After withdrawing retirement savings and taking on debt for a man she believed she could trust, Lori Flowers of North Carolina lost $600,000 in a "pig-butchering" scam.
The damage didn't end there. She later faced $225,000 in IRS taxes and penalties for the retirement money she took out.
Her experience is fueling calls in Congress to undo a rule that can leave fraud victims owing money on funds that were stolen from them, USA Today reported.
Here's what to know
The Tax Relief for Fraud Victims Act passed the House on Sept. 15 and awaits Senate action.
At the center of the dispute is a change to federal tax law.
The Tax Cuts and Jobs Act of 2017 removed the "casualty and theft loss" deduction, which had previously given theft victims tax relief, the newspaper noted.
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In 2025, Congress made that temporary change permanent, limiting what scam victims can claim at tax time.
Supporters of the legislation say many members of Congress only began to understand the breadth of the fallout after victims spoke publicly about what happened to them.
"You get scammed, and then the IRS comes after you," Clark Flynt-Barr, AARP's government affairs director for financial security, told USA Today. "You have no money, and now you're going to owe more money."
More background
The scam started with a LinkedIn message.
According to USA Today, the person who contacted Flowers, 58, said he was from Brussels and was relocating to her part of North Carolina.
As the two continued talking, she came to believe the connection was real.
"I thought we were really getting to know each other," Flowers told the outlet. "What I think I know now is he was using AI."
The label "pig-butchering" refers to that sort of long game. Scammers may spend weeks or months building trust before convincing victims to hand over large sums of money.
At one point, the man told Flowers he needed money for a business deal. She took $400,000 from her 401(k) and later borrowed another $200,000.
Flowers filed for Chapter 13 bankruptcy, and much of her monthly payment goes toward the tax debt.
According to USA Today, which cited AARP and federal data, Americans 60 and older reported $7.7 billion in fraud losses in 2025.
The total may be much higher because many victims never report what happened.
What's being done?
If it becomes law, the Tax Relief for Fraud Victims Act would let scam victims avoid paying taxes on money criminals stole from them.
"I think it has strong bipartisan support," said Chuck Bell, programs director for advocacy at Consumer Reports, per USA Today. "I think no one wants to defend this awful provision of the tax code."
Congress is also considering a separate measure for investigations.
The Guarding Unprotected Aging Retirees from Deception Act would help state and local law enforcement agencies pursue international financial scams by supporting hiring, training, and investigative tools.
As Bill Sweeney, AARP's senior vice president for governmental affairs, explained, local and state investigators are "often overwhelmed by the sheer volume of cases and hamstrung by a lack of specialized tools and trainings," according to USA Today.
For Flowers, though, even a change in the law would not restore the retirement money she lost.
"This is my credit," she told the paper. "This is my livelihood."
Where can I learn more?
Other victims have faced similar losses and tax headaches.
• Elsewhere in North Carolina, a retiree lost $753,000 in a pig-butchering crypto scam.
• In Massachusetts, a man lost $400,000 after American-made AI fueled a romance scam.
• After a call from a verified bank number, a woman lost her life savings to impostors.
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