End Tax Penalties on American Hostages Act

Postponement of Tax Deadlines and Suspension of Penalties: Under Section 2 (adding new Section 7511(a) of the Internal Revenue Code), the period that a United States national is wrongfully detained or held hostage abroad is completely disregarded when determining tax deadlines, interest, and penalties. This protects detained individuals and their spouses from being punished financially by the tax system while they are unable to manage their affairs.

Application to Spouses: According to Section 2 (adding new Section 7511(a)(2)), the tax deadline postponements and penalty reliefs also apply directly to the spouse of any eligible detained or hostage individual. This ensures families do not face added financial stress while their loved one is away.

Refunds for Past Penalties and Fines: Under Section 3 (adding new Section 7511(f) of the Internal Revenue Code), the government must establish a program by January 1, 2027, to allow eligible individuals, their spouses, or their dependents to apply for a refund or abatement of interest, penalties, and additions to tax paid for the applicable period starting from January 1, 2021. This ensures people get their money back if they were unfairly penalized for missing tax deadlines while held hostage or wrongfully detained.

Mandatory Notice to Affected Individuals: As outlined in Section 3 (adding new Section 7511(f)(1)(C)), the Secretary of State, Attorney General, and the Secretary must provide formal notice to identified individuals within 90 days of enactment (or within 90 days of release for those released later). This ensures that victims and their families are actually told about their eligibility for refunds and penalty relief.