The Congressional Record is a unique source of public documentation. It started in 1873, documenting nearly all the major and minor policies being discussed and debated.
“RESTRAINING EXCESSIVE SEIZURE OF PROPERTY THROUGH THE EXPLOITATION OF CIVIL ASSET FORFEITURE TOOLS ACT” mentioning the U.S. Dept. of Justice was published in the House of Representatives section on pages H6634-H6637 on Sept. 5, 2017.
The Department is one of the oldest in the US, focused primarily on law enforcement and the federal prison system. Downsizing the Federal Government, a project aimed at lowering taxes and boosting federal efficiency, detailed wasteful expenses such as $16 muffins at conferences and board meetings.
The publication is reproduced in full below:
RESTRAINING EXCESSIVE SEIZURE OF PROPERTY THROUGH THE EXPLOITATION OF
CIVIL ASSET FORFEITURE TOOLS ACT
Mr. ROSKAM. Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 1843) to amend title 31, United States Code, to prohibit the Internal Revenue Service from carrying out seizures relating to a structuring transaction unless the property to be seized derived from an illegal source or the funds were structured for the purpose of concealing the violation of another criminal law or regulation, to require notice and a post-seizure hearing for such seizures, and for other purposes, as amended.
The Clerk read the title of the bill.
The text of the bill is as follows
H.R. 1843
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Clyde-Hirsch-Sowers RESPECT Act'' or the ``Restraining Excessive Seizure of Property through the Exploitation of Civil Asset Forfeiture Tools Act''.
SEC. 2. INTERNAL REVENUE SERVICE SEIZURE REQUIREMENTS WITH
RESPECT TO STRUCTURING TRANSACTIONS.
Section 5317(c)(2) of title 31, United States Code, is amended--
(1) by striking ``Any property'' and inserting the following:
``(A) In general.--Any property''; and
(2) by adding at the end the following:
``(B) Internal revenue service seizure requirements with respect to structuring transactions.--
``(i) Property derived from an illegal source.--Property may only be seized by the Internal Revenue Service pursuant to subparagraph (A) by reason of a claimed violation of section 5324 if the property to be seized was derived from an illegal source or the funds were structured for the purpose of concealing the violation of a criminal law or regulation other than section 5324.
``(ii) Notice.--Not later than 30 days after property is seized by the Internal Revenue Service pursuant to subparagraph (A), the Internal Revenue Service shall--
``(I) make a good faith effort to find all persons with an ownership interest in such property; and
``(II) provide each such person with a notice of the seizure and of the person's rights under clause (iv).
``(iii) Extension of notice under certain circumstances.--The Internal Revenue Service may apply to a court of competent jurisdiction for one 30-day extension of the notice requirement under clause (ii) if the Internal Revenue Service can establish probable cause of an imminent threat to national security or personal safety necessitating such extension.
``(iv) Post-seizure hearing.--If a person with a property interest in property seized pursuant to subparagraph (A) by the Internal Revenue Service requests a hearing by a court of competent jurisdiction within 30 days after the date on which notice is provided under subclause (ii), such property shall be returned unless the court holds an adversarial hearing and finds within 30 days of such request (or such longer period as the court may provide, but only on request of an interested party) that there is probable cause to believe that there is a violation of section 5324 involving such property and probable cause to believe that the property to be seized was derived from an illegal source or the funds were structured for the purpose of concealing the violation of a criminal law or regulation other than section 5324.''.
SEC. 3. EXCLUSION OF INTEREST RECEIVED IN ACTION TO RECOVER
PROPERTY SEIZED BY THE INTERNAL REVENUE SERVICE
BASED ON STRUCTURING TRANSACTION.
(a) In General.--Part III of subchapter B of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting before section 140 the following new section:
``SEC. 139G. INTEREST RECEIVED IN ACTION TO RECOVER PROPERTY
SEIZED BY THE INTERNAL REVENUE SERVICE BASED ON
STRUCTURING TRANSACTION.
``Gross income shall not include any interest received from the Federal Government in connection with an action to recover property seized by the Internal Revenue Service pursuant to section 5317(c)(2) of title 31, United States Code, by reason of a claimed violation of section 5324 of such title.''.
(b) Clerical Amendment.--The table of sections for part III of subchapter B of chapter 1 of such Code is amended by inserting before the item relating to section 140 the following new item:
``Sec. 139G. Interest received in action to recover property seized by the Internal Revenue Service based on structuring transaction.''.
(c) Effective Date.--The amendments made by this section shall apply to interest received on or after the date of the enactment of this Act.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from Illinois (Mr. Roskam) and the gentleman from Massachusetts (Mr. Neal) each will control 20 minutes.
The Chair recognizes the gentleman from Illinois.
General Leave
Mr. ROSKAM. Mr. Speaker, I ask unanimous consent that all Members have 5 legislative days within which to revise and extend their remarks and include extraneous material for H.R. 1843, currently under consideration.
The SPEAKER pro tempore. Is there objection to the request of the gentleman from Illinois?
There was no objection.
Mr. ROSKAM. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, if a person deposits $10,000 or more into a financial institution, that institution must submit a currency transaction report to the Treasury Department. Avoiding this reporting requirement by purposefully staying below the $10,000 limit is a Federal crime known as structuring.
Structuring was made illegal in 1986 to prevent large-scale criminal enterprises, terrorists, and money launderers from hiding their illegally earned money from authorities by consistently depositing just shy of that
$10,000 limit. This makes complete sense.
When structuring is believed to have occurred, the Internal Revenue Service can use its civil asset forfeiture authority to seize funds and force the owner of the funds to prove that they were obtained legally. Let me tell you, I am not laying awake at night, and neither are my colleagues here, worrying about terrorists and mobsters not being able to get access to their money. So far, so good. The law makes sense.
But now let me tell you about somebody who had their money seized by the IRS. Andrew Clyde served three combat tours in Iraq, and then he came home and opened a store in Georgia.
Mr. Clyde had an insurance policy that only covered up to $10,000 in off-premise losses. So, like any reasonable person, Mr. Clyde never brought more than $10,000 in cash with him when he made his nightly deposits. The IRS seized $950,000 from him.
Now, just marinate in that for a minute, Mr. Speaker. Imagine trying to run your business, and one day the Federal Government comes in and takes away all of your money. You don't know why, but it is just gone. You would assume that the IRS would then talk to Mr. Clyde, hear his rationale, and say: Well, it is my mistake. You are clearly not a mobster or a terrorist. Thank you for your service. Here is your life savings back.
But that is not what happened. Instead, the IRS threatened him with criminal structuring charges until he agreed to settle with the agency, and gave them $50,000, after he had spent nearly $100,000 in legal fees.
Andrew Clyde lost $150,000 simply because he wanted to make sure that his cash deposits were low enough to be insured.
We are here today to make sure this never happens again. The RESPECT Act makes commonsense changes to civil asset forfeiture practices. First and foremost, the IRS would have to show probable cause that the funds they are seizing were derived from or connected to an illegal source.
Additionally, it would provide protections for taxpayers whose money was taken, requiring a hearing within 30 days of the money being seized. These commonsense steps prevent the Federal Government from acting with impunity and harassing the very citizens that they are supposed to protect.
I want to thank a number of individuals for their work on this legislation. I would like to thank John Lewis, the ranking member of the Oversight Subcommittee. I want to thank my lead sponsor, Joe Crowley, the lead Democrat on this legislation. I want to thank Mr. Neal for his leadership, and I want to thank Chairman Brady.
We have been at this for a long time. We first started investigating this issue at an Oversight Subcommittee hearing in February of 2015, and we made some progress. IRS Commissioner Koskinen apologized to the victims of this practice on behalf of his agency. In fact, a year later, he changed the IRS procedures to restrict the use of civil asset forfeiture cases in which the money was earned illegally, a commonsense decision that we will codify with this legislation.
I am also heartened to say that in March of this year, the IRS finished its process of reviewing all 454 contested cases that occurred before the rule change. The agency either returned or recommended that the Department of Justice return approximately 80 percent of those funds. The IRS returned over $6 million to honest Americans who were victims of this government overreach.
While the IRS returned over $6 million, they have also recommended that the Department of Justice return a whopping $16 million. Unfortunately, the Department of Justice still has a long way to go in tackling the backlog of undecided cases. We will be addressing this issue with an amendment in the upcoming appropriations bill.
Mr. Speaker, in closing, Americans deserve a government that they can trust. I look forward to working with my colleagues to pass this legislation to prevent future victims of abusive civil asset forfeiture practices, and fight for those who have been affected.
Mr. Speaker, I reserve the balance of my time,
Mr. NEAL. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I stand today in support of H.R. 1843, the Restraining Excessive Seizure of Property through the Exploitation of Civil Asset Forfeiture Tools Act--more simply, the RESPECT Act.
Fundamentally, this legislation is about stopping abusive civil asset seizure practices. Too often, honest small business owners were treated like criminals and had their bank accounts seized by the Federal Government for making frequent deposits from cash sales.
The law at issue today is the Bank Secrecy Act, which set up new reporting requirements for certain activities, like depositing more than $10,000 in cash. The purpose of the law is to limit criminal business activity conducted in cash, money laundering, drug transactions, and criminal enterprises. Thus, systematically depositing amounts just short of this threshold, is deemed an illegal attempt to structure bank transactions to avoid the reporting requirement.
Over the past 2 years, a number of law-abiding small businesses with high volumes of cash sales testified before the Ways and Means Subcommittee on Oversight describing just how this law was being applied by the IRS and the Department of Justice to seize their bank accounts. Congressmen on both sides of the aisle immediately denounced this practice and sought to have the seized amounts returned.
In October of 2014, the IRS changed its policy on enforcement. Now it only will seize funds of taxpayers where the money is being deposited from an illegal source. H.R. 1843 codifies this policy change, excludes interest received by taxpayers on the return of seized property from tax, and provides notice and hearing rights to taxpayers.
The IRS, however, is only one side of the issue. United States Attorney General Jeff Sessions also must act to right this wrong against these small business owners. The IRS referred 255 petitions to the Department of Justice from small business owners seeking the return of their property. As of June 2017, the Department still had over 180 petitions to review. The Department of Justice should and must work faster.
I thank Congressman Roskam, my friend; and the Democrat lead cosponsor, my friend as well, Congressman Joe Crowley, for their hard work on this legislation; and also the ranking member of the Oversight Committee, John Lewis, for his leadership on this issue.
In closing, I want to take a look at how the position taken by the IRS and the Department of Justice affected a small bakery in Connecticut. For almost 100 years--three generations--the Vocatura family has operated a bakery in Norwich, Connecticut. They sell sandwiches and fresh bread, lots of low-dollar purchases. Until recently, they didn't accept credit cards; so most of their business was in cash.
According to press reports, between March 2007 and April 2013, the Vocatura brothers made hundreds of deposits in amounts ranging from
$7,000 to $9,900. The bank tellers told them that they had to fill out lots of extra paperwork for deposits over $10,000, so the Vocatura brothers made sure to deposit their receipts more often. They didn't realize they were breaking the law by consciously avoiding making deposits over $10,000.
In May of 2013, the IRS enforced the structuring laws and seized the bakery's checking account with more than $68,000 on hand. The IRS held on to the Vocatura's money for 3 years without ever bringing a case before a judge. The brothers filed a motion, demanding the return of their money; and in 2016, the IRS capitulated.
This story is similar to others that we have heard. This legislation would ensure that no other small business is put in this position. I urge support on both sides of the aisle for this legislation.
Mr. Speaker, I reserve the balance of my time.
Mr. ROSKAM. Mr. Speaker, I yield 3 minutes to the gentleman from Georgia (Mr. Collins).
Mr. COLLINS of Georgia. Mr. Speaker, I appreciate the chairman yielding me the time, the ranking member for being here, and also Mr. Roskam and Mr. Crowley, both for their sponsorship and cosponsorship of this legislation.
H.R. 1843, the Clyde-Hirsch-Sowers RESPECT Act is one of those things that you really, at times, have a hard time understanding why we are debating on the floor of the House. It is that much common sense. And as my grandmother used to say: Common sense is not common.
So here we are. If anyone has any doubt about the need to restrain the forfeiture power of the IRS, they need to look no further than what happened to one of my constituents, as has already been mentioned, Andrew Clyde, whose namesake is on the bill. He is a law-abiding small business owner who served multiple combat tours. He had and has a successful gun store in northeast Georgia when the IRS seized his business bank accounts under a little-known procedure called civil asset forfeiture.
Now, we already talked a moment about just what that means, but let me go into a little bit more depth about that. What actually happened here is that Mr. Clyde was not charged with a crime when they seized his assets. In fact, he was never charged with a crime. In fact, the government's only allegation against him was he regularly made large cash deposits.
In other words, following what his own insurance would protect when he made those off-premise accounts, he was following good business practices. Despite this, the IRS had the audacity to negotiate with him about how much of his own money they would give back to him. The law, as it stands today, gives them the authority to do so; thus, the need for the legislation.
Now, rules have been changed and put in place, but this needs to be codified. I sat with Mr. Clyde on several occasions and talked about this case, and to hear the pain in his voice when he had to spend
$100,000 in legal bills, plus, at the same time, to get the IRS to give back his money, he had to beg the government for his own property.
No one should have had to go through this, and that is why I respect the authors of this legislation, and I appreciate their hearings and concern about this. Because whether it is a bakery, a gun store, or any business, no American should have to face the IRS or the Justice Department when they have never been charged with a crime--they were never charged with a crime--and had their money taken from them.
This is one that I am proud of to see an American who stood up and said: No, this is not right.
Unfortunately, it cost him money, but today, this wrong is being righted. We are going to continue to see this pushed through.
Mr. Speaker, I respect Andrew Clyde, his business, and all the others who stood up and said: This is not right.
I applaud the authors, and I say: Now is the time to finish this. Let's make sure that this never happens to another American citizen.
Mr. NEAL. Mr. Speaker, I yield myself such time as I may consume.
Before I introduce the primary cosponsor of this legislation, I want to respond to something the previous speaker said.
Commissioner Koskinen said a number of times in testimony before the Ways and Means Committee that he doesn't write the law. That is the question that is in front of us at this moment. He says that the IRS follows the law, which we expect agencies to do at the behest of those who are duly elected.
So in this instance, I would suggest that while we don't like what the IRS has done in these particular examples that have been correctly cited by both sides, we also have the obligation to alter, change, or amend the law so that this doesn't happen to the innocent going forward.
{time} 1715
So this was not simply about the Commissioner or IRS agents waking up one day and saying: What kind of havoc and peril can we create today? It was instead the prescription for law that we have offered to them.
Mr. Speaker, I yield 5 minutes to the gentleman from New York (Mr. Crowley), who is a primary cosponsor of this.
Mr. CROWLEY. Mr. Speaker, I thank the gentleman from Massachusetts for yielding me this time, and I want to thank, as well, the cosponsor--actually, the lead sponsor--Mr. Roskam, for his work here today.
Today is a good day for the American taxpayers as, hopefully, the House of Representatives will soon, once again, pass the Clyde-Hirsch-
Sowers RESPECT Act to enact vital reforms to the Federal Government's civil asset forfeiture process.
Civil asset forfeiture is an important tool that the IRS and other Federal agencies use to go after ill-gotten funds from drug dealers, human traffickers, terrorists, and other criminals. This bill will not weaken that vital law enforcement tool one iota, and that is an important point to make. But this legislation will codify into law much-needed reforms to the process to stop what we believe is an abuse of the asset seizures practiced, abusive seizures such as the government's ability to take a person's bank account without ever charging them with a crime.
The Oversight Subcommittee on the Ways and Means Committee, under the guidance of Chairman Peter Roskam, undertook a painstaking, multiyear investigation to get to the bottom of these abusive practices. This investigation included holding a series of congressional hearings--that doesn't always happen anymore around here, Peter, as you know--meeting with officials from a number of Federal agencies, including the IRS. I want to thank Commissioner Koskinen for his input and frankness as well, as the ranking member has just indicated.
The subcommittee continued keeping pressure on the IRS and the Justice Department to proactively reach out and return any assets seized from people who were never, ever charged with a crime. These actions culminated in this bipartisan legislation that passed the Ways and Means Committee unanimously.
This bill, the Clyde-Hirsch-Sowers RESPECT Act, aims to take what we have learned and fix the system to better protect all law-abiding citizens. Specifically, it prohibits the IRS from taking any asset related to structuring unless the funds are from an illegal source or the funds were structured to conceal other criminal activity.
Additionally, to provide due process to affected taxpayers, the bill requires the IRS to notify an account holder of a seizure within 30 days--fairly reasonable. Once an account is seized, the bill allows the person whose assets were seized to seek a hearing within 30 days. Now, we know that those engaged in illegal activity and illegal actions will usually not contest the seizure. But for those who committed no crime, this bill simply levels the playing field for them.
My colleague, Mr. Roskam, and I will continue to keep the pressure on the Federal Government to quickly return the assets of those innocent taxpayers--those who are not charged with any crimes but whose bank accounts and other items are still being held by their own government.
But passage of this bill isn't the last part of the fight on wrongful asset forfeiture. This bill is expected to pass this House unanimously, as it did last year, because we all recognize and believe in the basic American judicial premise of innocent until proven guilty. However, I am concerned by the Trump administration's statements and those of Attorney General Jeff Sessions, in particular, that the government intends to increase these asset seizures without any intention of charging affected Americans with crimes.
Let me be clear: I support civil asset seizures when the government can make the case that the money was derived from illicit activity. As I said before, nothing in this bill hinders the ability of the government to do just that. But we must fight any effort by the Trump administration to expand wrongful civil asset forfeiture and continue to take innocent people's own money without charging them with a crime.
Finally, as I close, I want to remind my colleagues of the importance of a larger discussion on much-needed criminal justice reform and an issue I hope this Congress can begin to tackle this year.
Just like the Clyde family, the Hirsch family, and the Sowers family who we named this bill after, far too many American families have seen the U.S. justice system unfairly work against them rather than for them. We need to address that issue of criminal justice reform in the same bipartisan way that Chairman Roskam and the entire Ways and Means Committee dealt with this particular issue.
With that, Mr. Speaker, I look forward to passage of this bill. I thank Mr. Roskam, again, for the sponsorship of this legislation working together in a very bipartisan way to get this bill out of committee to the floor and pass the House.
Mr. ROSKAM. Mr. Speaker, we have no remaining speakers on this side, and I reserve the balance of my time.
Mr. NEAL. Mr. Speaker, I think that this is a good step in the right direction. I hope that we will also encourage the Department of Justice in addition to what we are attempting to do here. As Mr. Roskam knows, they are part of the challenge in front of us as well, but I think this is a certain, forthright step on behalf of those who have been maligned in terms of reputation and their business activities in this moment.
Mr. Speaker, I yield back the balance of my time.
Mr. ROSKAM. Mr. Speaker, I yield myself the balance of my time.
Mr. Speaker, in closing, I think Mr. Crowley and Mr. Neal hit the nail on the head, as did Mr. Collins.
Let me just sort of sum up then. This is a story about a citizen, a citizen who is scandalized by the Federal Government that is there to protect the citizen, and the citizen said: Do you know what? This doesn't seem right to me. You don't get to do this.
You can imagine what it was like for these people who got caught up in this and were told by IRS agents and Department of Justice lawyers the nature of that intimidation and how heavy-handed and aggressive that is. Yet these people said: No, no, no. That is not right. That is not the way this country is supposed to work.
So they brought it to people's attention, and, Mr. Speaker, people on both sides of the aisle were scandalized by what they heard about this and were troubled by it and said: We can do something about it.
So as a result of this, you have got something that is moving through. Look, it is a tumultuous time in our public life, and there are many deep divisions within this House and across the country about all kinds of issues. But do you know what? Nobody is here defending the status quo of how these people were treated.
So the institution worked. The institution heard what was going on, and now people have come together on both sides of the aisle to move forward on this basis.
I want to echo Mr. Neal's admonition to the Department of Justice. It is not good enough for the Department of Justice to go into a passive-
aggressive mode and to say: Well, we are just going to wait these people out.
That is not good enough. We need to make sure that the Department of Justice is acting forthrightly, is reviewing these cases, and is moving them with dispatch.
Mr. Speaker, I thank my colleagues, Mr. Crowley, Mr. Lewis, Mr. Neal, and Chairman Brady. I urge passage of the bill, and I yield back the balance of my time.
The SPEAKER pro tempore (Mr. Ratcliffe). The question is on the motion offered by the gentleman from Illinois (Mr. Roskam) that the House suspend the rules and pass the bill, H.R. 1843, as amended.
The question was taken; and (two-thirds being in the affirmative) the rules were suspended and the bill, as amended, was passed.
A motion to reconsider was laid on the table.
____________________
