Restraining Excessive Seizure of Property Through the Exploitation of Civil Asset Forfeiture Tools Act

Floor Speech

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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.

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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.

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.

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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.

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