Peoria Standard

Congressmen Darin LaHood (IL-16) and Don Beyer (VA-08) have introduced the Federal Receivership Fairness Act, a bipartisan bill designed to speed up Internal Revenue Service (IRS) procedures for victims of Ponzi schemes and other fraud. The proposed legislation aims to ensure that those affected by financial fraud receive compensation without extended delays.

“Victims of fraud should not be forced to wait through a multi-year bureaucratic process before receiving compensation,” said Rep. LaHood. “The bipartisan Federal Receivership Fairness Act will cut through red tape at the IRS to ensure receivership proceedings move quickly and victims are made whole. I’m grateful to Congressman Beyer for joining me in introducing this commonsense bill.”

Rep. Beyer stated, “This legislation would provide desperately needed relief for victims of fraud who often must wait years to receive the compensation they are entitled to for no good reason. The Federal Receivership Fairness Act would establish an orderly and efficient process to expedite the distribution of funds and help get victims back onto their feet. I appreciate Rep. LaHood’s leadership on this bill and look forward to working together to see it passed into law.”

Kathy Bazoian Phelps, President of the National Association of Federal Equity Receivers (NAFER), added, "The National Association of Federal Equity Receivers (NAFER) strongly supports this long-overdue legislation that protects fraud victims from being harmed twice by establishing a fair and expedited court process to prevent lengthy IRS delays from blocking timely distribution of funds in receivership proceedings."

Receiverships occur when court-appointed agents take control over properties or businesses, typically after instances of fraud or financial mismanagement. These agents are responsible for selling assets and compensating victims and creditors but must also resolve outstanding federal tax obligations. Currently, there is no time limit for the IRS to determine what taxes are owed in these cases, sometimes resulting in multi-year waits before funds can be distributed.

In contrast, bankruptcy proceedings require the IRS to determine tax liability within 180 days. The new bill would apply this same deadline—180 days—to receiverships as well.

The legislation has garnered support from several organizations, including NAFER, the National Association of Bankruptcy Trustees (NABT), the Turnaround Management Association (TMA), and the Public Investors Advocate Bar Association (PIABA).

Darin LaHood currently serves as U.S. Representative for Illinois’ 16th district after replacing Aaron Schock in 2015 https://lahood.house.gov/about. In 2022, he won re-election against Elizabeth Haderlein with 66.3% of the vote https://ballotpedia.org/Darin_LaHood.

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