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Roskam Opening Statement: Protecting Small Businesses from IRS Abuse

February 11, 2015

WASHINGTON — Today, Ways and Means Oversight Subcommittee Chairman Peter Roskam (R-IL) delivered the following opening statement during the subcommittee’s hearing on the IRS’s use of civilasset forfeiture laws to seize the bank accounts of lawabiding small businesses and the settlement tactics used by the agency.

“Welcome. This is the Oversight Subcommittee’s first hearing of the 114th Congress. And today, we’re going to examine the IRS’s use and abuse of its civilasset forfeiture authority.

“What is that exactly? Well, under current law, federal agencies, like the IRS, can seize people’s assets—without any proof of wrongdoing. Now, this law was supposed to stop criminal enterprises and recover ill-gotten gains. But the IRS has used it to seize the bank accounts of people suspected of structuring—that is, of making cash deposits worth less than $10,000 to avoid reporting requirements. This is a crime most folks have never heard of. As small businesspeople will tell you, that’s a pretty wide net to cast, and it’s catching a lot of innocent people: a Mexican restaurant, a gas station, a dairy farmer. Many small businesspeople have then had to fight expensive court battles to get back even a portion of their money—even though they did nothing wrong.

“These small businesses keep getting caught in the snares largely because they are just that—they’re small; they do a lot of transactions in cash because, believe it or not, we’re still a very cash-driven economy. In a typical year, American consumers do more than $1 trillion in cash transactions. And under the Bank Secrecy Act, it is illegal to structure or split up transactions in order to avoid a requirement to report those worth more than $10,000. To be clear, it makes it a crime to fail to file a report on certain transactions.

“Take an example. Let’s say I’m a restaurant owner, and I take $8,000 to the bank on Friday and $2,000 on Monday simply because I don’t like to keep a lot of cash in my register. I’m not structuring. But if I do it because the bank teller says I can avoid filling out forms if deposits are smaller than $10,000, then I am guilty—even if I don’t know it’s a crime.

“In either case, it may look like I’m trying to avoid the reporting requirement. And that’s enough for the bank to file a suspicious-activity report. At that point, the IRS can file a warrant and say it has probable cause to believe the assets are involved in a crime. Then it can seize the account. That’s it. The IRS doesn’t have to give notice to the account-holder before seizing the assets. And the IRS doesn’t have to prove that the person is actually guilty of anything—just that the account probably is involved in structuring.

“After the IRS seizes the assets, the account holder isn’t entitled to any sort of expedited hearing. So even if he did absolutely nothing wrong, it can take years of legal proceedings for the account holder to get some or all of his assets back. Many people can’t afford a long, drawn-out fight, so they settle, handing over thousands of fairly earned dollars to the IRS—all without having done anything wrong.

“We’re going to hear from some of these victims today, and I know there are many others out there who wanted to be here today—like Carole Hinders, a restaurant owner in Iowa, and Mark Zaniewski, a gas-station owner in Michigan. They couldn’t take time away because of family and business needs, but we have received their statements for the record.

“We also learned yesterday that the Treasury Inspector General for Tax Administration plans to conduct an audit of the IRS’s practices in this area, so this inquiry will be ongoing.

“For our witnesses that travelled here to tell their stories, thank you for your time—we know that as smallbusiness owners you’re not drawing a salary while you testify here. We’re also looking forward to hearing from the IRS Commissioner Koskinen, who I hope will explain how long this has been going on and what the IRS is doing to stop it.”