Clyde-Hirsch-Sowers RESPECT Act

I 116TH CONGRESS 1ST SESSION H. R. 1219 To amend title 31, United States Code, to prohibit the Internal Revenue Service from carrying out seizures relating to a structuring transaction unless the property to be seized derived from an illegal source or the funds were structured for the purpose of concealing the violation of another criminal law or regulation, to require notice and a post-seizure hearing for such seizures, and for other purposes. IN THE HOUSE OF REPRESENTATIVES FEBRUARY 14, 2019 Mr. COLLINS of Georgia (for himself, Mr. KELLY of Pennsylvania, Mr. SMITH of Missouri, and Mr. LEWIS) introduced the following bill; which was re- ferred to the Committee on Ways and Means, and in addition to the Committee on Financial Services, for a period to be subsequently deter- mined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned A BILL To amend title 31, United States Code, to prohibit the Inter- nal Revenue Service from carrying out seizures relating to a structuring transaction unless the property to be seized derived from an illegal source or the funds were structured for the purpose of concealing the violation of another criminal law or regulation, to require notice and a post-seizure hearing for such seizures, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 VerDate Sep 11 2014 22:44 Feb 26, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H1219.IH H1219 kjohnson on DSK79L0C42 with BILLS 2 •HR 1219 IH SECTION 1. SHORT TITLE. 1 This Act may be cited as the ‘‘Clyde-Hirsch-Sowers 2 RESPECT Act’’ or the ‘‘Restraining Excessive Seizure of 3 Property through the Exploitation of Civil Asset For- 4 feiture Tools Act’’. 5 SEC. 2. INTERNAL REVENUE SERVICE SEIZURE REQUIRE- 6 MENTS WITH RESPECT TO STRUCTURING 7 TRANSACTIONS. 8 Section 5317(c)(2) of title 31, United States Code, 9 is amended— 10 (1) by striking ‘‘Any property’’ and inserting 11 the following: 12 ‘‘(A) IN GENERAL.—Any property’’; and 13 (2) by adding at the end the following: 14 ‘‘(B) INTERNAL REVENUE SERVICE SEI- 15 ZURE REQUIREMENTS WITH RESPECT TO 16 STRUCTURING TRANSACTIONS.— 17 ‘‘(i) PROPERTY DERIVED FROM AN IL- 18 LEGAL SOURCE.—Property may only be 19 seized by the Internal Revenue Service 20 pursuant to subparagraph (A) by reason of 21 a claimed violation of section 5324 if the 22 property to be seized was derived from an 23 illegal source or the funds were structured 24 for the purpose of concealing the violation 25 VerDate Sep 11 2014 22:44 Feb 26, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H1219.IH H1219 kjohnson on DSK79L0C42 with BILLS 3 •HR 1219 IH of a criminal law or regulation other than 1 section 5324. 2 ‘‘(ii) NOTICE.—Not later than 30 3 days after property is seized by the Inter- 4 nal Revenue Service pursuant to subpara- 5 graph (A), the Internal Revenue Service 6 shall— 7 ‘‘(I) make a good faith effort to 8 find all persons with an ownership in- 9 terest in such property; and 10 ‘‘(II) provide each such person 11 with a notice of the seizure and of the 12 person’s rights under clause (iv). 13 ‘‘(iii) EXTENSION OF NOTICE UNDER 14 CERTAIN CIRCUMSTANCES.—The Internal 15 Revenue Service may apply to a court of 16 competent jurisdiction for one 30-day ex- 17 tension of the notice requirement under 18 clause (ii) if the Internal Revenue Service 19 can establish probable cause of an immi- 20 nent threat to national security or personal 21 safety necessitating such extension. 22 ‘‘(iv) POST-SEIZURE HEARING.—If a 23 person with a property interest in property 24 seized pursuant to subparagraph (A) by 25 VerDate Sep 11 2014 22:44 Feb 26, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H1219.IH H1219 kjohnson on DSK79L0C42 with BILLS 4 •HR 1219 IH the Internal Revenue Service requests a 1 hearing by a court of competent jurisdic- 2 tion within 30 days after the date on which 3 notice is provided under subclause (ii), 4 such property shall be returned unless the 5 court holds an adversarial hearing and 6 finds within 30 days of such request (or 7 such longer period as the court may pro- 8 vide, but only on request of an interested 9 party) that there is probable cause to be- 10 lieve that there is a violation of section 11 5324 involving such property and probable 12 cause to believe that the property to be 13 seized was derived from an illegal source or 14 the funds were structured for the purpose 15 of concealing the violation of a criminal 16 law or regulation other than section 17 5324.’’. 18 SEC. 3. EXCLUSION OF INTEREST RECEIVED IN ACTION TO 19 RECOVER PROPERTY SEIZED BY THE INTER- 20 NAL REVENUE SERVICE BASED ON STRUC- 21 TURING TRANSACTION. 22 (a) IN GENERAL.—Part III of subchapter B of chap- 23 ter 1 of the Internal Revenue Code of 1986 is amended 24 by inserting before section 140 the following new section: 25 VerDate Sep 11 2014 22:44 Feb 26, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H1219.IH H1219 kjohnson on DSK79L0C42 with BILLS 5 •HR 1219 IH ‘‘SEC. 139H. INTEREST RECEIVED IN ACTION TO RECOVER 1 PROPERTY SEIZED BY THE INTERNAL REV- 2 ENUE SERVICE BASED ON STRUCTURING 3 TRANSACTION. 4 ‘‘Gross income shall not include any interest received 5 from the Federal Government in connection with an action 6 to recover property seized by the Internal Revenue Service 7 pursuant to section 5317(c)(2) of title 31, United States 8 Code, by reason of a claimed violation of section 5324 of 9 such title.’’. 10 (b) CLERICAL AMENDMENT.—The table of sections 11 for part III of subchapter B of chapter 1 of such Code 12 is amended by inserting before the item relating to section 13 140 the following new item: 14 ‘‘Sec. 139H. Interest received in action to recover property seized by the Inter- nal Revenue Service based on structuring transaction.’’. (c) EFFECTIVE DATE.—The amendments made by 15 this section shall apply to interest received on or after the 16 date of the enactment of this Act. 17 Æ VerDate Sep 11 2014 22:44 Feb 26, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6301 E:\BILLS\H1219.IH H1219 kjohnson on DSK79L0C42 with BILLS