Stop Tax Penalties on American Hostages Act of 2025

Tax relief for U.S. hostages

If enacted, the time a U.S. national was unlawfully detained or held hostage abroad would not count toward federal tax deadlines. This would pause interest, penalties, and additions to tax for that detention period, and the same pause would apply to the spouse. The bill would also create a Treasury refund and abatement program, to be set up by January 1, 2026, letting eligible former hostages (or their spouse or dependent) get back interest and penalties paid for years from January 1, 2021 through the date of enactment. The State Department and the Attorney General (through the Hostage Recovery Fusion Cell) must give the IRS lists of eligible people and then the IRS would notify them within 90 days after enactment (or within 90 days after release if released later). Refunds and abatements would be paid like overpayment refunds under section 6402, the IRS would update its tax systems to apply these rules, and the normal 3-year refund deadline would be extended after the IRS notice.