On April 12, 2013, the IRS seized every penny of a nearly $1 million business account held by Georgia gun shop owner Andrew Clyde.
His misdeed — if you can call it that: depositing business checks into his bank account in increments under $10,000.
A bipartisan group of lawmakers on House Republicans are on Wednesday preparing to shine a spotlight on the government’s practice of seizing small business civil assets without charging them with a crime, signaling a new oversight focus on an issue gaining more attention and hinting at new legislation backed by both parties.
In one instance, a U.S. attorney suggested to one witness’s attorney that he may be getting a harsher punishment because the witness spoke to the press, according to an email reviewed by POLITICO.
“There is a strong indication that the IRS has been involved in civil forfeiture that has hurt innocent people,” said House Ways and Means oversight subcommittee chairman Rep. Peter Roskam (R-Ill.) in a brief interview, calling it an “abuse by the federal government against citizens.”
The hearing was the first for Roskam, who takes over the subcommittee that in the past year focused nearly exclusively on the IRS tea party targeting controversy.
But Wednesday’s hearing struck a rare bipartisan accord as Democrats joined their counterparts in lecturing the IRS.
“Whether or not it is within the law, it is wrong to, without any criminal evidence, seize somebody’s property,” New York Democrat Charles Rangel fumed. “Common sense and decency says that when the Congress screws up, we expect you people to come back and say this is not working.”
IRS Commissioner John Koskinen in the hearing apologized to “anyone who got caught up in this,” calling lawmaker’s concerns “legitimate and appropriate.” But he also said his agents were merely following the law.
Under the law, banks must report cash bank deposits of $10,000 or more to the federal government — a provision aimed at catching illicit traffickers. Criminals have tried to sidestep the reporting requirement by keeping their deposits under the $10,000 threshold that triggers the reports, a practice called “structuring” that is also illegal.
The IRS — like other agencies that engage in the practice, such as the DEA or FBI — has sweeping authority to take assets, having to prove only “preponderance of evidence.”
They don’t have to charge anyone with a crime or present any evidence that shows guilt beyond a reasonable doubt, but can get a seizure warrant solely by presenting bank statements showing that a business has deposited amounts under $10,000.