WASHINGTON – U.S. Senators Chris Coons (D-Del.) and Mike Rounds (R-S.D.) reintroduced the Stop Tax Penalties on American Hostages Act today to prevent the Internal Revenue Service (IRS) from imposing fines or penalties on American hostages and wrongful detainees for late tax payments while they are held abroad. In addition to Senators Coons and Rounds, this legislation is co-sponsored by Senators Thom Tillis (R-N.C.), Ron Wyden (D-Ore.), Bill Cassidy, M.D. (R-La.), Chris Van Hollen (D-Md.), Rick Scott (R-Fla.), John Fetterman (D-Pa.), and Dave McCormick (R-Pa.). This bill was originally introduced in December 2022, and the Senate unanimously cleared the bill last year.

“When you return to the United States after being held hostage or wrongfully detained overseas, the first thing that you should get from your government is a ‘welcome home.’ Instead, it’s usually a fine from the IRS for failing to pay your taxes while you sat in a foreign jail,” said Senator Coons. “This bipartisan legislation will fix a glaring flaw in our tax code to ensure that Americans who have already been through the unthinkable do not face thousands of dollars in fines and late fees from the IRS for non-payment of taxes. As we continue our work to bring home every wrongfully detained American, I encourage my colleagues to once again advance this bill and ensure we don’t make their re-entry to our country harder than it already is.”

“After returning home, American citizens who were held hostage or wrongfully detained should be spending time with their families and getting back to their lives, not worrying about late fees on their taxes,” said Senator Rounds. “For obvious reasons, any American held hostage should not have the heavy hand of the IRS charging penalties on missed federal tax payments. Our legislation will protect Americans from misguided statutory requirements and unnecessary red tape when they return home.”

“After returning home, American hostages and wrongful detainees should not have to face penalties for taxes missed while held abroad,” said Representative French Hill. “I am proud to introduce this bipartisan legislation that will correct a crucial gap in our laws that burdens these Americans with penalties and fines from the IRS after they return home."

“It goes without saying that no one who has endured wrongful detention or been taken hostage abroad should face the additional trial of navigating onerous tax burdens they incurred by no fault of their own when they return,” said Representative Dina Titus. “This commonsense, bicameral, bipartisan legislation will eliminate that unthinkable possibility by simplifying the tax code to postpone tax deadlines and refund late fees to support wrongful detainees, hostages, and their families.”

“Hostage US strongly supports the Stop Tax Penalties on American Hostages Act. As the leading organization providing reintegration support, guidance, and resources to Americans held hostage or wrongfully detained abroad, we see firsthand the long-term impact captivity has on individuals and their loved ones. This critical piece of legislation prevents unjust tax burdens when hostages return home and means former captives can rebuild their lives without additional hardship. Americans who have endured captivity should have financial protections and this commonsense legislation will provide much-needed relief to those who have already suffered so much,” said Liz Cathcart, Executive Director of Hostage US.

“On behalf of all U.S. nationals returning from captivity abroad and the James W. Foley Legacy Foundation, I sincerely commend Senator Coons’ and Senator Rounds’ leadership and their staff for this bill prohibiting tax penalties for hostages and wrongful detainees as an essential step forward," said Diane Foley, Founder and President of the James W. Foley Legacy Foundation.

Americans who are held abroad as hostages or wrongful detainees are fined and charged interest by the IRS in the event of non-payment of taxes while in prison or captivity abroad, as though they had simply chosen not to pay taxes. Jason Rezaian, a Washington Post reporter who was wrongfully detained by the Iranian government for more than a year, brought this issue to Senator Coons’ attention. When Rezaian came home in 2016, the IRS hit him with tens of thousands of dollars in fines and interest charges on taxes he wasn't able to file while imprisoned. The IRS has made clear a legislative fix is needed to resolve this situation.

Senator Coons has led numerous bills supporting American hostages and wrongful detainees and addressing financial hardships they often face upon their return. He reintroduced the Stop Tax Penalties on American Hostages Act alongside two other hostage bills today: the Fair Credit for American Hostages Act and Retirement Security for American Hostages Act. The first is a bill with Senator Thom Tillis (R-N.C.) that would empower former hostages and detainees to restore credit scores that may have been negatively impacted during their detention. The latter is a bill with Senator Bill Cassidy, M.D. (R-La.) that would ensure that hostages and wrongful detainees are not penalized in calculating their Social Security benefits. 

A one-pager is available here.

The full text of the legislation can be found here.