[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1389 Introduced in House (IH)]

111th CONGRESS
  1st Session
                                H. R. 1389

To amend the Internal Revenue Code of 1986 to allow a refundable credit 
    for taxes paid on earnings reinvested and lost in a fraudulent 
                           investment scheme.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             March 9, 2009

 Mr. Ackerman introduced the following bill; which was referred to the 
                      Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


 
To amend the Internal Revenue Code of 1986 to allow a refundable credit 
    for taxes paid on earnings reinvested and lost in a fraudulent 
                           investment scheme.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Fraudulent Tax Relief Act of 2009''.

SEC. 2. REFUNDABLE CREDIT FOR INCOME TAXES PAID ON EARNINGS REINVESTED 
              AND LOST IN A FRAUDULENT INVESTMENT SCHEME.

    (a) In General.--Subpart C of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to refundable credits) 
is amended by inserting after section 36A the following new section:

``SEC. 36B. CREDIT FOR INCOME TAXES PAID ON EARNINGS REINVESTED AND 
              LOST IN A FRAUDULENT INVESTMENT SCHEME.

    ``(a) In General.--There shall be allowed as a credit against the 
tax imposed by this subtitle for the taxpayer's 1st taxable year 
beginning after the date of the enactment of this section an amount 
equal to the tax imposed by this chapter for all prior taxable years 
beginning after December 31, 1994, which was paid on earnings--
            ``(1) from an investment which the taxpayer did not know, 
        and reasonably should not have known, was fraudulent,
            ``(2) which were reinvested in such investment, and
            ``(3) which remained so reinvested until the fraud was 
        discovered.
    ``(b) Credit Limited to Loss Sustained.--The credit allowed by 
subsection (a) shall not exceed the aggregate loss sustained on such 
investment as of the close of such 1st taxable year.
    ``(c) Application of Section.--This section shall apply to frauds 
discovered during 2008.''.
    (b) Conforming Amendments.--
            (1) Paragraph (2) of section 1324(b) of title 31, United 
        States Code, is amended by inserting ``36B,'' after ``36A,''.
            (2) The table of sections for such subpart C is amended by 
        adding at the end the following new item:

``Sec. 36B. Credit for income taxes paid on earnings reinvested and 
                            lost in a fraudulent investment scheme.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.
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