Johnson, Larson Introduce Medical Debt Tax Relief Act
Recently, U.S. Congressmen John Larson (CT-01) and I introduced the Medical Debt Tax Relief Act (H.R. 5493), which would ensure that the IRS cannot tax medical debt that has been forgiven.
Medical debt can be financially crippling, and folks who have been fortunate to receive debt forgiveness should NOT be taxed by the IRS on that debt – it just adds insult to injury. The Medical Debt Tax Relief Act seeks to protect these vulnerable individuals, and I thank Congressman Larson for joining me in this important effort. I look forward to getting this bipartisan and commonsense bill passed into law.
“I applaud Chairman Johnson for introducing the Medical Debt Tax Relief Act and standing up for people who are struggling with high medical bills. For those individuals who have had their medical debt forgiven, it is unconscionable to think that they would then be sent a tax bill. I urge Congress to take up this commonsense legislation,” said Larson.
Currently, the tax code does not explicitly exempt the cancellation of medical debt from taxation. Therefore, it is possible for a taxpayer to have their medical debt cancelled, but then be required to pay taxes on that debt as if it were income. The Medical Debt Tax Relief Act would right this wrong by ensuring that the cancellation of medical debt is not a taxable event.
CLICK HERE to read the bill.