[Congressional Record (Bound Edition), Volume 163 (2017), Part 9]
[House]
[Pages 12840-12843]
[From the U.S. 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. 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.

[[Page 12841]]

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

[[Page 12842]]

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, I 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

[[Page 12843]]

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.

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