Tax Relief for Coerced Debt Act of 2024

Section 108 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection:

In the case of an individual, gross income does not include any amount which (but for this subsection) would be includible in gross income by reason of the discharge (in whole or in part) of coerced indebtedness.

For purposes of this subsection—

Indebtedness of an individual shall be treated as coerced indebtedness if—

(i) the indebtedness, or any portion thereof, was incurred—

(I) as the result of the unknowing and unauthorized use of personal identifying information of the individual, or

(II) by reason of economic abuse, intimidation, harassment, threat of force, force, fraud, deception, coercion, undue influence, or other similar means, and

(ii) the individual is relieved of personal liability for the debt or any obligation to the creditor or other claimants pursuant to a court judgement.

The term economic abuse means behavior, without regard to the relationship context in which such behavior occurs, which is otherwise described in section 40002(a)(13) of the Violence Against Women Act of 1994, and includes interference with the individual's ability to work.

The Secretary shall ensure that no additional reporting or filing requirements are imposed on the individual with respect to the exclusion under this subsection.

The amendment made by this section shall apply to discharges of indebtedness after December 31, 2023.