The House Ways and Means Oversight Subcommittee is calling on the Internal Revenue Service, the Treasury Department and the Justice Department to return funds wrongly seized from taxpayers during civil asset forfeitures.
Rep. Peter Roskam, R-Ill., who chairs the subcommittee, and Rep. John Lewis, D-Ga., the ranking Democrat on the subcommittee led all the members in sending a letter Wednesday to top officials, Treasury Secretary Jack Lew, IRS Commissioner John Koskinen, and Attorney General Loretta Lynch. They asked their agencies to review all IRS civil asset forfeiture cases and return money to victims where warranted.
The practice of civil asset forfeitures, which has becoming increasingly common at law enforcement agencies across the country, has also become a controversial topic. The IRS in particular has come under pressure to return funds wrongly seized from taxpayers in a series of high-profile cases (see Prosecutors Return $447,000 in IRS Civil Asset Forfeiture Case and Prosecutors Drop IRS Civil Forfeiture Case). In December 2014, former House Ways and Means Committee chairman Dave Camp, R-Mich., and ranking member Sander Levin, D-Mich., introduced bipartisan legislation to protect taxpayers against inappropriate use of civil asset forfeitures by the IRS (see Congressmen Introduce Bill to Curb IRS Civil Asset Forfeitures).
In the letter, Roskam and Lewis explain that the agencies' actions have “unfairly harmed American citizens and have undermined Americans’ trust in their government” and call on the agencies to “give all due consideration to all pending petitions,” “to remit funds as appropriate,” and to “establish a process to review all similarly-situated cases to determine if funds should be remitted.”
Last month, their subcommittee held a hearing at which victims of these seizures testified about how the IRS had seized their money based on allegations that they were “structuring” their cash transactions—that is, making transactions of under $10,000 to avoid banking law reporting requirements. The structuring statute is supposed to help the government identify and prosecute money-launderers, drug runners, and terrorists, but in a number of these cases, the IRS used it against small business owners whose funds came from legal sources. Since bringing those cases, the IRS has since announced a new policy of focusing on structuring cases involving other criminal acts.
Last August, the subcommittee called on the agencies to review all past cases in which the IRS had seized money from citizens and small businesses owners that came from legal sources and to return those funds if warranted. At a follow-up meeting last month, the agencies appeared not to have made any progress on this front. One week after that meeting, however, the IRS did return $150,000 to a North Carolina store owner.
Wednesday’s letter follows up on last month’s meeting. In the letter, all members of the subcommittee expressed their concern about the application of the IRS’s civil asset forfeiture authority and hope that the agencies find a way to demonstrate good faith in reviewing these cases and giving justice to these American citizens.
At that meeting, the lawmakers noted, IRS Criminal Investigation chief Richard Weber and DOJ Criminal Division chief of staff David Bitkauer told Roskam that the agencies were unsure they legally could review closed cases and that, even if they did have the legal authority to review the cases, the agencies may not have created or maintained a sufficient evidentiary record that would allow them to determine whether remitting funds would be justified. Moreover, they said, even if the agencies reviewed cases and determined that justice would require remitting the funds, there may be no money available to make the victims whole.
The subcommittee members said in the letter they are troubled by the agencies’ response. “The agencies’ representatives at that meeting did not provide any legal reasoning for why such a review would be illegal, and they seemed unconcerned that the IRS and DOJ’s actions in these cases unfairly harmed American citizens and have undermined Americans’ trust in their government,” they wrote. “One week after that meeting, we were pleased to learn that the IRS decided to return more than $100,000 to one petitioner, Ken Quran. The other pending petitions of which we are aware, including the Sowers petition, are currently under the DOJ’s jurisdiction, because the property owners challenged the seizure of their funds in court. To date, we have heard of no action taken on those petitions.”