A law passed by Congress in 2017 contained fine print that is now delivering a financial shock to victims of fraud. With little fanfare, it eliminated the tax deduction for people who lose money in scams, and that is costing victims even more money. In a July U.S. District Court decision, a judge ruled that a retired couple owed federal taxes on nearly $2 million stolen from them by their daughter, who is now serving a 25-year sentence.

While Judge Tom Barber found his own ruling “astonishingly” odd, he based it on language in the 2017 law. According to the Washington Post, that law included provisions that were designed to capture tax revenue in the aftermath of big tax cuts that were costing the U.S. Treasury billions of dollars. One section eliminated a tax deduction for theft – including scams. Other provisions eliminated deductions for money lost in earthquakes, fires and storms.

Under that law, the tax deduction that used to be helpful to scam victims will be reinstated after 2025, although some lawmakers now oppose doing so. In the meantime, however, its absence is proving costly – and shocking – to individuals who have suffered elder fraud and other scams.

The Post reported, for example, that a Maryland retiree now owes more than $200,000 to the Internal Revenue Service after she was scammed by a crook who pretended to be a government official. “IRS just milks the money,” she told the newspaper. “…There is no mercy for little old ladies.”

In another example, the newspaper featured the story of a former White House scientist who lost $655,000 in life savings to a global, online criminal ring – and was then slapped with a six-figure tax bill from the IRS. The scammers tricked her into believing they were protecting her savings from fraud. After gaining her trust, they proceeded to clean out her assets including her retirement account.

Decades of savings went down the drain, severely harming her financial and emotional well-being. “I’m never going to stop feeling like it was my fault, because I made a stupid mistake, and I already paid a terrible price,” she  told the newspaper.

The former scientist is not alone in facing the double whammy of scams – and taxes on scams. According to the Washington Post, taxpayers claimed $3 billion in “personal theft and casualty loss deductions” before the 2017 law, but by 2020 the amount of those claims had shrunk to about $600 million.