Russian prisons in August who are facing fines and late fees from the IRS need legislative action now,” Coons’ spokesperson Will Baskin-Gerwitz said in a statement.

The legislation has gotten increased attention as several Americans among the hostages taken by Hamas during the group’s attacks on Oct. 7, 2023 remain imprisoned in Gaza.

Wall Street Journal reporter Evan Gershkovich, journalist Alsu Kurmasheva, politician Vladimir Kara-Murza, and former US Marine Paul Whelan were released earlier this year in a prison swap after being held hostage in Russia.

The hostages returned to fines and fees from the IRS that should be waved, Senate Majority Leader Chuck Schumer (D-N.Y.) said earlier this year, urging House Speaker Mike Johnson (R-La.) to take up the Senate’s version of the bill.

Fight Over Vehicle

Senators locked in an agreement to send the legislation to the president as long as the House sends over a bill identical to what was introduced in late April. Senators won’t have to hold a separate vote under the arrangement, which was adopted to assuage Republican leadership concerns that the Democratic-led chamber would load up a rare House-passed tax bill with their priorities.

The House Ways and Means Committee opted against voting to advance the identical bill. Instead, it advanced a different bill introduced by Rep. Claudia Tenney (R-N.Y.) on a 38-0 vote. That, combined a companion of Coons’ bill sponsored by Rep. Dina Titus (D-Nev.) with a bill that changes the process for terminating the tax-exempt status of organizations identified as providing support to terrorist groups.

The Ways and Means committee incorporated technical changes and feedback from the IRS when it paired the two bills, Tenney spokesperson Meg Deneen said by email, arguing the new bill improved the legislation.

“Tenney is eager to support this bill on the House floor and urges her Senate colleagues to take up the bipartisan bill when it reaches them, but ultimately it is up to Leader Schumer,” she said.

But if the House opts to forgo the identical House bill and pass the new one, its most likely fate will be no action at all, forcing lawmakers to start the process over again next Congress.

“There’s only one way to achieve that goal before the end of the year,” Baskin-Gerwitz said. “By the House taking up and passing Senator Coons’ Stop Tax Penalties on American Hostages Act next month.”