A retired US nurse who lost more than $200,000 to a scammer posing as a federal agent was later hit with an $80,000 tax bill from the Internal Revenue Service, forcing her to sell her home to deal with the financial burden.

Susan Bivins said she reported the fraud to the FBI and local police but did not receive the assistance she had expected. The money she lost had been withdrawn from her retirement accounts, creating a separate tax obligation even though the funds were subsequently stolen.

Bivins eventually sold her home and moved into a small one-bedroom apartment. She continues to pay the tax bill by selling handmade quilts.

“I wanted to drive off a cliff,” Bivins said, as quoted by the Washington Post. “I didn’t know how I was going to live.”

Scam losses can create additional financial problems

Bivins' case was highlighted as part of an investigation by the Associated Press and FRONTLINE that examined the broader financial and personal impact of online scams in the United States.

The investigation involved 58 people who had lost money to cyber scams. Their losses ranged from several thousand dollars to as much as $4 million. The victims included professionals such as doctors, IT workers and academics, as well as people facing financial difficulties.

The findings showed that the damage from fraud can continue long after money has been transferred to scammers. Victims may face bank charges, loan repayments, legal expenses and, in some cases, taxes on funds that are no longer available to them.

US consumers reported $15.9 billion in scam losses to the Federal Trade Commission last year, a 25% increase from 2024. The actual figure could be substantially higher because many victims do not report fraud, often because of embarrassment or shame.

The FTC estimated that actual scam losses in the US during 2024 could have been close to $200 billion.

Retirement withdrawals can leave scam victims with tax bills

Bivins' experience also highlights the tax consequences that can follow fraud involving retirement savings.

Tax-deferred retirement accounts generally allow taxes on certain income to be postponed until funds are withdrawn. Once money is taken out, however, it can become subject to taxation even if the withdrawn funds are subsequently stolen.

Before 2018, victims of theft and fraud could, in some circumstances, deduct their losses from taxable income. A provision in the Tax Cuts and Jobs Act removed tax deductions for personal losses arising from many common scams. That provision was made permanent in 2025.

As a result, victims can potentially owe taxes on money they no longer possess.

For Bivins, that resulted in an $80,000 IRS bill after she had already lost more than $200,000 to the scam. Selling her home became necessary to manage the financial pressure.

A proposal before Congress, the Tax Relief for Fraud Victims Act, seeks to restore the ability of victims to deduct losses from certain scams. Kathy Stokes, AARP's fraud prevention lead, argued that victims should not be left with financial obligations resulting from crimes committed against them.

Recovering stolen money remains difficult

Getting money back after a scam can be challenging even when victims quickly report the crime.

People interviewed in the investigation described dealing with banks and lenders after fraudulent transactions. Some reported having accounts frozen or closed, while others faced loan repayments and legal expenses.

Under current US law, banks generally are not required to reimburse customers who personally authorised transactions after being deceived. The situation is different when money is taken without the customer's authorisation.

Cryptocurrency can add another obstacle. Crypto assets do not have the same federal insurance protections as bank deposits, while transfers can make it harder to trace funds and identify those controlling them. Cross-border operations involving cryptocurrency exchanges can further complicate recovery efforts.

One victim, Brian Glick, said he lost $575,000. He contacted the FBI, an elder abuse hotline, the Securities and Exchange Commission and the New York State Attorney General's office, while also collecting thousands of screenshots related to his case.

The FBI contacted cryptocurrency company Tether seeking to freeze funds connected with the case. Tether said the money had already been moved and mixed with other funds before the company was contacted.

AI and cryptocurrency are making scams harder to contain

The investigation comes as fraudsters increasingly use technology to operate scams at greater scale. Artificial intelligence can help criminals automate and expand fraudulent operations, while cryptocurrency can make stolen money harder to trace.

An Associated Press-NORC Center for Public Affairs Research poll found that 98% of Americans believed they had been targeted by scammers. Three in 10 respondents said they had personally lost money or information.

US lawmakers are considering more than a dozen bills addressing scams. The proposals include establishing a central website for reporting fraud and requiring disclosures for deepfakes and other AI-generated audio and video.

The Justice Department has also established a Scam Center Strike Force to target criminal networks involved in scams and pursue the seizure of stolen funds.

However, victims and investigators say enforcement efforts remain limited compared with the scale of online fraud.

The FBI receives nearly 3,000 internet crime complaints per day on average through its Internet Crime Complaint Center. Donna Gregory, a former FBI unit chief, said the agency can investigate only about 10% to 12% of the cases submitted through the system.