[Congressional Record Volume 162, Number 142 (Tuesday, September 20, 2016)]
[House]
[Pages H5690-H5693]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
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
[[Page H5691]]
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,
[[Page H5692]]
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
[[Page H5693]]
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.
____________________