WASHINGTON, D.C. – Today, Oversight Subcommittee Chairman Peter Roskam (R-IL) and Ranking Member John Lewis (D-GA) led all members of the Subcommittee in calling upon the Treasury Department, Internal Revenue Service (IRS) and Department of Justice to return funds inappropriately seized by the IRS. The members sent Treasury Secretary Jack Lew, IRS Commissioner John Koskinen, and Attorney General Loretta Lynch letters today asking that their agencies review all IRS civil asset forfeiture cases and return money to victims where warranted.
In their letter, they 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.”
- On February 11, 2015, the 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.
- In August 2015, 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 in February this year, 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.
- Today’s letter follows up on that February meeting. All members of the Subcommittee are concerned 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.
Click here to read the letters.
Full text of letter below:
March 23, 2016
The Honorable John Koskinen
Internal Revenue Service
1111 Constitution Avenue, NW
Washington, D.C. 20224
Dear Commissioner Koskinen:
Last August, members of the House Ways and Means Oversight Subcommittee, including Chairman Roskam and Ranking Member Lewis, wrote the Department of the Treasury regarding Randy and Karen Sowers’ petition for the return of their funds seized by the IRS. We urged Treasury, the Internal Revenue Service, and the Department of Justice to grant that petition and review other cases in which the IRS seized funds on the suspicion that the bank account holders violated the structuring statute and return funds as appropriate in cases that do not meet the IRS’s current policy that the funds must have come from an illegal source. See attached letter.
Four months later, on December 2, 2015, Committee staff contacted the IRS and DOJ requesting a briefing on the status of the review process. The agency staff response led us to believe that Treasury, IRS, and the DOJ had not yet taken any action to commence the review process. The agencies delayed meeting with Subcommittee Chairman Roskam until February 12 this year—more than two months after the staff initially requested the meeting.
At that meeting, IRS Criminal Investigation Chief Richard Weber and DOJ Criminal Division Chief of Staff David Bitkauer told Chairman 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 is 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.
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.
We again urge Treasury, IRS, and DOJ to give all due consideration to all pending petitions and to remit funds as appropriate. We also ask that the agencies establish a process to review all similarly-situated cases to determine if funds should be remitted. As part of that process, we request that all known property owners whose funds were seized on a suspicion of structuring prior to the implementation of the IRS’s October 25, 2014, policy receive notice of the review and the opportunity to submit a petition for remittance of funds. If a property owner fails to submit a petition, however, we ask that the lack of a petition not weigh against the merits of remitting their funds if otherwise appropriate.
As the IRS and DOJ agreed during the meeting with Chairman Roskam, please provide us with the following information by April 6, 2016:
- An update on the status of the review process, including whether it will move forward and, if so, the standards and procedures that will be used to review cases;
- If the agencies identify any cases in which property was seized prior to the implementation of the IRS’s October 25, 2014 announcement, and the agencies would remit funds except that the money already has been spent elsewhere, (a) how many such cases exist; (b) how much money should be remitted to the property owners; and (c) why the agencies currently do not have access to funds to remit to the property owners;
- Whether there are any cases in which property was seized before the implementation of the October 25, 2014 policy on suspicion of structuring that have not been resolved; and
- DOJ and IRS’s policies and practices regarding case file retention for cases involving IRS civil asset forfeiture authority, including how long, in what format, and where case files are maintained.
Thank you for your assistance with these requests and in helping bring justice to these American citizens.