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“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 H5690-H5693 on Sept. 20, 2016.
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. 5523) 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. 5523
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 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 New York (Mr. Crowley) 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 on H.R. 5523, 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, this afternoon, the gentleman from New York and I are going to tell you a fascinating story. It is a story that when we tell it to our constituents at home, there is such a level of concern about what they have heard has happened that it really gets their attention. The good news is that the Ways and Means Committee and others have come along and tried to come up with a remedy.
So here is what has been going on: for the past 2 years, the Ways and Means Oversight Subcommittee has been investigating how the IRS has abused its civil asset forfeiture authority. We heard from numerous people about how the IRS seized their life savings with no notice simply because they had deposited their own money into their own bank accounts in amounts of less than $10,000. You heard that right--their own money into their own bank accounts with no underlying bad act, and the IRS came in and seized their assets with no notice.
It was so outrageous and so egregious in some of these cases, Mr. Speaker, that the Commissioner of the Internal Revenue Service actually apologized to some of these people. Now, getting an apology out of the IRS Commissioner was like birthing a calf, but we got the apology from him, and we have been able to move forward.
Subsequent to that, the Internal Revenue Service has changed their policy--which is okay, it is a good step--but we have to go farther and we need to change the underlying statute.
Now, here is the back story: most people don't know that the law requires deposits of more than $10,000 to be reported to the government. It is not a bad policy, and it is in place in case there is a human trafficking operation or a mafia front group or a meth lab that is trying to get around some bank secrecy acts. Others don't know that it is actually illegal to intentionally avoid that reporting requirement.
Two Maryland farming families, the Sowers and the Taylors, went through this ordeal. In their cases, bank tellers told them that it would be helpful if they could deposit all the cash they earned by selling farmers market products in amounts less than $10,000.
So, Mr. Speaker, in other words, the bank teller says: Look, it is a big hassle when you come in here with more than $10,000. It would be much easier if you come in with less than $10,000 because we, the bank, won't have to make a report.
The Sowers and the Taylors--nicest people ever--said: Sure.
That is where the trouble began. As they requested, they kept their deposits under $10,000 to help out the tellers.
Likewise, the Hirsch brothers in New York, who own a convenience store distributorship, do a lot of cash business; and just because they made large cash deposits at their bank, the government seized their savings of $400,000.
Andrew Clyde, who owns an armory down in Athens, Georgia, has a similar story. His store's insurance policy only covers up to $10,000 in cash losses. So he does what any commonsense, clear-thinking person would do, and that is to take less than $10,000 to the bank because more than $10,000 wouldn't be covered by his own insurance policy.
Mr. Speaker, now, even after the IRS had seized these accounts and the IRS realized that there was no criminal activity attached to these funds--in other words, they realized this is not what this law is all about--the IRS kept the money, and people like the families that I just mentioned spent time and resources trying to get them back. Some of them, like Mr. Clyde and the Taylors, are still fighting today.
Mr. Speaker, the entire subcommittee, both sides of the aisle, was scandalized to learn about this. It began to say, number one, how can this be? And number two, what can we do about it?
Mr. Crowley, my friend from New York, and I thought it was a good step that the IRS changed their policy. But we think an even better step is to pass this underlying bill.
What the bill does is it says that the IRS would only be able to seize structured assets if they are used to conceal another crime or they are derived from an illegal source. It would also give procedural protections, like the right to a speedy hearing, to people from whom the IRS seizes money. Finally, if the government ultimately gives assets and interest back when challenged, our bill would exempt that interest from Federal income tax. It serves to help right the wrong, if only in a small way, for the money being improperly taken in the first place.
Unfortunately, the bill comes up too late to keep the Clydes, the Sowers, the Hirsches, and the Taylors from dealing with this problem. But they have done all Americans and this body a service by standing up and being willing to tell their stories so that we can respond. We cannot let the IRS abuse this discretion and abuse this power. I am pleased that the overwhelming and, in fact, the unanimous Ways and Means Committee has supported this.
Mr. Speaker, I reserve the balance of my time.
House of Representatives,
Committee on Financial Services,
Washington, DC, September 8, 2016.Hon. Kevin Brady,Chairman, Committee on Ways and Means,Washington, DC.
Dear Chairman Brady: I am writing concerning H.R. 5523, the
``Clyde-Hirsch-Sowers RESPECT Act''.
As a result of your having consulted with the Committee on Financial Services concerning provisions in the bill that fall within our Rule X jurisdiction, I agree to forgo action on the bill so that it may proceed expeditiously to the House Floor. The Committee on Financial Services takes this action with our mutual understanding that, by foregoing consideration of H.R. 5523 at this time, we do not waive any jurisdiction over the subject matter contained in this or similar legislation, and that our Committee will be appropriately consulted and involved as this or similar legislation moves forward so that we may address any remaining issues that fall within our Rule X jurisdiction. Our Committee also reserves the right to seek appointment of an appropriate number of conferees to any House-Senate conference involving this or similar legislation, and requests your support for any such request.
Finally, I would appreciate your response to this letter confirming this understanding with respect to H.R. 5523 and would ask that a copy of our exchange of letters on this matter be included in your committee's report to accompany the legislation, as well as in the Congressional Record during floor consideration thereof.
Sincerely,
Jeb Hensarling,Chairman.
____
Committee on Ways and Means,
House of Representatives,
Washington, DC, September 8, 2016.Hon. Jeb Hensarling,Chairman, Committee on Financial Services,Washington, DC.
Dear Chairman Hensarling: Thank you for your letter concerning H.R. 5523, the ``Clyde-Hirsch-Sowers RESPECT Act,'' on which the Financial Services Committee was granted an additional referral.
I am most appreciative of your decision to waive formal consideration of H.R. 5523 so that it may proceed expeditiously to the House floor. I acknowledge that although you waived formal consideration of the bill, the Financial Services Committee is in no way waiving its jurisdiction over the subject matter contained in those provisions of the bill that fall within your Rule X jurisdiction. I would support your effort to seek appointment of an appropriate number of conferees on any House-Senate conference involving this legislation.
I will include a copy of our letters in the Congressional Record during consideration of this legislation on the House floor.
Sincerely,
Kevin Brady,
Chairman.
Mr. CROWLEY. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, first, let me thank my good friend, my colleague from Illinois (Mr. Roskam), for his good work on this issue. Tenacity does pay off. The gentleman has really kept his nose to the grindstone on this. Now, I don't want the gentleman to get a bad reputation for working with me on so many issues. I just want to point that out for the record.
Today is a good day for American taxpayers as, hopefully, the House of Representatives will soon 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 for the IRS and for other Federal agencies. They use it 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 bit. But this legislation will codify into law much-needed reforms to the process to stop abusive asset forfeitures--abusive seizures such as the ability of the government 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 our chairman, Mr. Roskam, undertook a painstaking 17-month investigation. I think this is a good example of the committee process and how we can work functionally, unlike what we have seen in other committees here in the House.
This investigation included holding a series of congressional hearings, meeting with officials from a number of Federal agencies, and continually keeping the pressure on the IRS to practically reach out and return any asset seized from people who were never charged with any crimes. In particular, Mr. Speaker, hearing from the victims themselves was incredibly moving and touching, I think, to Members of both sides of the aisle.
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 prevent the seizure of bank accounts of law-abiding citizens. Specifically, this legislation prohibits the IRS from taking any assets 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 of that seizure. Once an account is seized, the bill allows the person whose assets were seized to seek a post-seizure hearing within 30 days. Now, even that, for some, can be onerous; but it is a start. We know that those engaged in illegal actions will usually not contest the seizure. They won't go to the agency and contest it. But for those who committed no crimes, this bill, in many respects, levels the playing field.
But the passage of this bill isn't the last part of this fight. I know my colleague, Mr. Roskam, and I will continue to keep pressure on the Federal Government to quickly return the assets of those innocent taxpayers not charged with any crimes whose assets are still being held by the Federal Government.
Mr. Speaker, I look forward to the passage of this legislation and correcting a wrong in the law that exists to help law-abiding citizens hold on to their hard-earned resources.
Mr. Speaker, I reserve the balance of my time.
Mr. ROSKAM. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I want to thank Mr. Crowley for his work, his advocacy, and his willingness to make suggestions to improve this bill so we could enjoy unanimous support. We are in a very good situation on it.
Let me just give you a little bit more color commentary, if I could, because I think it is important for us to recognize the role that we in this House play as a coequal branch of government pushing back on abuse when we see it in the executive branch, and this is part of our experience.
So here is the back story: it occurred to us, Mr. Speaker, that these were certain cases--and I mentioned them a minute ago; I gave the names of these individuals a minute ago--that we had come to learn about. The IRS then subsequently changed their policy.
But then it begs the question: What happens to the people, number one, that we don't know about who are still stuck in the system?
So the IRS, in other words, said that we are not going to do this moving forward.
What about the people that they had done this to?
In other words, they had assets they had confiscated.
So we ended up having another hearing, again, bipartisan. The result of that hearing, a result of a unanimous voice on the subcommittee itself, was that the IRS said: We are going to come up with a petition process. The IRS has written to 1,100 people involving approximately 700 cases, and they have heard back from 380 people so far who have said: You have wrongly taken this money.
{time} 1800
Mr. Speaker, I just want to tell you a quick story.
It was a few months ago--I don't remember the exact date--but it was a few months ago when I asked for a briefing from the Department of Justice and the Internal Revenue Service on these pending cases. I thought, Mr. Speaker, based on these hearings and so forth, that the meeting at my request was going to take 10 minutes and that the officials were going to come in and my question was: What is happening to the people who are caught in the middle of this? I thought they were going to come in and they would say, you know: Mr. Roskam, here is a list or whatever. We can't give you a list, but here is all disposed of.
No, no, no, no. An hour and a half later, at the end of this discussion, I turned to the Department of Justice officials, Mr. Speaker, and I said: I am more afraid of you now than when I started this meeting. Do you want to know why I am afraid of you? Because you are acting in a completely obtuse manner.
When I asked what happened to these people's money, the officials told me, Mr. Speaker, that the money had been absorbed into the Federal system. Let me repeat that. They said that the money had been absorbed into the Federal system--wrongly absorbed, but absorbed nevertheless. That this could come out of the mouth of someone who works for the Department of Justice I found to be completely absurd.
I asked a simple question: What happens if my constituents owe a tax liability, don't pay the tax liability, and spend the money on something else? What do you do to them? And I answered the question: What you do to them is you put a lien on their house and you put them in prison, that is what you do.
So don't you see, Mr. Speaker, what we are dealing with? We have got to get to this situation, and we have got to get to making sure that power is used appropriately and it is not abused. I think this legislation that, again, is bipartisan, comes forward and it says it strikes the right balance, and if there is an underlying bad act--that is, an illegal activity--there is no one that is going to find any comfort in this bill; however, for the innocent folks who are not abusing this, they will find great comfort.
I reserve the balance of my time.
Mr. CROWLEY. Mr. Speaker, I yield myself the balance of my time.
In closing, Mr. Speaker, Congress has a chance to right a wrong in the law by passing this bill.
We always say that, in the U.S., you are innocent until proven guilty, but the civil asset forfeiture policies imposed by the Federal Government don't always reflect that basic premise.
I urge all of my colleagues to vote for this bill.
But let me be clear. While we are correcting an injustice in one area, this bill reminds us of the importance of a larger discussion on much-needed criminal justice reform.
I hope that this larger issue can also be tackled by this year's Congress. Just like the Clyde family and the Hirsch family and the Sowers family, whom we named this bill for, far too many American families have seen the U.S. justice system not work on behalf of them. We need to address that issue of criminal justice reform in the same bipartisan way, Mr. Speaker, that Mr. Roskam and the entire Ways and Means Committee dealt with civil asset forfeiture.
Mr. Speaker, I don't know how difficult it is to birth a calf. I am a boy from Woodside, Queens. I used to say we had no running water growing up where I came from. Well, we had running water in my home, but we didn't have any streams; we had no ponds, no lakes. The closest I got to the water--I want the violins to come out now--the closest I got to the water was Rockaway Beach in Queens. But my wife is from Montana, and she grew up on a ranch. She may certainly have an inclination how difficult that is.
But let me say, on behalf of the American people, we want to apologize--though it is not necessarily our place--for the entire Federal Government. We didn't impose this on the Clyde family or the Hirsch family or the Sowers family, but they do deserve an apology, not just from the IRS, but from the American people as well, all taxpayers.
But the Clyde family, the Hirsch family, and the Sowers family, I don't know where their families came from. I do not know their ethnicity. I do not know their political persuasion. I do not know what religion they practice, if any at all. But what I do know is they are American citizens, so they deserve to be treated with justice under the law.
In these particular cases, they sought justice and were denied it; and we are restoring that today with the passage of this bill, not only for them, but for all Americans who find themselves in this situation. For that, I am grateful for my friend from Illinois, for his tenacity; but I am also grateful for the tenacity of these families to not sit back and allow this to happen not only to themselves, but to potentially future victims. That is what their legacy will be. I hope their families are proud of what they have accomplished.
Mr. Speaker, I yield back the balance of my time.
Mr. ROSKAM. Mr. Speaker, I yield myself such time as I may consume.
I think Mr. Crowley made a great point, and that is there is a great temptation when the Federal Government comes after you--I would imagine, a great temptation--to cower to the intimidation. The government has a lot of power, and the government in this case figuratively reached out and grabbed these families by the throat and choked them and used power that was not correct to use against them, and it was unjust.
It would have been an easy thing for these families to just sit back and take it and so forth, but they didn't do that. I think the fact that they didn't do that, Mr. Speaker, and they are willing to stand up and fight is a good foreshadowing of things to come. In other words, they told their story; Members of Congress heard their story, and we have been able to move and seek justice, not only changing underlying policies within the executive branch, but also changing an underlying statute.
The other body has introduced this, and I am hopeful that it will be considered in an expeditious manner.
I want to thank the gentleman from New York (Mr. Crowley) for his support and advocacy. I urge passage of the bill.
I yield back the balance of my time.
The SPEAKER pro tempore. 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. 5523, as amended.
The question was taken.
The SPEAKER pro tempore. In the opinion of the Chair, two-thirds being in the affirmative, the ayes have it.
Mr. HUELSKAMP. Mr. Speaker, on that I demand the yeas and nays.
The yeas and nays were ordered.
The SPEAKER pro tempore. Pursuant to clause 8 of rule XX, further proceedings on this motion will be postponed.
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