IRS Hits Freed Hostages with Massive Fines for Not Paying Taxes While Held in Russian Prisons

AP Photo/Dmitry Serebryakov, File

When Wall Street Journal reporter Evan Gershkovich returned to the United States after being wrongfully detained in a Russian prison, he was greeted by his family and President Joe Biden and Vice President Kamala Harris.

Also waiting for him? The Internal Revenue Service, with a big tax bill in hand.

Gershkovich, Paul Whelan, and Vladimir Kara-Murza were released in August after being held hostage by Russia and found themselves having to work through not just the mental and emotional trauma of their detention but also multiple financial messes caused by their inability to pay their bills while they were gone.

Reason’s Emma Camp reported that all three had suffered hits to their credit report from unpaid bills and the fines and late fees assessed by the IRS. It’s a common problem for returning hostages. Washington Post reporter Jason Rezaian, who was held hostage in Iran for 544 days, told NPR he was slapped with a $6,000 bill for the late fees and interest on the taxes he had been unable to file until he was freed. That $6,000 ballooned to $22,000 before the State Department intervened and was able to partially suspend part of that amount. He still ended up paying the original $6,000.

The IRS has said it can drop some fines but lacks the authority under federal law to fully waive interest and penalties.

There does seem to be some possible relief in sight.

Sen. Chris Coons (D-DE) met with Rezaian, Gershkovich, Whelan, and Kara-Murza and was moved to address the issue, co-sponsoring a bill with Sen. Mike Rounds (R-SD) called the “Stop Tax Penalties on American Hostages Act,” which passed the Senate via unanimous consent earlier this year. The House bill does have bipartisan support, but will need Speaker Mike Johnson (R-LA) to call up the bill for a vote.

Coons wrote an op-ed for The Wall Street Journal this weekend, urging support for the Stop Tax Penalties on American Hostages Act, as well as related legislation to protect hostages’ credit scores when they can’t pay their mortgages, car loans, credit cards, or other debts, and another bill to recalculate their Social Security benefits so they are not penalized for not being able to work and contribute payroll taxes during their wrongful imprisonment.

“Americans held hostage or wrongfully detained shouldn’t be treated like tax cheats,” wrote Coons, calling the legislative reforms “badly overdue.”