[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]



 
                    PROTECTING SMALL BUSINESSES FROM
                          IRS ABUSE (PART II)

=======================================================================

                                HEARING

                               before the

                       SUBCOMMITTEE ON OVERSIGHT

                                 of the

                      COMMITTEE ON WAYS AND MEANS
                     U.S. HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             SECOND SESSION

                               __________

                              MAY 25, 2016

                               __________

                          Serial No. 114-OS12

                               __________

         Printed for the use of the Committee on Ways and Means
         



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                      COMMITTEE ON WAYS AND MEANS

                      KEVIN BRADY, Texas, Chairman

SAM JOHNSON, Texas                   SANDER M. LEVIN, Michigan,
DEVIN NUNES, California              CHARLES B. RANGEL, New York
PATRICK J. TIBERI, Ohio              JIM MCDERMOTT, Washington
DAVID G. REICHERT, Washington        JOHN LEWIS, Georgia
CHARLES W. BOUSTANY, JR., Louisiana  RICHARD E. NEAL, Massachusetts
PETER J. ROSKAM, Illinois            XAVIER BECERRA, California
TOM PRICE, Georgia                   LLOYD DOGGETT, Texas
VERN BUCHANAN, Florida               MIKE THOMPSON, California
ADRIAN SMITH, Nebraska               JOHN B. LARSON, Connecticut
LYNN JENKINS, Kansas                 EARL BLUMENAUER, Oregon
ERIK PAULSEN, Minnesota              RON KIND, Wisconsin
KENNY MARCHANT, Texas                BILL PASCRELL, JR., New Jersey
DIANE BLACK, Tennessee               JOSEPH CROWLEY, New York
TOM REED, New York                   DANNY DAVIS, Illinois
TODD YOUNG, Indiana                  LINDA SANCHEZ, California
MIKE KELLY, Pennsylvania
JIM RENACCI, Ohio
PAT MEEHAN, Pennsylvania
KRISTI NOEM, South Dakota
GEORGE HOLDING, North Carolina
JASON SMITH, Missouri
ROBERT J. DOLD, Illinois
TOM RICE, South Carolina

                     David Stewart, Staff Director

                   Nick Gwyn, Minority Chief of Staff

                       SUBCOMMITTEE ON OVERSIGHT

                  Peter J. Roskam, Illinois, Chairman

PAT MEEHAN, Pennsylvania             JOHN LEWIS, Georgia
GEORGE HOLDING, North Carolina       JOSEPH CROWLEY, New York
JASON SMITH, Missouri                CHARLES B. RANGEL, New York
TOM REED, New York                   DANNY DAVIS, Illinois
TOM RICE, South Carolina
KENNY MARCHANT, Texas


                            C O N T E N T S

                               __________
                                                                   Page

Advisory of May 25, 2016 announcing the hearing..................     2

                               WITNESSES

Panel One
Robert Johnson, Institute for Justice............................    28
Randy Sowers, South Mountain Creamery............................    18
Calvin Taylor, Taylor Farms......................................     9

Panel Two
Kenneth Blanco, Deputy Assistant Attorney General, Criminal 
  Division, U.S. Department of Justice...........................    85
John Koskinen, Commissioner, Internal Revenue Service............    76
Richard Weber, Chief, IRS Criminal Investigation.................    80

                       SUBMISSIONS FOR THE RECORD

Cognitive Care Alliance, statement...............................   161
Institute for Justice, letter of February 16, 2016...............   164
    Enclosure: Subcommittee on Oversight, letter.................   167
    Enclosure: Sowers Petition...................................   170
        Table of Contents........................................   171
        Introduction.............................................   172
        Statement of Facts.......................................   174
        Argument.................................................   180
        Conclusion...............................................   195
        Exhibit A: Memorandum for Special Agents in Charge, 
          Criminal Investigation.................................   198
        Exhibit B: U.S. Department of Justice, Policy Directive 
          15-3...................................................   201
        Exhibit C: Record of Hearing, Protecting Small Business 
          from IRS Abuse.........................................   206
        Exhibit D: Declaration of Randy Sowers...................   322
        Exhibit E: Declaration of Karen Sowers...................   329
        Exhibit F: Declaration of David L. Watt, Esq.............   333
        Exhibit G: Affidavit in Support of Application for 
          Seizure Warrant........................................   337
        Exhibit H: Subpoena to Testify Before a Grand Jury.......   344
        Exhibit I: article by Van Smith..........................   346
        Exhibit J: Verified Complaint for Forfeiture.............   350
        Exhibit K: email about Settlement Agreement..............   363
        Exhibit L: U.S. Department of Justice letter.............   367
        Exhibit M: Motion for Final Order of Forfeiture..........   371
        Exhibit N: Final Order of Forfeiture.....................   375
Institute for Justice, letter of March 11, 2016..................   378
    Enclosure: letter from Richard Weber.........................   380

                        QUESTIONS FOR THE RECORD

The Honorable Peter Roskam.......................................   153


          PROTECTING SMALL BUSINESSES FROM IRS ABUSE (PART II)

                              ----------                              


                        WEDNESDAY, MAY 25, 2016

             U.S. House of Representatives,
                       Committee on Ways and Means,
                                 Subcommittee on Oversight,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 9:40 a.m., in 
Room B-318, Rayburn House Office Building, the Honorable Peter 
Roskam [chairman of the subcommittee] presiding.
    [The advisory announcing the hearing follows:]
    
    

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    Chairman ROSKAM. The subcommittee hearing will come to 
order.
    Welcome to the Ways and Means Oversight Subcommittee 
hearing on protecting small businesses from IRS abuse. This is 
version 2.0.
    There is a line in ``Les Mis,'' one of the adaptations of 
Victor Hugo's novel, where Inspector Javert, the guy that 
everybody hates, he says this: ``Right or wrong, the law is the 
law and it must be obeyed.'' Yet, the author comes up with a 
better approach, and he says: ``Actually, the highest law is 
conscience.''
    I agree that the law must be obeyed. But in a just 
government, and in a government that has a department named the 
Department of Justice, and a government of limited resources, 
we know that Federal agents and prosecutors must choose which 
violations to pursue, and when that decision is made they must 
examine the situation closely to decide if there has been a 
violation at all.
    This is our subcommittee's second hearing this Congress on 
the IRS' use of its civil asset forfeiture authorities, and 
during our hearing last year, we heard testimony about how the 
IRS has used a law that is meant to catch drug runners and 
terrorists, and instead they have used it to punish farmers and 
small-business owners.
    And the law I am talking about prohibits people from 
structuring their financial transactions to keep them below 
$10,000 to avoid reporting requirements. Sometimes it may look 
like someone is structuring their bank deposits to avoid the 
reporting requirement, but as we heard from a Georgia store 
owner last year, Andrew Clyde, some businesses have insurance 
policies that only protect cash on hand up to $10,000. So every 
time he got close to $10,000, he would deposit his money.
    Because the IRS thought that looked suspicious, they seized 
his entire bank account, $900,000. They didn't investigate 
whether Mr. Clyde was trying to avoid the reporting requirement 
before they took the savings. And after they seized the money, 
he explained the insurance policy to them and the IRS didn't 
give the money back. And when Mr. Clyde took the matter to 
court, the government lawyer from the Department of Justice 
said that if he wouldn't settle and give $50,000, the 
government lawyer would try to prosecute him on criminal 
charges.
    That is unethical, that is wrong, and it has happened in 
more than one case, lest we think that this is an aberration.
    In other cases, we have seen sworn testimony that a bank 
teller asked a customer to keep deposits under $10,000 to avoid 
additional paperwork for the bank. You can imagine this. This 
is not speculative. You can just imagine a bank teller saying: 
``Hey, it is a big hassle if you bring in $10,000. Why don't 
you bring in less money?'' And in that instance, the customer 
didn't know that it was illegal, or just thought that they were 
helping out the bank teller.
    Other people didn't want to be reported, they didn't want 
to be reported to the IRS--by the way, who does--and they 
didn't know it is illegal to avoid those reports.
    The IRS knew that seizing money from farmers and store 
owners who appeared to be structuring their transactions wasn't 
right unless they were doing it to come up to cover up other 
crimes. And that is why the IRS announced a new policy in 
October of 2014 that it wouldn't seize money unless it was 
derived from an illegal source. Great news. Good policy change. 
It is a better policy than what the IRS was doing before, and 
we were pleased to hear about the acknowledged need to do 
better.
    Now, a year and a half later, we want to know how things 
are going under that policy. And indeed, a new policy doesn't 
right all the wrongs. Those people whose assets were seized 
under the old policy were not treated fairly. Several of them 
have sent petitions to the IRS and the Department of Justice 
asking for justice and asking for their money back, the money 
that the IRS has acknowledged they shouldn't have taken in the 
first place. The IRS granted one of those petitions and gave 
$154,000 back. From all accounts, the IRS did this because it 
was the right thing to do.
    However, the Department of Justice has not provided any 
relief, either financially or procedurally, to those who have 
petitioned for return of their funds. Let's remember what we 
are talking about. It is not the government's money. It is, by 
everybody's acknowledgment, the money that belongs to these 
taxpayers. The petitioners deserve a fair, transparent review 
process and an answer.
    Furthermore, every single member of this subcommittee--
every single member of this subcommittee--has called upon the 
Department of Justice to review and the IRS to review all IRS 
civil asset forfeiture cases brought solely on the allegations 
of structuring. We have sent two letters asking for that 
review. I met with Mr. Weber--who we are going to hear from in 
the second panel, who is not here to hear, interestingly, 
apparently, although they were invited to attend, to hear from 
these witnesses, we will hear from Mr. Weber later--and the 
Department of Justice's representatives back in February and I 
reiterated that request in this room. And while we received 
letters in response, we haven't received answers.
    And despite our request for a review of those cases brought 
under the previous policy and now the corrected policy, it 
doesn't appear that any comprehensive review has taken place. 
And I hope we get those answers today.
    I would like to yield now to my friend and the 
distinguished gentleman from Georgia, the ranking member, Mr. 
Lewis.
    Mr. LEWIS. Good morning. Good morning, Mr. Chairman, and 
Members of the Committee. I regret that I was running a little 
late, but I am sure Mr. Rangel and Mr. Davis were prepared to 
sit in. They know something about sitting down or sitting in 
and standing up. Thank you.
    Mr. Chairman, I would like to thank you for holding this 
hearing. Thank you. I am pleased to have the Commissioner 
testifying before us today. I appreciate his hard work on 
behalf of the American people. The Commissioner brings truth 
and honesty to this key government agency. He is a thoughtful, 
hard-working public servant.
    I would also like to thank the other witnesses for taking 
the time to be here today.
    Under the law--under the law--banks are required to report 
deposits of more than $10,000. As many of you know, taxpayers 
are barred from structuring their deposits of income earned 
from legal or illegal sources in a manner that seems to avoid 
the reporting requirement. When small businesses appear to 
structure their deposits to evade bank reporting laws, the 
government can seize their bank accounts.
    The press reports on these matters in 2014 brought this 
important oversight matter to the subcommittee's attention. In 
response, we held a hearing on this topic last February. In 
that hearing, we learned how many small businesses were simply 
making cash deposits from their daily operations. They were not 
engaged in any illegal activity, but were unintentionally 
captured by the law.
    During the hearing, all subcommittee members agreed that 
while allowed under the law, the government should not seize 
the bank accounts of taxpayers where the cash being deposited 
was not earned from criminal activity.
    In October 2014, the Federal Government changed its policy 
and agreed that in the future it will only seize assets where 
the deposits were earned from illegal sources. Since the 
hearing, the subcommittee members have written a number of 
letters requesting updates on the policy change. Together, we 
asked what can be done for those taxpayers whose assets were 
seized before the change.
    I understand that the witnesses on the first panel have had 
their asset seized before the policy changed and both filed 
petitions to have their assets returned. I look forward to 
hearing more about their experiences.
    Mr. Chairman and members, we must do more to resolve this 
issue for small businesses. It is the right thing to do. It is 
the just thing to do. I hope that we will be successful in 
securing a timely, fair, and bipartisan resolution of this 
important matter.
    Again, I want to thank all of the witnesses for being here.
    And again, Mr. Chairman, I want to thank you for holding 
this hearing.
    Chairman ROSKAM. Thank you, Mr. Lewis. You have admonished 
this committee to do more and we intend to do more. And to help 
us do more we are going to hear from our witnesses in the first 
panel.
    Calvin Taylor and Randy Sowers are both farmers in 
Maryland. The IRS seized thousands of dollars from each of them 
and they have both petitioned the government to get their money 
back. We will also hear from Rob Johnson, an attorney at the 
nonprofit law firm the Institute of Justice who has represented 
a number of individuals and small businesses whose assets have 
been seized.
    Gentlemen, the committee has your written remarks, and I 
would like to now recognize you each for 5-minutes each.
    So, Mr. Taylor, if we could start with you.

            STATEMENT OF CALVIN TAYLOR, TAYLOR FARMS

    Mr. TAYLOR. Thank you very much. I have here with me my 
wife, my lawyer----
    Chairman ROSKAM. There is a button that says push down on 
the lower part of that mike. There, go.
    Mr. TAYLOR. Okay. I don't use these on the farm.
    With me today are my wife, my lawyer, Steve Gremminger, 
from the Gremminger Law Firm. We operate a diversified family 
farm on the Eastern Shore.
    In 1984, when my wife was pregnant with our third child, we 
decided we wanted her to stay home and I needed more income. It 
didn't seem like much, but I planted four 1-acre boxes of 
silver queen sweet corn. Over the next few years that grew to 
almost 100 acres of hand-picked sweet corn, four produce stands 
of our own, other vegetables, and about 20 teenagers to get 
things harvested and sold, which can be a circus. We take 
seriously our role as a first employer, trying to teach them to 
be good employees. We try to help them understand the business, 
the fact that all of the money coming in is not profit, that we 
have invested money long before they get there to start working 
for us.
    When they come in June, late June, we have about a 12-week 
window to get our income. I was surprised, September 16, 2011, 
my wife called and said IRS agents were at the house and wanted 
to talk to me. I went straight home.
    When I got there, they told me the same thing they told her 
when she invited them into the house and offered them ice tea, 
that they didn't think we were in trouble, they didn't think we 
had done anything wrong, but they had some questions to ask 
about our banking practices. I have always felt like if you are 
running your business honest and above board, you should be 
able to sit down and talk to anybody about what you are doing 
and get it straightened out.
    So we sat down. They asked questions and we answered 
questions all about our bank deposits. I had heard years ago 
from a friend that was in the automobile business, and I have 
heard since then from businesspeople, that if you deposit over 
$10,000 there is a form filed to the IRS. Nobody wants their 
name reported to the IRS, even if you are as honest as you can 
be. So we had kept deposits under $10,000.
    They then told us that we were under investigation for 
structuring. We didn't know what structuring was or smurfing. 
They briefly explained it. Then they told us that they had 
already been to our bank and seized all of the money in our 
bank account, which left us with nothing. I thought of the 
bills that needed to be paid, the teenagers that hadn't cashed 
their checks yet. What kind of employer bounces checks off 
employees? My wife gasped because we just sent the invitations 
to my daughter's wedding the day before.
    We called around. We got a recommendation. We hired Mr. 
Gremminger.
    As those guys were leaving, one of them said, you need to 
hire a lawyer, and if you are innocent, you may get part of 
your money back. We were just dumbfounded after they left.
    Mr. Gremminger then met with the attorney from that point 
on, the prosecutor. They wanted 4 years of financial 
information. We got that to them in the required time. He said, 
if they found anything wrong with our taxes, that we would be 
prosecuted.
    After a few weeks, there was another meeting. The agents 
said they could find no evidence of wrongdoing on our taxes. 
And they also added that, ``We don't think the Taylors knew 
they were doing anything wrong.'' And then the prosecutor 
turned and said, ``Well, we won't prosecute if you will sign a 
civil forfeiture, asset forfeiture.''
    We are not just talking about the expense of defending 
myself against the government or the fact that jail time would 
very much likely be involved. I was just realistically looking 
at losing what I worked my life for and what my father worked 
his life for.
    So there was no choice. I had to sign. We signed it. We 
went home. We went back to work. We tried to put it behind us.
    Last February, we read of the meeting that you had here in 
2015. We thought maybe this is a chance for justice. We sent 
letters to the Department of Justice and the IRS and we 
recently filed a petition. One thing that is really upsetting 
to me is we have a letter from the U.S. Attorney's Office after 
we sent our initial letter. The sentence that jumped out at me 
was when they told me they could still prosecute me for this.
    Thomas Jefferson said something about a government being so 
big that it could take everything you have. It just seems very, 
very real to me right now.
    Thank you for having me. If any of you ever want to visit 
us on the farm, you come on down.
    [The prepared statement of Mr. Taylor follows:]
    
    
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    Chairman ROSKAM. We will take you up on it. Thank you, Mr. 
Taylor.
    Mr. Sowers.

       STATEMENT OF RANDY SOWERS, SOUTH MOUNTAIN CREAMERY

    Mr. SOWERS. Good morning. Mr. Chairman, thank you for 
inviting me back for a second time. My story is about the same 
as Mr. Taylor's. We have been over this a lot of times.
    My wife Karen is here today, and we have been working 35 
years for this business that we have. It is a tough business. 
Just to get here this morning, I milked cows this morning at 
12:30. We left home and came down here at 4 o'clock because I 
didn't want to miss the meeting and didn't want to get into 
traffic. I don't like driving in traffic, so we slept in the 
garage for 2 hours just to make sure we got here on time.
    But we work every day. I mean, in 35 years we get very few 
days off. And we haven't had a day off since November except I 
was in the hospital, I had appendicitis that busted the other 
day and I got 4 days off. It is a nice vacation. They wouldn't 
let me out of the hospital.
    But the same thing, I mean, these people come into your 
business, place of business. And farmers always try to do 
things the way we are supposed to do it. We don't need more 
trouble than we already have. The regulations change so often, 
you never know when you might be doing something wrong.
    I don't disagree with the government coming in and looking 
at things, but they need to be more--like Mr. Taylor said. I 
mean, they come in. They make demands. They don't come in like 
they are just in there to check on you or to make sure you know 
what is going on and how to do it to keep yourself out of 
trouble.
    And they do it in front of your employees, flashing their 
badges, demanding this and demanding that, instead of calling 
ahead and saying, ``Look, this is what is going on. We need 
this information. Get it together. You know, we will meet and 
we will talk about it.'' But that is just not the way it 
happens.
    And we were scared. We were scared from the beginning about 
being thrown in prison. I mean, we didn't know what to do. My 
lawyer didn't know anything about it. And how we got ahold of 
Paul Kamenar, I don't know. I mean, just an act of God, I 
guess, that he dealt with this kind of stuff before.
    Our agent said too, I mean, you could tell they were 
besides themselves. They didn't, you know, want to be out there 
doing what they were doing, but it was their job. And they said 
this has gone this far, you know, you are going to have to 
continue this through the process.
    So our lawyers called Cassella, who was the prosecutor, and 
he kind of walked through things and said this is the way it is 
going to happen. And that is the way we figured it was going to 
happen. I mean, we already had a date set for a grand jury. I 
mean, if we wanted to present our case we had to go to the 
grand jury. But they had what they needed. I mean, the bank 
teller told my wife to put the keep it under 10. That is what 
she did. We never had over 10 too often. Once in a while she 
did, and that day she actually did have more than 10.
    So she had no clue of what she was doing. We process milk, 
we do farmers markets, so we get a lot of cash. I mean, we just 
handle a lot of cash. And every Monday she deposits whatever it 
was, minus what she needed for what she had to have cash for 
her farmers market. So she couldn't deposit it all.
    I wanted to tell everybody about it and I did tell 
everybody at the farmers markets, whoever I talked to, because 
I was upset and I wanted other people to be upset too. So I 
told everybody. But my lawyers told me I should keep my mouth 
shut, except for Paul.
    And Paul, he is a go-getter like I am, wanted to tell 
everybody and do something about it. And everybody said, 
``Well, you know, you do that, they are going to send every 
agent they got in there to harass you. If you are going to do 
this, make sure you understand that that is what is going to 
happen.''
    So I really didn't do anything until we get the call from 
Baltimore City Paper, wanted to do a story, and I said, ``You 
know, I really would love to tell you. I can't tell.'' He said, 
``Well, you know, I am going to do a story. It is not going to 
look good on your part.''
    So the reporter did a beautiful job. He just did a 
beautiful job. He put it just the way it was. And I think that 
is what started a lot of this rolling, because he did a good 
job.
    We didn't have any choice but to take the $29,000 
settlement. I mean, I couldn't have hired lawyers and defended 
myself for less money than that. But when the paperwork came 
through, it wasn't the same as the Taylor's. We already knew 
what the Taylor's was and we asked, ``Well, why is ours 
different?'' And they said, ``Well, because you went to the 
press.'' And we have an email from Cassella to my lawyer that 
it is because you went to the press, is why, you know, we are 
going to be tougher on you.
    Like I say again, we scared to death. I mean, to think that 
they could throw my wife in jail for depositing cash in a bank. 
I mean, it was just unbelievable. Unbelievable.
    We continue today to try to pay the bills. I mean, I am 
paying bills this week with money I am depending on getting for 
tonight's deliveries yet.
    You know, farming is a tough job. Any business you run on 
your own, it is a tough job. I mean, this government needs, 
this country needs people like us. That is why the country is 
in bad shape. And they just need to let us do our jobs. I mean, 
we need some, you know, once in a while we need some guidance 
and we don't mind that, but it has got to come different than 
what this has come.
    We filed to get our money back because they changed their 
mind and said, ``Yeah, we were wrong.'' That is why we filed 
petitions. I haven't heard anything. I mean, I could use the 
$29,000 right now for sure.
    [The prepared statement of Mr. Sowers follows:]
    
    
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    Chairman ROSKAM. Mr. Sowers, thank you. We are going to 
have a chance to have many members that want to inquire of you, 
so why don't we leave it there for now.
    Let me turn to Mr. Johnson.

       STATEMENT OF ROBERT JOHNSON, INSTITUTE FOR JUSTICE

    Mr. JOHNSON. Good morning. Chairman Roskam, Ranking Member 
Lewis, thank you for inviting me here to testify about the IRS' 
use of civil forfeiture to take money from small businesses 
that are accused of nothing more than doing business in cash.
    My name is Robert Johnson. I am an attorney at the 
Institute for Justice. It is a nonprofit law firm that 
litigates cases across the country to protect property rights.
    As the committee is aware, there has been a series of cases 
where the IRS has taken money, often entire bank accounts from 
small businesses, simply because they deposited cash in the 
bank in amounts under $10,000. The IRS calls this structuring 
and it treats these businesses like criminals. But these are 
legitimate businesses that have done nothing wrong.
    In October 2014, the IRS announced a policy change where 
they said they would no longer apply the structuring laws to 
these kinds of legitimate businesses. Henceforth, they would 
only apply the laws to real criminals engaged in real criminal 
activity. And in February of 2015, the IRS Commissioner 
appeared before this committee and actually apologized to 
people who had their money taken before that policy change.
    Despite all of that, the IRS continues to hold money that 
was seized from property owners before these policy changes. 
Between 2007 and 2013, the IRS seized about $43 million from 
over 600 people in cases where they alleged no criminal 
activity apart from the mere act of under-$10,000 bank deposits 
or withdrawals. Those people are still waiting to get their 
money back.
    One of those people is Randy Sowers, who is here to testify 
today, and you heard his story about how the IRS took $29,500 
from his business for no real reason. Randy joined with the 
Institute for Justice in July of 2015 to file a petition 
demanding the return of that money. Ten months have gone by. 
That petition is still pending with the Department of Justice 
and we have received no answer apart from a letter stating that 
they received the petition and are considering it.
    Now, the IRS would not take that money today. They admitted 
they were wrong when they changed their policies. Now they need 
to do the right thing and they need to give that money back.
    At the same time, the IRS also is continuing to take money 
and to try to force small businesses to forfeit money under the 
structuring laws. Just yesterday, the Institute for Justice 
announced a new lawsuit on behalf of Vocatura's Bakery, a 
third-generation family business in Norwich, Connecticut, that 
had $68,000 seized for structuring in May 2013.
    For the 3 years that followed that time, the IRS and 
Department of Justice held possession of that money and they 
did nothing to bring their case before a court. They didn't 
file criminal charges. They didn't file civil charges. They did 
nothing. But what they did do was attempt to pressure the 
Vocaturas to agree to the voluntary forfeiture of those funds.
    The structuring issue received significant attention in the 
press and the government dropped the issue for 18 months. But 
then in February of 2016, they sent the Vocaturas a proposed 
plea agreement demanding that they plead guilty to criminal 
structuring charges. And that is just earlier this year. And 
under this proposed plea, the Vocaturas would have agreed to 
forfeit $68,000 that was seized from the bakery, as well as an 
additional $160,000 in personal assets, and they would have 
faced between 3 to 4 years' time in prison.
    The brothers rejected that plea agreement because they 
believed they had done nothing wrong, and immediately after 
they rejected the plea agreement the IRS served them with a 
subpoena, a criminal grand jury subpoena, demanding 8 years of 
financial records for the business, practically every record 
that has been generated by this business since January of 2008.
    Yesterday, after the Institute for Justice filed suit on 
behalf of the Vocaturas, the IRS announced within hours that 
they were giving back the $68,000 that they had seized, but 
they are continuing to go forward with their grand jury 
investigation.
    In short, this is a problem that is far from solved. The 
IRS' change in policy needs to be codified in statute so that 
it is judicially enforceable and so that property owners, like 
the Vocaturas, can actually rely on it when their rights are 
not respected, and the IRS needs to give back money back that 
it took before its policy change. Again, this is money that the 
IRS would not take today if it was following its policy and it 
needs to give that money back.
    Thank you again for the opportunity to testify.
    [The prepared statement of Mr. Johnson follows:]
    
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    Chairman ROSKAM. Thank you all for your testimony.
    We will now turn to member questions. Mr. Meehan is 
recognized.
    Mr. MEEHAN. Thank you, Mr. Chairman.
    And I want to thank each of the witnesses here for your 
testimony.
    Mr. Sowers, your explanation of just your day today and 
what you have already done, it appears to me you worked harder 
in 1 day than the United States Senate has done in the month of 
May.
    But I am grateful for your being here with Mr. Taylor and 
telling your story. It is also a very revealing story. And you 
run a small business. Is this a family business?
    Mr. SOWERS. Yes.
    Mr. MEEHAN. How many generations have been associated with 
this?
    Mr. SOWERS. We are the first.
    Mr. MEEHAN. First generation, but this is farming. When you 
are working during the course of the week, it is using other 
students? You have produce stands and other kinds of things 
along the side of the road?
    Mr. SOWERS. We are dairy farmers. We have a processing 
plant and home deliver milk in the tristate area here.
    Mr. MEEHAN. Okay.
    Mr. SOWERS. So it is something we started--we started 
farming in 1981, but we started processing 15 years ago.
    Mr. MEEHAN. During the course of each week is it likely 
that you will generate more than $10,000 that will be----
    Mr. SOWERS. It is still cash in that neighborhood. It is 
not normally over 10. It can be, depending on what is going on 
and----
    Mr. MEEHAN. Well, that is an important point. So you were 
dealing in an economy which is a local economy, which by 
tradition is a cash-based economy. Is it not?
    Mr. SOWERS. Well, the farmers markets are cash based. Now, 
we do home delivery. Home delivery is mostly through credit 
card, so that is not----
    Mr. MEEHAN. But that is not part of it. But at the end of 
the week, the point being, with this cash business that is what 
is----
    Mr. SOWERS. We do farmers markets and we have a store on 
the farm, and a lot of that money is cash.
    Mr. MEEHAN. But in many weeks will you have proceeds that 
will be less than $10,000.
    Mr. SOWERS. Most weeks it is less than 10.
    Mr. MEEHAN. Most weeks. And so even if you want to, you 
wouldn't be able to put in more than $10,000?
    Mr. SOWERS. No. It just happened that day. We had a 
festival and we had extra cash.
    Mr. MEEHAN. Had you ever heard of structuring before?
    Mr. SOWERS. Never in my life, no.
    Mr. MEEHAN. When the agents came to your home, did they 
ever talk to you about representation of an attorney?
    Mr. SOWERS. Our attorney actually had just left, and I 
tried to call him and he didn't answer the phone. I didn't 
think it was a problem because I just wondered how long it 
would be before they show up wanting to know where all of the 
cash came from.
    So I didn't have any problem talking to them. But they kind 
of shut down the investigation when I said, ``Well, you know, 
sometimes I have $12- or $15,000 in cash.'' And then they kind 
of didn't talk anymore and showed me the paperwork that they 
had already seized my account.
    Mr. MEEHAN. Mr. Taylor, you run a similar kind of business? 
You are a small farmer with produce stands?
    Mr. TAYLOR. Yes, sir.
    Mr. MEEHAN. And would it be your experience during the 
course of each week that you would generally generate more than 
$10,000 worth of income to be deposited?
    Mr. TAYLOR. Generally, yes, sir.
    Mr. MEEHAN. Generally.
    Mr. TAYLOR. During the summer, in the 12 weeks of the 
summer, I do generate a lot of cash.
    Mr. MEEHAN. Okay. You generate the cash. But your interest 
then in depositing in the bank is to get it in there on a 
timely basis. But were you aware of structuring laws prior to 
that point in time?
    Mr. TAYLOR. I had never heard of structuring laws, no.
    Mr. MEEHAN. Okay. So this is, once again, you deal on a 
cash basis, which is generally the economy of the region?
    Mr. TAYLOR. Yes.
    Mr. MEEHAN. Mr. Taylor, when you were confronted with this 
and your money was seized, what kind of impact did that have on 
you and your business?
    Mr. TAYLOR. Well, my daughter paid for more of her wedding 
than she should have.
    Mr. MEEHAN. So you had a wedding coming up but you did not 
have the resources?
    Mr. TAYLOR. Yes.
    Mr. MEEHAN. What did it do to your reputation in the 
community?
    Mr. TAYLOR. I believe it hurt--it didn't hurt it with 
people that really know me, but the general public that I ideal 
with, we had a family member in a restaurant and heard a 
comment from the booth next door: ``Well, I used to think those 
Taylors were pretty honest, but I guess not.''
    Mr. MEEHAN. So there is a presumption, if the government is 
looking at, there must be doing something that you are doing 
wrong.
    Mr. TAYLOR. You get known as the people that had the 
problem with the IRS.
    Mr. MEEHAN. Have you ever had any problem before that with 
any governmental entity or any other criminal justice issue in 
your lifetime?
    Mr. TAYLOR. No, sir.
    Mr. MEEHAN. So this is the first time that you found out, 
is when the agents from the IRS walk into your--meet your wife, 
she offers them ice tea?
    Mr. TAYLOR. Yes, sir.
    Mr. MEEHAN. Did you ever have any opportunity to consult a 
lawyer prior to the questioning by these agents?
    Mr. TAYLOR. No, sir.
    Mr. MEEHAN. Did they ever at any point in time suggest to 
you that you ought to consult a lawyer?
    Mr. TAYLOR. As they were leaving.
    Mr. MEEHAN. As they were leaving. You had spoken to them 
for some period of time.
    Mr. TAYLOR. We talked to them for over an hour. When they 
let us know that they had seized our money already, then we 
stopped answering questions and we said we need to get a 
lawyer.
    Mr. MEEHAN. But by that point in time they had told you 
that they had seized your money and you now need a lawyer in 
order to be able to deal with them?
    Mr. TAYLOR. Yes.
    Mr. MEEHAN. Mr. Taylor, Mr. Sowers, thank you for your 
testimony, and I regret that you are in this situation.
    Mr. TAYLOR. Thank you.
    Mr. SOWERS. Thank you.
    Chairman ROSKAM. Mr. Lewis.
    Mr. LEWIS. Thank you very much, Mr. Chairman.
    I want to thank you for being here.
    I grew up on a farm. Farming is hard work. It is very 
difficult. It can depend on the weather, whether you produce, 
what type of living you make. I am very sympathetic toward what 
has happened to the two of you.
    Mr. Taylor, I want to know, how has this affected not just 
your business, but your life and your family, the life of your 
family?
    Mr. TAYLOR. Well, you are always looking over your 
shoulder. When you think you are doing the right thing you are 
still wondering, ``Am I going to hear from somebody that I am 
doing the wrong thing?''
    I have always tried to be very honest and upright in 
everything I do. And I just really--well, I don't have much 
faith in the government.
    Mr. LEWIS. You have lost faith?
    Mr. TAYLOR. In the government.
    Mr. LEWIS. Really?
    Mr. TAYLOR. Yes, sir.
    Mr. LEWIS. You feel like you have been mistreated, that you 
have been wronged?
    Mr. TAYLOR. Yes. They took my money with no notice and then 
they kept it, even though they found nothing wrong. They just 
kept it because they could. It is just not right.
    Mr. LEWIS. What is the total amount that you feel like----
    Mr. TAYLOR. They kept from me $41,790. They seized $93,000 
that day. They kept $41,790. My son quit taking wages for the 
rest of the year. He lived on some savings that he had built 
up. We didn't have any cash to start the next year with. We had 
to start using an operating loan which adds $5,000 to $8,000 to 
my interest expense each year. And I just this year got my son 
reimbursed for the wages he gave up in 2011.
    Mr. LEWIS. Mr. Sowers, you testified before the 
subcommittee some time ago. Was it last year?
    Mr. SOWERS. In February.
    Mr. LEWIS. February.
    Mr. SOWERS. Yes.
    Mr. LEWIS. Has anything changed, anything you would like to 
tell us today that you didn't tell us before? Have there been 
any changes?
    Mr. SOWERS. Well, I still think sometimes I am being 
harassed by the government when Department of Labor showed up 
the day before Christmas, you know, same thing, flashing their 
badges to my employees and demanding things. Those records are 
public record. I mean, there is nothing like we could hide 
anything. I mean, again, we weren't doing anything wrong, we 
didn't think.
    But it has been 4 months, and the last thing we got out of 
them was they show up 1 day and say, ``Here is the settlement 
that we think you ought to take, and if you don't agree to do 
this today, then we are going to start proceedings against 
you.''
    Mr. LEWIS. How long have you been farming?
    Mr. SOWERS. Thirty-five years.
    Mr. LEWIS. Mr. Taylor, how long have you been in business?
    Mr. TAYLOR. Well, officially, about 40 years. I have been 
there all my life.
    Mr. LEWIS. So it has been a way of life, and this is the 
first time something like this happened to you in 35 years or 
to you in 40 years?
    Mr. TAYLOR. Yes, sir.
    Mr. SOWERS. First time, yes.
    Mr. LEWIS. So you are reaching out to your government for 
help.
    Mr. SOWERS. Yes. I mean, we shouldn't be afraid of the 
government. We should depend on you. I mean, like I say, we 
don't do things wrong to do things wrong. Sometimes we do and 
we have to be told about it. But when they come out and fine 
you and don't care whether they put you out of business or not 
with what they are doing, it is not right.
    Mr. LEWIS. Thank you both for being here. Thank you.
    I yield back, Mr. Chairman.
    Chairman ROSKAM. Thank you, Mr. Lewis.
    Mr. Holding.
    Mr. HOLDING. Thank you, Mr. Chairman.
    Mr. Johnson, I understand that Mr. Sowers and Mr. Taylor 
and others have submitted petitions to get their money back, 
even though their cases have been closed. Is that correct?
    Mr. JOHNSON. That is correct.
    Mr. HOLDING. So would you explain the process by which they 
are trying to get their money back now? How does this work?
    Mr. JOHNSON. These are called petitions for remission or 
mitigation. There is a statute that actually dates back to the 
first Congress that has been on the books for a long time that 
says that the government can give back money that was taken 
through civil forfeiture. This is a very well-established 
process. It is kind of like a pardon petition. It allows, even 
if you have a case where a case has been settled or decided by 
a court, just as the President may decide to pardon somebody 
who has been convicted, the agencies or government entities 
that have forfeited money can, as a matter of grace, return 
money to people that should not have been taken.
    Mr. HOLDING. So, I mean, to be absolutely clear here, the 
IRS and DOJ have the authority to return these funds, correct?
    Mr. JOHNSON. There is no question that they have the 
authority and there is also no question that they have the 
means. In 2015, the IRS put out a report saying that the 
Treasury Forfeiture Fund, the fund where these funds are 
deposited, currently holds about $6.1 billion.
    Mr. HOLDING. And we know of a case where the IRS has, 
indeed, returned these funds, correct?
    Mr. JOHNSON. That is correct.
    Mr. HOLDING. Can you explain a little bit about that case 
for me?
    Mr. JOHNSON. Yes. So that was another petition that was 
filed by the Institute for Justice on behalf of a property 
owner named Khalid Quran, who runs a convenience store in North 
Carolina, and he had over $150,000 taken by the IRS, 
permanently forfeited. We filed a petition saying that in light 
of the policy change, this money should be returned, and they 
did so. The IRS returned in full all the $150,000.
    And yet, what is surprising is that although the IRS has 
done the right thing for Ken and returned his $150,000, the 
Department of Justice still has not done the right thing for 
Randy. And there are many other property owners who are still 
waiting for justice as well.
    Mr. HOLDING. Mr. Johnson, you are probably aware that under 
this administration the guideline sentences for certain drug 
offenses have been revised down, particularly the crack cocaine 
sentencing guidelines. You know, if you are convicted today for 
possession or distribution of crack cocaine, your sentence is 
going to be much lower than it would have been in times past. 
You are aware of that, aren't you?
    Mr. JOHNSON. Yes.
    Mr. HOLDING. Are you also aware that U.S. Attorney's 
Offices around the country are spending a tremendous amount of 
time going through, finding convicted criminals who are in 
prison serving sentences and seeing if those new guidelines 
will apply, thereby reducing their sentences and letting them 
out of prison early?
    Mr. JOHNSON. Yes.
    Mr. HOLDING. So, obviously, the Department of Justice has 
the time and bandwidth to do that. But we are wondering here 
today whether the Department of Justice has the time and 
bandwidth to go back and return the funds that have been seized 
under rules that they have now disavowed, correct?
    Mr. JOHNSON. Yeah, I think that is a great point. I mean, 
all we are asking in Randy's case or in the Taylors' case is 
for them to give back money to people who have actually gone 
ahead and filed a petition. But what the Department of Justice 
really should be doing is much more. They should be identifying 
people who are eligible to file a petition and they should be 
sending those people notice, informing them that they have the 
right to try to get their money back.
    Mr. HOLDING. Thank you Mr. Johnson.
    Mr. Chairman, I yield back.
    Chairman ROSKAM. Mr. Rangel.
    Mr. RANGEL. Thank you, Mr. Chairman, for holding this 
hearing.
    And I am so embarrassed in being part of a government--I am 
proud to be an American and being a Member of Congress, but 
these horror stories, it is hard to believe that this could 
happen in our country. The whole idea that the Justice 
Department is taking time out to right the wrong for people 
that have been in prison for committing crimes--it doesn't 
justify it--has absolutely nothing to do with them not 
fulfilling their moral responsibilities to treat Americans and 
taxpayers with the dignity that they deserve.
    Mr. Chairman, it is painful for me to see that this torture 
continues without coming to a shrieking halt, finding out who 
is responsible for it, and we, as Members of Congress and the 
Ways and Means Committee, not being able to guarantee these 
citizens that this should not have happened and we are going to 
correct it.
    I am a former prosecutor. The law makes a lot of sense when 
you are dealing with criminals, drug dealers, with millions of 
dollars in cash and not being held accountable so they put it 
in the bank. It is less than $10,000 so they don't have to 
report it. We are talking about criminals.
    The opposite side of that coin are hard-working Americans 
that make us proud to have a family of people who do different 
things to make the country greater, and, historically, the 
farmers have been the heart of this great Nation.
    Mr. Johnson, you have a list of American taxpayers that 
have been almost criminally treated by the Federal Government. 
As a lawyer, what have you done besides cause these people to 
be able to come here and to tell us, what are you suggesting, 
because, to me, we should as a committee and as a Congress 
bring the Treasury Department here with a list of these names 
and not ask for justice between now and the next hearing, but 
to have justice now and return of these funds with the 
penalties that are involved, with the inconvenience and the 
pain it has caused to your business and your reputation, and 
more importantly, to find out who made these decisions.
    You don't have to be a lawyer or a lawmaker to know this is 
morally wrong. This amounts to stealing somebody's property by 
using coercion and the power of government. Just because it is 
the government doesn't mean that it is right. It makes it even 
worse.
    So, Mr. Chairman, I hope that we have enough self-esteem in 
terms of our influence to be able to tell these gentlemen they 
don't have to worry about this happening to them or anybody 
else, that we feel the obligation, because it is our reputation 
that is tarnished, we are part of this government, and that we 
have to exonerate ourselves in finding out who caused this 
horrible thing to happen to you two and the members of the 
list.
    And I promise you, Mr. Chairman, that these heroes that 
have gone through all of this pain on behalf of the people that 
don't have the time and cannot come here with likeable stories.
    So thank you for your courage. This is what makes you great 
Americans. And I can assure you that as I leave this Congress, 
I cannot think of anything that I would want to do except to 
set this record straight and to have you, Mr. Taylor, to 
restore your confidence in the government. As we say in the 
neighborhood, we just screwed up. And someone should pay for 
this. And you should be proud at the end of the day that we 
dedicated ourselves to restore your dignity as well as that of 
our great country.
    And thank you for these hearings, Mr. Chairman.
    Chairman ROSKAM. Thank you, Mr. Rangel.
    Mr. Smith.
    Mr. SMITH. Thank you, Mr. Chairman.
    Mr. Chairman, thank you for hosting this hearing.
    Wow. That is the most I can say. But we have uncovered a 
lot of disturbing items in this subcommittee, but this one 
definitely tops the icing on a lot of items.
    One of the things that is the most troubling to me is that 
in these cases it looks like government attorneys handling the 
forfeitures have threatened to bring criminal charges to the 
businesses, to the business owners, if they did not agree to 
forfeit your money.
    Mr. Taylor, did that happen to you?
    Mr. TAYLOR. Yes, I believe it did.
    Mr. SMITH. Mr. Sowers, did that happen to you?
    Mr. SOWERS. Yes, definitely. And if I wouldn't have taken 
the settlement, they said they would have gone after the whole 
amount that we deposited for that summer, which was somewhere 
around $300,000. So----
    Mr. SMITH. And Mr. Sowers, in your situation, is it true 
that the U.S. attorney even tried to push harder settlement 
agreements because you spoke to the media?
    Mr. SOWERS. Yes, that is true.
    Mr. SMITH. Mr. Chairman, I would like to submit into the 
record the email that documents that from the U.S. attorney in 
this situation.
    Chairman ROSKAM. Without objection, so ordered.
    [The information follows:]
    
    
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]    
    
    
    Mr. SMITH. Thank you.
    It is absolutely unacceptable. It is absolutely ridiculous. 
And no American should ever be treated that poorly by their 
government in any situation.
    Mr. Johnson, have you heard of government attorneys 
threatening criminal charges in other cases like this?
    Mr. JOHNSON. I absolutely have. As I was mentioning 
earlier, we recently launched a lawsuit on behalf of Vocatura's 
Bakery, whose owners, the Vocatura family, were threatened with 
criminal structuring charges bringing a criminal forfeiture of 
over $200,000, as well as up to 4 years in prison. And David 
Vocatura, one of the Vocatura brothers, is here with me today. 
He is in the audience. This is shocking, it is wrong, and it is 
still going on today, and it has to stop.
    Mr. SMITH. Have there been threats of IRS audits of 
people's businesses if they don't settle the cases?
    Mr. JOHNSON. Again, in the Vocatura case, this is shocking, 
but the day that they refused to agree to this plea agreement, 
to plead guilty to structuring, they were told that they would 
be subjected to a criminal tax investigation of their business.
    Mr. SMITH. Can you think of any others?
    Mr. JOHNSON. So one case that I found shocking, it is 
slightly different, but in the Ken Quran case, for instance, 
after they got their money back, the day after they got their 
money back, they received a letter from the IRS saying that 
they were being subjected to a money laundering audit for their 
compliance with money laundering laws.
    Mr. SMITH. Thank you.
    Mr. Chairman, this is absolutely egregious. It is horrible. 
I look forward to asking the IRS some further questions in the 
second panel. I yield back.
    Chairman ROSKAM. Mr. Davis of Illinois.
    Mr. DAVIS. Thank you, Mr. Chairman. And I, too, want to 
thank you for calling the hearing. And I want to thank our 
witnesses for coming.
    Yes, we are indeed a part, if only a small part, of this 
government. And I, for one, want to apologize to both of you on 
behalf of that part of the government that I am. Your 
experiences should have never happened.
    Let me ask you, did you feel any sense of concern for you 
on the part of those who were investigating or interacting with 
you in telling you what your situation was?
    Mr. Taylor.
    Mr. TAYLOR. No, sir, no. When we expressed concern about 
the bills that were due, the checks that were outstanding, the 
wedding coming up, they said it politely, but they said, ``That 
is none of our concern.''
    Mr. DAVIS. Mr. Sowers.
    Mr. SOWERS. Well, the bank that sent the money to the IRS, 
I mean, we had checks bouncing, and we tried to get some 
answers from them on what are we supposed to do about that. And 
we couldn't find anybody that could give us an answer. So we 
were just like in limbo. We didn't know what to do.
    Mr. DAVIS. And after it was determined that you had not 
committed any kind of criminal offense, did anybody ever 
express any sense of discomfort or any sense of, ``We are sorry 
this has happened,'' or, ``It is unfortunate that this has 
happened''? Did you ever get any of that from anybody?
    Mr. SOWERS. I mean, from the first two agents that showed 
up, and, like I say, you could tell that they weren't really 
interested in being there, it was just their job. And they knew 
that it was wrong, they knew what we were going to have to go 
through. But there wasn't anything they could do about it.
    Mr. DAVIS. Well, at least that is one feeling, that they 
were doing their job.
    Mr. SOWERS. Yeah.
    Mr. DAVIS. And that is what they had to do.
    Mr. Taylor.
    Mr. TAYLOR. No, sir, I did not hear any concern of anyone 
involved about what had happened.
    Mr. DAVIS. You expressed that you had lost some confidence 
in the government. Is there any way that that breach can be 
repaired, in your mind?
    Mr. TAYLOR. Well, certainly, if I get my money back, I 
would feel a lot better about it. If you see that there is a 
problem and it gets corrected, that would serve to restore your 
confidence in the government as a whole.
    Mr. DAVIS. Well, I certainly hope that you are going to be 
able to get your money back. And I can assure you that anything 
I can be supportive of or can do to help make sure that that 
would happen for not only the two of you, but others who have 
fallen into this situation, we would do it. I certainly 
empathize with you in terms of just the feeling, and I am sure 
there are others who have had that feeling, that somehow or 
another you have been unjustifiably treated. And the only way 
that justice can be restored is that you do, in fact, get your 
money back, as you say.
    And, Mr. Chairman, again, I thank you for the hearing, and 
I yield back.
    Chairman ROSKAM. Mr. Reed.
    Mr. REED. Thank you, Mr. Chairman.
    And thank you to our witnesses here today. As echoed by my 
colleagues, I share the anger, the frustration that has been 
put on evidence here today.
    I join with my college from New York, Mr. Rangel, in saying 
we should join together and find justice for these individuals 
and the thousands that they represent across America.
    And I hope you stick around, Mr. Sowers and Mr. Taylor, 
because we have the IRS Commissioner come in right after you 
are done, and we will ask him this question. So we are going 
right to the top to see if we can't get justice for at least 
you here today.
    And, Mr. Johnson, I look forward to getting that list also 
from you so that we can go after other folks and get justice in 
this situation.
    I think it is important to read this email that was entered 
into the record and take a moment to reflect on what is being 
said here. So, Mr. Sowers, this is an email between your 
attorney, David Watt, and Stefan Cassella, who was the U.S. 
attorney who was in charge of your case, Correct?
    Mr. SOWERS. Yes.
    Mr. REED. And in working with Mr. Cassella from the U.S. 
Attorney's Office, your attorney is trying to work out the 
terms of your agreement, et cetera, and finalizing the 
agreement. That is correct?
    Mr. SOWERS. Yes.
    Mr. REED. All right. So he says, ``I have obtained''--this 
is Mr. Watt talking on your behalf--``I have obtained a 
settlement in the Taylor case''--which is Mr. Taylor's case, 
Taylor Produce case--``attached to this email, which is very 
similar to the Sowers case and there is no language regarding 
the Taylors' acknowledgement that there was reasonable cause 
for the seizure. We would even be satisfied with the same 
`whereas' clause as those in the Taylor agreement. I have a 
hard time''--and your attorney put this in bold and 
underlined--``I have a hard time explaining to my client why he 
is being treated differently.''
    Mr. Cassella's response is very telling, because in that 
email, it says, in bold and underlined in response to your 
attorney, ``As a representation of the United States 
Government,'' this U.S. attorney has the audacity to use the 
power of his office to tell you, Mr. Sowers, ``Mr. Taylor did 
not give an interview to the press.''
    So when you heard that, is that your government telling you 
to shut your mouth, don't exercise your freedom of speech 
rights? Is that your government with a badge and a weapon 
telling you to shut your mouth as we will take more of your 
money away? Is that how you interpret it? Because that is the 
way I interpret it.
    Mr. SOWERS. That is exactly the way I interpreted it.
    Mr. REED. That is appalling in this day and age that we 
have got people in power abusing that power like that.
    So I am going to give the benefit of the doubt to maybe 
some of these agents that were there who said that they didn't 
want to be there. It sounds like you treated them kindly. You 
opened your home to them.
    Mr. SOWERS. That is what God taught me to do.
    Mr. REED. Amen.
    So when you were having that conversation did you ever ask 
them, ``Then why are you here?''
    Mr. SOWERS. They have a job to do. They have families too.
    Mr. REED. So did they tell you who told them to be there?
    Mr. SOWERS. They were from the Treasury is all I knew. They 
didn't say anything else about it.
    Mr. REED. Did they give you any indication as to why they 
were coming after you, why they were there in the room, even 
though they didn't want to be there?
    Mr. SOWERS. Well, they never gave me an indication of what 
they really were after until the comment about the $12,000 to 
$15,000, and then I learned what they were there for.
    Mr. REED. Okay.
    Mr. Taylor, how about that hour conversation that you had 
in your testimony to them? Did the agents give you any 
indication as why they were there, what they were trying to do?
    Mr. TAYLOR. No, sir, they were just asking questions. As I 
say, they started off by saying I was not in trouble hadn't 
done anything wrong, they just had some questions.
    Mr. REED. So these agents who we are trying to believe are 
just innocent participants in this, just doing their job, there 
was no pressure. You don't think these guys were under any 
pressure maybe from their higher-ups to achieve something there 
by coming into your home to take your money? Any speculation as 
to maybe why they were there?
    Mr. SOWERS. I think that it is not the first time they did 
it so they knew exactly what was going to happen.
    Mr. REED. Are you aware that when they take your money 
where that money goes?
    Mr. SOWERS. Well, I have heard stories.
    Mr. REED. What have you heard?
    Mr. SOWERS. Some of it goes into local----
    Mr. REED. Goes right back in their budget, doesn't it?
    Mr. SOWERS. That they don't have to go to through a lot of 
loopholes to get money. They just can get it and use it.
    Mr. REED. Mr. Taylor, are you aware where the money goes 
when they seize it?
    Mr. TAYLOR. I have read articles.
    Mr. REED. What is your understanding of it?
    Mr. TAYLOR. It is used for police departments, for their 
budget, for items they can't get from the government.
    Mr. REED. How about those same agents? How about the same 
IRS that is coming after you to take your money? Are you aware 
that that money goes right back to the IRS to a large degree--
--
    Mr. TAYLOR. Yes, sir.
    Mr. REED [continuing]. For them to do this to other people?
    Mr. TAYLOR. Yes, sir.
    Mr. REED. Do you think that is right?
    Mr. TAYLOR. No.
    Mr. REED. Do you think that creates an incentive maybe for 
the IRS to be in your room to take your money?
    Mr. TAYLOR. Definitely.
    Mr. REED. Think we should do something about that as 
policymakers here in Washington, D.C.? With that, I yield back. 
Thank you.
    Chairman ROSKAM. Mr. Crowley.
    Mr. CROWLEY. Thank you, Mr. Chairman. Thank you for holding 
this hearing, as well, today.
    Mr. Sowers, we have met before, the last time you were here 
before the hearing. And I would say welcome back, but I know 
you are not here to discuss a good experience--well, welcome 
back despite that--but, rather, quite frankly, a bad experience 
that you have gone through. I hope to get your situation 
resolved as soon as possible, because law-abiding citizens like 
yourself should not have the experience that you have had with 
your government, with our government.
    All of us up here are on the same page on this issue of 
fixing and preventing these seizures from happening to law-
abiding citizens like yourself--and, Mr. Taylor, that would go 
for you as well; I don't mean to exclude you--making sure that 
you get full restoration and restitution of your assets.
    The policy of the government seizing assets and never 
charging people with a crime turns the basic principles of 
American justice of innocent until proven guilty on its head. I 
believe the IRS needs to go through its old files and return 
all the funds wrongly seized from Americans. And I would work 
with any and all of my colleagues on both sides to see that 
that actually does take place.
    I have a quick question about--is it ``Vocatura's'' Bakery?
    Mr. JOHNSON. ``Vocatura's'' Bakery.
    Mr. CROWLEY. Vocatura's Bakery. And that is in Norwich in 
Connecticut?
    Mr. JOHNSON. That is correct.
    Mr. CROWLEY. When did the government seize their assets?
    Mr. JOHNSON. The assets in that case were seized in 2013, 
before the policy change.
    Mr. CROWLEY. So the policy changed in October of 2014, 
correct?
    Mr. JOHNSON. Yes.
    Mr. CROWLEY. And that is my understanding, as well, that 
the policy did change in 2014.
    What I would suggest, again, is we'll get to the bottom of 
this and see to it that those moneys are restored to their 
rightful place with the citizen of the United States.
    So, with that, Mr. Chairman, I will just yield back the 
balance of my time.
    Chairman ROSKAM. Thank you, Mr. Crowley.
    Mr. Rice.
    Mr. RICE. Thank you, Mr. Chairman.
    Mr. Johnson, I want to start with you. This institute that 
you work with, are you limited to tax controversies?
    Mr. JOHNSON. No. The Institute for Justice is a nationwide 
public interest law firm that litigates in a number of areas, 
one of which is property rights, which is what brings us to 
this particular issue.
    Mr. RICE. Yeah. With the cascade of scandals that have 
arisen in the Federal Government and the level of incompetence 
and outright wrongdoing over the last 5 years, I am not 
surprised that Mr. Taylor has lost some faith in the 
government. I sure as hell have.
    How about you? You deal with the government all the time.
    Mr. JOHNSON. It is very difficult dealing with Federal 
prosecutors, in particular, in these cases, who have sworn an 
oath to uphold the law and are supposed to be enforcing the law 
but come across more like schoolyard bullies than law 
enforcement officers.
    Mr. RICE. You know, these folks, to my understanding, have 
admitted that the money was taken wrongfully from these people. 
Is that correct? With this change in policy, they have admitted 
that.
    Mr. JOHNSON. Exactly.
    Mr. RICE. And what is their justification for holding the 
money?
    Mr. JOHNSON. Well, I would say, in these cases, they would 
say that it is too late, that it is already over. But we have 
filed petitions, and we have asked to get the money back. So, 
really, they have no justification.
    Mr. RICE. If these folks here had withheld money from the 
IRS for the last few years and the IRS discovered it was their 
money and they came to them and said, ``Too late,'' what do you 
think the IRS would do?
    Mr. JOHNSON. I don't think the IRS would be too keen on 
that.
    Mr. RICE. Let me ask you this. Mr. Taylor, when they came 
to you, did they ask you to produce records to show that you 
didn't have any underlying criminal activity?
    Mr. TAYLOR. No, sir.
    Mr. RICE. They didn't? They didn't want to look at your 
receipts and your expenses to prove your income and all that 
kind of stuff?
    Mr. TAYLOR. Not the gentleman that came to the house.
    Mr. RICE. Okay.
    Mr. TAYLOR. But the prosecuting attorney did want 4 years 
of financial records.
    Mr. RICE. Okay.
    Mr. TAYLOR. Which we got it there by the time that they 
asked for it.
    Mr. RICE. What do you think they would have done if you had 
said, ``No, I'm not going to give you those records''?
    Mr. TAYLOR. I might not be sitting here today.
    Mr. RICE. Probably in prison, wouldn't you?
    What do you think they would have done if you would have 
said, ``Well, I lost them''?
    Mr. TAYLOR. I don't know what they would do.
    Mr. RICE. What do you think they would have done if you 
just said, ``Oh, well, I destroyed my hard drive. It crashed''?
    Mr. TAYLOR. I have heard that before.
    Mr. RICE. You probably wouldn't be sitting here, would you?
    Mr. TAYLOR. No.
    Mr. RICE. You know, these public officials, they are 
supposed to operate on a higher plane, right? They are not 
supposed to abuse the public trust. But, by their own 
admission, they are stealing from you.
    Is it any wonder why people have lost faith in the 
government? This level of--it is not incompetence. I mean, it 
is certainly incompetent, but it is way beyond that. It is not 
negligence, is it, Mr. Johnson? It is far beyond that. How 
would you characterize this?
    Mr. JOHNSON. I would say that the IRS is taking people's 
money because the IRS wants that money to fund its own budgets.
    Mr. RICE. It is malicious. It is wrongdoing. It is 
criminal. Our government is acting as the criminal here. It is 
amazing that people have what faith they do in the government. 
And it is not just the IRS. Look across all these 
bureaucracies. Look at the VA, for God's sake.
    So, my friends, I sure am sorry for what you had to deal 
with, and I will do my part, if offered the opportunity, to fix 
this problem.
    Thank you very much. I yield back.
    Chairman ROSKAM. Mr. Marchant.
    Mr. MARCHANT. Thank you, Mr. Chairman.
    Mr. Sowers, Mr. Taylor, since this has happened to you, did 
you get any guidance from these agents or the agency on how you 
should conduct your business going forward? Did they say, 
``Wait till you have $10,000 saved up and make your deposits''? 
Did they offer any--for all those people listening out there 
now that are conducting their business the way you guys have, I 
mean, did you change the way that you did business?
    Mr. TAYLOR. I have changed. I have a cash transaction 
report filed every week when I deposit money.
    Mr. MARCHANT. Yeah.
    Mr. TAYLOR. The only advice I got was from a lawyer and 
reading what I could about the whole idea of what I had done 
and what I should be doing.
    Mr. MARCHANT. So, now, most of your transactions are over 
$10,000 so they get put into the system?
    Mr. TAYLOR. I sometimes save it until I do have over 
$10,000.
    Mr. MARCHANT. Yeah. Yeah, that is what I was asking.
    Mr. TAYLOR. Right.
    Mr. MARCHANT. I mean, this has made you conscious, and it 
has been something that now, every day, you have to think 
about.
    Mr. TAYLOR. I have had more tellers learn how to do a cash 
transaction report.
    Mr. MARCHANT. Yeah. Yeah. I would imagine.
    How about you, Mr. Sowers?
    Mr. SOWERS. I really hate to say, but I don't deposit cash 
anymore. I am afraid to do it.
    Mr. MARCHANT. Yeah.
    Just for my information, if somebody gives you a check, do 
they treat that differently than cash?
    Mr. SOWERS. Checks don't make any difference. It is just 
the cash.
    Mr. MARCHANT. Yeah. So, on that deposit slip, they pick up 
just the cash number. They don't treat a check as cash.
    Mr. SOWERS. Yes. That is all. I mean, the cash is the only 
thing they are concerned about.
    Mr. MARCHANT. Yeah. Because I think there are millions of 
Americans out there that are conducting their business 
innocently, thinking that they are complying with every single 
law, and, still, just an innocent mishandling or making a 
deposit the way they don't want you to make it is subjecting 
them to some criminal action.
    Mr. Johnson, how many petitions are currently pending 
before the government for reimbursement or forgiveness or 
return the money?
    Mr. JOHNSON. So I am aware of two, the Taylor and the 
Sowers petitions. There was a third, the Quran petition. The 
IRS granted that petition. And, again, it raises the question, 
if they can grant one, why can't they grant the other two.
    Mr. MARCHANT. So of the thousands of--how many billion 
dollars did you say was in the fund?
    Mr. JOHNSON. So there are $6.1 billion in the fund as of 
the close of the 2015 fiscal year.
    Mr. MARCHANT. Yet there are only three petitions pending to 
get their money back?
    Mr. JOHNSON. Well, so, in terms of the structuring cases, 
we know that there are about 600 cases that fall into this 
category of people who had their money taken who wouldn't have 
it taken today. The problem is we don't know who those people 
are. We know that they exist, but the records are anonymized so 
that we can't identify them and speak to them, and they may not 
know that they have the right to try to get their money back.
    Mr. MARCHANT. And this fund where the money goes, is it a 
general revenue fund or is it a dedicated fund that can't be 
touched by anybody?
    Mr. JOHNSON. It is the Treasury Forfeiture Fund, which is 
available to the IRS to fund its own activities, its own law 
enforcement activities. So what the IRS is doing here is it is 
taking money from people and then it is using that money to 
fund its own budget without having to come to Congress to ask 
for an appropriation of funds.
    Mr. MARCHANT. You suggested that there was a way for 
Congress to statutorily stop this. Would you repeat that?
    Mr. JOHNSON. Yeah, I think Congress needs to do two things.
    One is it needs to codify the policy change that the IRS 
has announced, to change the definition of ``structuring'' so 
that in order to be convicted or have your money taken for 
structuring you have to actually have been engaged in some 
other crime.
    The other thing that Congress can do is actually direct the 
IRS to return funds in cases that don't meet the policy so that 
people have a judicial right to get that property back rather 
than depending on the petition procedure that we currently are 
pursuing.
    Mr. MARCHANT. Mr. Chairman, I hope that that is the goal of 
our committee, to do that. And thank you.
    Chairman ROSKAM. It absolutely is, and legislation is 
imminent.
    Mr. Kelly, bring us home.
    Mr. KELLY. Thank you, Mr. Chairman. And thanks for holding 
this hearing today and allowing me to be here.
    To both Mr. Taylor and Mr. Sowers, thank you for standing 
up and actually talking about your story. I am an automobile 
dealer, and every time I get the chance to talk about the IRS, 
my son calls me and says, ``Dad, please be careful. I don't 
want them coming in the store.''
    I know one thing for sure: The issue that we are talking 
about today should be a national outrage. It just shouldn't be 
a concern of this committee. The whole country should be 
standing up and staying, ``Not in our country, not at this 
time, not on our watch.''
    It is stunning to me, the arrogance of the IRS. Now, I know 
that we have to have a way of collecting revenue. And I am not 
painting everybody with the same brush. But for you to sit 
where you are sitting--and we have a form called the 8300 Form, 
where, if it is 10 grand or more, we have to report it.
    So I am talking to the garage today, and I said to 
Stephanie, ``So tell me--for us to be in compliance.'' She 
goes, ``You know what? I even watch for any other signs that 
may look like somebody is structuring.'' And I am saying, you 
are talking about guys that make steel down the street for us, 
guys that make railroad cars, guys that stand on their feet all 
day and girls that do stuff all day long to make a living, and 
those are the people we are really worried about?
    Just from where you are, Mr. Taylor and Mr. Sowers, talk 
about the loss that you have incurred, not just in the fact 
that they could shut you down, but you are not paid interest on 
that money that was frozen. You don't have--your loss in your 
communities of your reputation and how you have to go back and 
try to repair that. This is the part, I think, that we are 
missing. Because we are talking about people--real people, 
people who get up every day with one reason and one reason 
only, and that is to take care of their kids, their community, 
their churches, and their schools. And then we have an agency 
that comes in and says, ``Yeah, you're the guys we're looking 
for because you don't know how to deposit money. You're the bad 
guys.''
    Mr. Taylor, tell me how that has affected you in your 
community--Mr. Sowers, you in your community--and the arrogance 
that this agency could come in to do it.
    I don't give a damn if they said they were sorry or not. 
They knew exactly what they were doing to you, and they knew 
exactly where it was leading. And you know what else they knew? 
They knew you didn't have the money to ante up to fight them, 
and that is why you would settle.
    Look at this up on the board. You know, we call it a 
shakedown back home, but this is what I think they are doing. 
If you can just take a look at--extortion is the practice of 
obtaining money, property, or services through coercion, force, 
or threats. It is synonymous with ``shakedown.''
    Do either of feel like you got a shakedown?
    Mr. SOWERS. Certainly I got a shakedown.
    And I guess the biggest impact it had on me was a story the 
local paper did that makes you sound like you are a criminal. 
And my daughter just the other day told me, ``You know, you 
must be doing something wrong; you're always in trouble.'' But 
she has known me for 40 years, and she knows I have a big mouth 
and I don't stand back when somebody is doing something wrong, 
to tell everybody.
    And that is what happened. I told everybody that walked up 
to my table at the farmer's market what happened. And those 
people are upset. I mean, people are upset.
    Mr. KELLY. Yeah. Yeah.
    Mr. SOWERS. I mean, I know I do everything the way I should 
do it or--and I don't really care what other people think. But, 
you know, that is just the way it is. I mean, people think----
    Mr. KELLY. So let me ask you, because I know how badly you 
were hurt, but so--now, checks were bouncing, right?
    Mr. SOWERS. Yes.
    Mr. KELLY. Okay. I live in a small town too. You bounce a 
check, and I guarantee you those tellers say, ``You hear what 
happened up at Kelly's? Their checks are bouncing.'' That goes 
through that community like wildfire. I bet in your community a 
guy that has been an upstanding citizen--you and your wife 
raised a wonderful family, a wonderful business. I bet your 
name went through that community so fast.
    You know who couldn't give a damn about it? People in the 
IRS. They don't care how much they crush you. They don't care 
how much they demean you. They don't care what the grinder is 
they put you through. You know why? Because they have absolute 
power to do it, and it has corrupted them absolutely.
    If you can, Mr. Taylor, tell me how this has affected you. 
And, please, this is your day to tell your story to America of 
what is happening right now on our shores. This is not Germany 
with the Gestapo coming in or Russia with the KGB coming in. 
This is right here in America, right here with our own 
government.
    So, Mr. Taylor, how much has this hurt you?
    Mr. TAYLOR. I am not sure I can quantify how much it has 
hurt me.
    Mr. KELLY. And I know you can't.
    Mr. TAYLOR. And all I know is I just have to live my life 
the way I know how to live it, trying to do things right. And, 
sooner or later, people will realize that something went wrong 
there and it wasn't with me. I can't fight it. I just have to 
move on.
    Mr. KELLY. Okay. Well, I just want to offer you something--
and, Chairman, I want to thank you so much for this.
    Because you know what? The truth of the matter is you can't 
go in that arena and fight for yourself. But you know what you 
can do? You can elect people to go and represent you in this 
government that is looking out for your best interests. You 
need champions that are going to rise up to say, ``You have 
hurt our people. You have done terrible wrong to our people, 
and it has to be remedied.''
    The fact that we have a hearing is one thing. There is no 
way we can go back and repair your reputations. There is no way 
we can go back and repair the damage we have done to you just 
as a person. Your wives are with you today. It hurts not just 
you, your business, your family, but your grandchildren and 
your children. It affects you in the community.
    And this is all because of somebody thinking that you 
structured a deposit in order to hoodwink the IRS. That is 
absolutely preposterous, and it is not allowed to stand in 
America, especially not at this time and certainly not on our 
watch.
    Thank you guys for having the gumption and the courage to 
stand up and tell your story.
    Chairman ROSKAM. Thank you, Mr. Kelly.
    You know, as I have been listening and watching you both 
and watching your wives here and just the chance to visit with 
you before the hearing and so forth, your presence and your 
willingness to tell your story is very encouraging, actually, 
because what you are doing is you are bearing witness to a 
deeper virtue of this country. In other words, you are standing 
up for American ideals. And whether you realize it or not, you 
are holding on to an American ideal and you are reflecting that 
back to a lot of other people, saying, ``This isn't right. 
There is something that is off about this.''
    And, you know, when you were talking a minute ago, Mr. 
Sowers, about trouble and one of your kids teasing you about 
being in so much trouble, Mr.----
    Mr. SOWERS. Oh, she wasn't teasing.
    Chairman ROSKAM. Well, I take your point.
    But Mr. Lewis kind of nudged me and--there was a hashtag 
that he had yesterday; it is called ``good trouble.'' And he 
knows something about good trouble. And you are sort of in good 
trouble, in a way. And I am not trying to be dismissive or 
cavalier about that or dismissive about the pain and the 
difficulty that you are going through, but what I am telling 
you is the strength that you are reflecting to us is a good 
thing, and it is encouraging.
    There is another thing that is important. We are on your 
side. We are rooting for you. We are on your team. And we are 
going to hear from the other team in a couple minutes. Stick 
around. It is going to be an interesting discussion.
    And, Mr. Johnson, I have a question for you, just to go 
into a little bit more detail. You mentioned in your testimony 
that, you know, there is data and so forth on lists and others 
who have been impacted by this. Can you walk us through--
because we have to get to this. We need to sort this out, and 
your insight on what is available and so forth is very 
important.
    So, in terms of scope and scale, I have heard you discuss 
generally three numbers. One number was the number of people 
that you have reason to believe have been similarly situated as 
the Taylors and the Sowers. And that number was about 600 
people, 600 cases?
    Mr. JOHNSON. That is correct.
    Chairman ROSKAM. How did you come to that number? How have 
you come to that conclusion?
    Mr. JOHNSON. So we came to that through a FOIA request to 
the IRS where they provided us with access to some data about 
structuring forfeitures. We sought additional data that could 
help us to identify, you know, more information about what the 
IRS is doing with civil forfeiture and to have even greater 
information. And the IRS responded to us and said that, before 
they could turn over all of the data that they would have, we 
would have to pay a fee of a quarter-million dollars for access 
to that data. They basically said that the Institute for 
Justice, which is a nonprofit organization, falls within the 
commercial-use category of FOIA requests, which is complete 
nonsense.
    And then when we tried to appeal that decision, they said 
to us, ``Well, it is not final because we haven't actually 
denied you access to the data, so you have no right to 
appeal.''
    Chairman ROSKAM. Good grief. I mean, the pattern that they 
have run these folks through, they are just overlaying this 
pattern on FOIA requests. Good grief. Judas, man.
    So, by not giving you an answer, they deny you the capacity 
to appeal. Is that right?
    Mr. JOHNSON. Right. By saying that, ``Well, we will give 
you the information, but you have to pay us this outlandish 
amount of money,'' then they are claiming----
    Chairman ROSKAM. Who lays awake at night at the IRS 
thinking about this stuff? Who lays awake at night thinking 
about, ``Hmm, how can we stick it to people and not give them 
information to which they are entitled?''
    Okay. That is new information for me. It is probably new 
information for this entire panel. And we need to deal with it. 
So that is the----
    Mr. RANGEL. Mr. Chairman.
    Chairman ROSKAM. Yes.
    Mr. RANGEL. Could you inquire as to what information he 
actually has?
    Chairman ROSKAM. I will yield to Mr. Rangel.
    Mr. RANGEL. Thank you.
    I know what you can't get. And I agree with the chairman, 
that is outrageous. But this 600 people have cases in front of 
the IRS. Do you have that information for us?
    Mr. JOHNSON. We know that there are----
    Mr. RANGEL. No, no, no, no.
    Mr. JOHNSON. Right, but we don't----
    Mr. RANGEL. You know. But how can we know what you know? Do 
you have a list of names?
    Mr. JOHNSON. So we don't have a list of names. What----
    Mr. RANGEL. What do you have?
    Mr. JOHNSON. What we know is that the IRS' database 
identified 600 cases between 2007 and 2013 where there is no 
allegation of any criminal wrongdoing apart from structuring 
and that, in those cases, they took about $43 million from 
those people.
    Mr. RANGEL. Well, you stick around too, because----
    Chairman ROSKAM. That is right.
    Mr. RANGEL [continuing]. It is very difficult for us to ask 
for information when we cannot identify wrongdoing. But this 
committee will be able to give you--without paying a fee, we 
will get access to whatever you can help us to get that 
information from. But we need your help in order to determine 
whether these 600 cases--because what we have here, Mr. 
Chairman, are two different cases. We have the Justice 
Department, which we have cases that we have to call on them 
separately, but we can handle the IRS part of it this morning.
    Thank you.
    Chairman ROSKAM. Mr. Johnson, to echo, then, on Mr. 
Rangel's inquiry, so we have that 600 cases. Then the $43 
million figure is the number that you came to understand was 
captured by the IRS as a result of those 600 cases.
    Mr. JOHNSON. Exactly.
    Chairman ROSKAM. And then you mentioned a fund. And so I 
just don't want us to be thinking that there is $6 billion out 
there. So there is a fund generally at the IRS that has $6 
billion in it that is what?
    Mr. JOHNSON. That is called the Treasury Forfeiture Fund. 
And that is the fund into which the Treasury Department puts 
all of its forfeitures under the civil and criminal 
forfeiture----
    Chairman ROSKAM. Could be cases that we would be very 
sympathetic to. In other words, it could be drug forfeiture 
cases; it could be, you know, mafia front groups and all that 
sort of stuff. So that would be also within that fund, that $6 
billion?
    Mr. JOHNSON. Right. That is all forfeitures by the entire 
Treasury Department.
    Chairman ROSKAM. I understand. So, for our purposes, we 
want to focus in--based on your representation, we want to 
focus in on the cases and the $43 million. Is that right?
    Mr. JOHNSON. The point of mentioning the $6.1 billion is 
that that is money that is available to the IRS to return 
assets to people. The amount of money that needs to be returned 
is by no means $6.1 billion.
    Chairman ROSKAM. I understand. So, if we were to hear, for 
example--so your point in raising that is, if we were to hear, 
for example, from the Federal Government, DOJ or anybody else, 
that we don't have the money, your point is, yes, you do have 
the money, and that is an obtuse argument. Is that right?
    Mr. JOHNSON. Exactly.
    Chairman ROSKAM. Okay.
    We have been joined by Mr. Renacci.
    Mr. RICE. Mr. Chairman, can I ask one question?
    Chairman ROSKAM. I will yield quickly, and then--yes. 
Quickly.
    Mr. RICE. Mr. Johnson, the 600 cases that you have 
identified where there is no allegation of wrongdoing, how did 
you identify those?
    Mr. JOHNSON. So, again, what we requested from the IRS 
through FOIA is data from what they call their AFTRAK database, 
which just tracks the forfeitures of assets by the IRS----
    Mr. RICE. And you specifically asked for those that had no 
allegation of wrongdoing?
    Mr. JOHNSON. So one thing that the database includes is a 
box that they can either check or not check where it says that 
they suspect criminal wrongdoing in addition to structuring. 
And so we know that there are about 600 cases where they did 
not check that box. In other words, they themselves indicated 
in their own database that the only reason they were pursuing 
those funds was because there was structuring.
    Mr. RICE. But there very well could be, and probably are, 
thousands of other cases that, like in these guys' cases, they 
signed these agreements to avoid criminal prosecution, but 
there could be no validity to it.
    Chairman ROSKAM. Let me reclaim the time. We will keep 
moving. And this is a line of inquiry that we will have with 
the second panel.
    Mr. Renacci has joined us.
    Mr. Renacci.
    Mr. RENACCI. Thank you, Mr. Chairman. I am just going to 
yield at this time.
    Chairman ROSKAM. Okay.
    Thank you all.
    Mr. CROWLEY. Mr. Chairman, can I--just one more----
    Chairman ROSKAM. I will yield.
    Mr. CROWLEY [continuing]. Followup just in terms of the 600 
cases.
    Just following up Mr. Rangel's queries as well, do you have 
a list of the 600 cases?
    Mr. JOHNSON. So the data that we obtained from the IRS is 
anonymized. So we don't know----
    Mr. CROWLEY. No. Okay.
    Mr. JOHNSON [continuing]. Who those people are. We just 
know that they exist.
    Mr. CROWLEY. Okay.
    Well, Mr. Chairman, I think, if that is the case, we should 
inquire as to how we can access that information.
    Chairman ROSKAM. Yes.
    Mr. CROWLEY. Because I think, if that is the case, we would 
like to have that information in terms of who those individuals 
are.
    Mr. JOHNSON. Absolutely.
    Chairman ROSKAM. Perfect segue to the second panel.
    Mr. LEWIS. Mr. Chairman.
    Chairman ROSKAM. Mr. Lewis.
    Mr. LEWIS. Before we leave these two witnesses, I just want 
to take a moment to thank you for being brave and courageous, 
joining Mr. Johnson to come before us today. I think we learned 
a great deal that could be helpful not just to you but to 
taxpayers all across our country. So thank you.
    Chairman ROSKAM. I know that every member reflects Mr. 
Lewis's sentiment.
    And, Mrs. Sowers and Mrs. Taylor, thank you for your role 
in this as well.
    Thank you to the witnesses.
    And we will reconvene shortly with the second panel.
    [Recess.]
    Chairman ROSKAM. Thank you.
    We would now like to invite the second panel of witnesses 
to the table.
    Our second panel is comprised of three witnesses from the 
government who are responsible for the IRS' use of its civil 
asset forfeiture authority and who handle these cases when they 
go to court. So it obviously doesn't start and end with the 
IRS. These cases have started with the IRS, but they obviously 
are turned over to the Department of Justice to be pursued. And 
that is the nature of this inquiry today.
    IRS Commissioner John Koskinen is with us; IRS Civil 
Investigation Chief Rich Weber is with us--I am sorry, Criminal 
Investigation Chief Richard Weber is with us; and DOJ 
Department Assistant Attorney General Kenneth Blanco.
    The committee has received your written remarks.
    A little bit of the back story: We had hoped that you were 
able to hear the testimony of the prior panel, and it is my 
understanding that you were able to hear the overwhelming 
majority of it. That was important to us.
    And I also just want to clear up one thing, and that is, in 
terms of the Commissioner's participation today, there was a 
press story that was involving the other committee of interest 
right now. There was a press story that sort of put this 
committee in a position of taking a disproportionate amount of 
time and attention.
    We had invited Mr. Weber to come as a witness. Commissioner 
Koskinen, you had said you would like to come. You are always 
welcome, obviously, as the Commissioner of the IRS, to come 
here. I just wanted it clear that it was at your request that 
you are here today, and you are always welcome.
    And, at that, let's open it up for 5 minutes. And I am 
pleased to recognize you, Commissioner Koskinen.

  STATEMENT OF JOHN KOSKINEN, COMMISSIONER, INTERNAL REVENUE 
                            SERVICE

    Mr. KOSKINEN. Thank you, Mr. Chairman.
    First, yeah, we talked about this a couple weeks ago, about 
this hearing. So my only point was I had committed to be here. 
I am delighted to be here. You are our oversight committee, and 
when you hold a hearing, I am anxious to be here as we go.
    I am sorry for the miscommunication about whether we should 
be here or not. Your staff was very helpful, and so we were 
able to hear about an hour and 10 minutes of the first panel. 
So we got, I think, the bulk of the issue. And we do take this 
very seriously, and I am delighted to have the opportunity to 
testify here again before this committee.
    As you know, over a year ago, about a year and a half ago, 
we changed our policy in this area and made it clear that there 
would--even though structuring still remains a crime on the 
books, if you have structured your deposits in a way that 
avoids the reporting requirement but it is not with illegal 
source funding, as of a year and a half ago, there are no more 
seizures by the IRS. And I think that is important to know, 
that we have reached out to do that.
    As I said when I testified here last February, I guess it 
was, we apologize to anybody who had innocently gotten 
themselves into the middle of this and committed that we would 
do whatever we could to work this forward. And I am delighted 
to do that.
    I would clarify one other thing before I get into my 
statement, which is: There has been a lot of talk about the 
forfeiture fund. Those funds don't come directly to the IRS. We 
get less than 2 percent of those funds. It is about, on 
average, over the last 5 years, it has been $20 million or $22 
million, you know, out of an $11 billion budget. So we don't 
have a direct incentive that if we get more money it comes to 
us. We don't see the money at all. And if it goes to the TEOAF 
fund, we get a very small percentage of it, and it goes to law 
enforcement purposes.
    So I think it is important to understand IRS agents don't 
have a financial incentive. They are not measured in any way 
under the Restructuring Act, either on the civil or criminal 
side, according to whatever collections are taken as a result 
of their activities. Those are not performance measures 
anywhere. I sign a quarterly authorization and statement that 
no one is measured by the amount of money they collect in any 
part of the IRS.
    So we do take this very seriously. The need to support the 
Federal Government's efforts against financial crimes, such as 
money laundering and terrorist financing, are important. And in 
our efforts, though, we strive for a balanced approach designed 
to ensure fairness and respect for the rights of individuals 
under the law.
    The balanced approach extends to our efforts in regard to 
the crime of structuring, in which cash transactions are 
intentionally manipulated so they fall below the $10,000 
reporting threshold established under the Bank Secrecy Act. 
This reporting requirement is one of several used by law 
enforcement agencies to uncover illegal activities in the U.S. 
and abroad.
    Structuring may occur for any number of reasons. 
Individuals may want to conceal cash generated from illegal 
activities, such as drug dealing, or the cash may come from a 
legal source but the person is trying to evade taxes. Whatever 
the reason, the law is clear that structuring cash transactions 
to evade the reporting requirements is a crime.
    Under the law, the IRS and every other Federal law 
enforcement agency has the authority in structuring cases to 
investigate criminally and seize assets involved in the 
structuring. But the law also includes procedures we must 
follow to safeguard the rights of individuals and ensure that 
the seizure action is appropriate.
    Before any action can go forward, before any IRS agent can 
take an action, Federal agents must first prepare a seizure 
warrant affidavit that is reviewed by the appropriate U.S. 
attorney's office, and then the warrant is presented to a 
Federal judge who approves or denies it. Only if the judge 
authorizes the warrant and the activity by finding there is 
probable cause to believe the property is involved in a crime 
can the seizure and forfeiture proceedings take place.
    As I noted, after reviewing our activities, we did a year 
and a half ago change the policy and note we would no longer 
pursue the seizure and forfeiture of funds, while illegal under 
the structuring act, that were solely legal-source structuring 
cases, not derived from illegal sources, unless there were 
exceptional circumstances, and there haven't been any since the 
policy.
    By concentrating on illegal-source structuring violations, 
we are now able to devote more of our resources, obviously, to 
investigating the most egregious Federal violations, including 
those cases where structuring activity is indicative of more 
serious crimes.
    The change in policy doesn't render prior seizures 
unlawful, as structuring is still today a Federal felony 
regardless of the source of funds. We will continue to 
investigate structuring violations as they relate to other 
financial crimes, including tax and money laundering 
violations. But we believe that our policies change will help 
ensure consistency in how IRS structuring investigations and 
related seizures are conducted and ensure, to the extent we 
can, fairness to the taxpayers.
    As I noted earlier while I was here a year and a half ago, 
we have apologized to anyone innocently caught up in this, and 
we are doing our best, going forward, to make sure that we 
remediate those conditions.
    The question has arisen as to how the IRS is treating cases 
where legal-source funds were seized prior to the October 17 
policy. And, since that date, we have considered approximately 
75 cases, including petitions from property owners for 
mitigation.
    In administrative cases, where we have control, where it 
did not actually go--the taxpayer didn't take it to court, we 
make a decision at the senior level within our Criminal 
Investigation Division, not at the level of the IRS agent 
involved in the case, on the merits of whether to return the 
funds to the property owner. In judicial cases--that is, where 
the seizure went to court for one reason or another--the 
Department of Justice has control. And, in those cases, we make 
recommendations after reviewing the case to the Department of 
Justice about how the case should be handled.
    We recognize that seizure and forfeiture, as noted, are 
powerful law enforcement tools and must be administered in a 
fair and appropriate manner. We understand we have a duty not 
only to uphold the law but to protect the rights of individuals 
as well.
    We look forward to working with property owners who come 
forward and file petitions--we are processing those to this 
day--and will continue working to ensure that we handle all the 
cases with fairness and respect for taxpayers' rights in every 
instance.
    Mr. Chairman, that concludes my statement, and I would be 
happy to take questions.
    [The prepared statement of Mr. Koskinen follows:]
    
    
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    Chairman ROSKAM. Mr. Weber.
    Mr. WEBER. No statement, sir.
    [The prepared statement of Mr. Weber follows:]
    
    
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    Chairman ROSKAM. Mr. Blanco.

STATEMENT OF KENNETH BLANCO, DEPUTY ASSISTANT ATTORNEY GENERAL, 
         CRIMINAL DIVISION, U.S. DEPARTMENT OF JUSTICE

    Mr. BLANCO. Good morning, Chairman Roskam, Vice Chairman 
Meehan, Ranking Member Lewis, and Members of the Subcommittee. 
Thank you for the opportunity to appear today to discuss the 
important topic of civil asset forfeiture and structuring.
    As a 27-year veteran prosecutor and Deputy Assistant 
Attorney General overseeing a variety of areas, including asset 
forfeiture and money laundering, I am honored to represent the 
Department of Justice today and to address the Department's 
commitment to ensuring the Federal asset forfeiture laws are 
appropriately and effectively used and consistent with the 
civil liberties and the rule of law.
    Asset forfeiture and the structuring laws are a critical 
tool that serves a number of compelling law enforcement 
purposes, including detecting and deterring other illegal 
activity. The Bank Secrecy Act assists law enforcement in the 
detection of criminal conduct by requiring financial 
institutions to file reports concerning financial transactions 
in excess of $10,000.
    The criminal structuring laws, as enacted by Congress, are 
intended to prevent individuals from evading these important 
reporting requirements. The government is required to prove 
three elements for a structuring charge, namely that the 
defendant structured his transactions, knew of the reporting 
requirements, and intended to evade the reporting requirements.
    It is important to note that structuring is not a strict 
liability crime, and an individual who inadvertently divvies up 
his money to deposit or withdraw cannot be liable simply for 
structuring because he lacks the intent to evade the reporting 
requirement.
    Congress has authorized a variety of sanctions, both civil 
and criminal, for structuring violations, including forfeiture 
of the structured funds. In a civil action to forfeit property 
linked to crime, including a structuring violation, the 
government has the burden to prove by a preponderance of the 
evidence that a crime occurred and that the seized property was 
connected to that crime.
    Even after the government has proven its case, the law 
entitles any individuals with standing to assert a claim that 
they are innocent owners of the property at issue and defeat 
the government's claim.
    After a forfeiture is competed, a petitioner can seek the 
return of property by filing a petition for remission or 
mitigation. Remission and mitigation do not contest the 
forfeiture. In effect, those petitions are tools to request a 
pardon for the forfeited property. The Department has 
procedures in place for considering and fairly resolving each 
of these petitions.
    Those who commit structuring violations do not qualify for 
remission because they are not innocent owners under the terms 
of the law. Such petitions might, however, qualify for 
mitigation, which is a decision to pardon some portion of the 
forfeited property based on a holistic view of the case.
    The factors the Department considers when evaluating 
mitigation include: the existence of a prior record or evidence 
of similar conduct; whether the violation includes a drug 
offense or drug crime; the violator's cooperation with law 
enforcement on the related matter; was the violation isolated 
and not part of a larger scheme; and the necessity of the 
forfeiture to achieve a legitimate forfeiture purpose.
    In order to protect and maintain the integrity of the work 
our career prosecutors and career agents do, I cannot comment 
on any pending litigation or specific case today. But I can 
tell you the Department continues to thoroughly review and 
appropriately rule on any current and newly filed petitions for 
remission or mitigation, including those involving structuring 
violations.
    I would also like to highlight the Department's ongoing and 
comprehensive review of forfeiture practices and policies over 
the past 18 months. As part of that review, on March 31, 2015, 
the Department issued a policy limiting the use of asset 
forfeiture to authorities in connection with structuring 
offenses in most cases to instances where a defendant has been 
criminally charged or there is evidence of additional criminal 
activity beyond the crime of structuring.
    The new policy also imposes important protections after a 
seizure has taken place, including a directive to return the 
funds if the prosecutor at any time determines there is 
insufficient evidence to prevail at trial and imposing a 
deadline for filing a criminal indictment or civil complaint 
against the forfeited funds.
    This policy is a significant change that exceeds the 
requirements of the law, and it underscores the Department of 
Justice's commitment to fighting crime and returning money to 
victims while protecting civil liberties and ensuring due 
process.
    I thank the subcommittee for their interest in this matter. 
I look forward to fielding any questions from the committee.
    [The prepared statement of Mr. Blanco follows:]
    
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    Chairman ROSKAM. Thank you both for your statements.
    Just as a little bit of a prelude--and I will come to Mr. 
Meehan very, very quickly, but we are having this hearing 
because of a briefing that I found just incredibly 
dissatisfying in February of this year. And, you know, the 
Internal Revenue Service made a decision that I think is a 
fantastic decision, and that was, look, don't treat these 
underlying offenses that are not criminal cases in this way. 
And they made a good decision, and people said, ``Terrific.'' 
Mr. Weber made the announcement. It was in The New York Times 
and so forth. And, across the aisle, there was a sense of, 
``This is a good thing.''
    Then I asked for a briefing. Because, you know, it just 
sort of occurs to one, well, what happens if that was then and 
this is now? So, in other words, somebody is caught up in this, 
and are they just going to go through the legal meat grinder of 
getting caught up? And isn't there a way out for people who 
wouldn't--this wouldn't apply to them in the future?
    And in this room in February, I thought it was going to be 
a 15-minute meeting. I thought it was going to be, ``Hey, Mr. 
Roskam, you know, we've disposed of these cases, and here's 
this process, and it's all done, and all is good,'' and that I 
was going to get on my plane and go home to Chicagoland and 
that was it.
    But it was just one of these meeting that I came out of an 
hour and a half later, and I was completely dissatisfied. And I 
told the three representatives from the IRS and I told the 
three representatives of the Department of Justice, I said, ``I 
am more fearful of you now than I was when I walked into the 
room.'' And the fear that I was manifesting was kind of 
reflected in my own constituency, and that is: Look, there is 
no pursuit of justice here. And it was obtuse. It was this--it 
was like a weird Kafka novel script, frankly. I thought, ``We 
can do a lot better than that.''
    And so, if you listened to the first round of questions, 
what you are hearing is a wide range of political opinion, a 
wide range of life experience, a wide range of geography that 
is all saying one thing: ``Do justice. And pursue it and make 
it happen and be aggressive about it.''
    And there is always, you know, sort of one reason or 
another, or we can't talk about this, and we can't talk about 
that. And we are not asking anybody here to do anything that 
they don't have the authority to do. But you have the authority 
to fix this, and you have the authority to do something 
extraordinarily great here.
    And the extraordinary greatness would be to restore the 
confidence of Mr. and Mrs. Sowers, to restore the confidence of 
Mr. and Mrs. Taylor, and all kinds of people out there, where 
they say, ``You know what? This government, it responded. And 
when it was brought to a level where people said this is an 
important thing, the government responded.''
    And we have to get this done. There is an urgency to this. 
Because if we don't, then what happens? The government becomes 
delegitimized in people's eyes. Really, it becomes very, very, 
very corrosive. So this is something we have to deal with.
    And I am convinced that we can do some good here. I am 
convinced that our subcommittee and those in the executive 
branch with authority have the capacity together to do justice.
    I yield to Mr. Meehan.
    Mr. MEEHAN. Thank you, Mr. Chairman.
    Mr. Blanco, you cannot comment on specific cases, but we 
can. And we sat here and listened to the testimony of two 
farmers. And as you go through the litany of the kinds of 
issues--whether there was prior conduct, whether it is drug 
proceeds, whether they were cooperating, whether it may be an 
isolated incidence, whether it is necessary to effectuate a 
criminal purpose--I purposely elicited testimony from them 
about their experience, and on every factor there is a complete 
absence of the kind of aggravating circumstances associated 
with their matter.
    Now, we are going to talk about policies moving forward, 
but we are in this gap of time in which the Department of 
Justice, which has been handed a great percentage of the 
responsibility to deal with these issues, it now lies with you 
and those who work with you.
    Now, you talk about cases in which there is a preponderance 
of the evidence. We have also heard testimony from the 
individual who was here before about some 618 cases in which 
the Department of Justice, by it is own identification, from 
the Freedom of Information request, identified that that file 
contained by the DOJ's failure to check off the box that they 
had no suspicion of criminal activity. That is $43 million 
worth of dollars that have been seized from American citizens, 
small-business owners, in which IRS agents showed up.
    Now, I am aware today because of public information which 
was made about the extreme activity going on in the Department 
of Justice as we speak. Whether it is a policy decision, others 
can argue about. But there are scores of attorneys, maybe more, 
throughout the Department of Justice voraciously going through 
the records of convicted criminals, who are currently sitting 
in prisons, trying to find ways in which we can suggest that 
somehow those convictions weren't completely just and we have 
to undo some percentage of that.
    We will let that issue go. What I want to stand for is the 
fact that, as we speak today, there is significant effort going 
on in this Department of Justice to go through the records of 
convicted criminals to see if we can change their load. And yet 
we have before us people, no criminal suspicion, assets which 
have been seized, 618 cases. What is being done to look at the 
cases for those 618? Because in the same case, justice delayed 
is justice denied. We are looking at years of delay for some of 
these individuals.
    Mr. Blanco, what do you know about the efforts looking into 
the 618 cases for individuals who have not been suspected of 
criminal activity, one of the criteria that you have for a 
seizure?
    Mr. BLANCO. Congressman, my understanding is, with the 
testimony this morning, is those cases were IRS cases. Not all 
of these cases would have come to the Department of Justice. 
Some of those cases could have been handled administratively. 
So I don't think all those cases are ours.
    And, also, the $43 million would have gone into the TEOAF 
and not necessarily to the Department of Justice.
    Mr. MEEHAN. That is not what I am--where it goes, the 
money, I am not interested in. Well, maybe we will have--since 
we have Mr. Weber, Mr. Koskinen, the three of you can sit and 
resolve this issue.
    But, Mr. Koskinen, you testified that you have had 75 
cases, but that falls woefully short of the 618 which have been 
reported, and those only because we have been able to have a 
FOIA request to identify those. 75, 618. What do you know about 
what efforts have been undertaken to fairly and appropriately 
resolve these outstanding issues?
    Mr. KOSKINEN. My understanding of the 618 is the box hasn't 
been checked, therefore they are going to be criminally 
prosecuted. But they doesn't mean that those cases don't have 
illegal sourcing being used as part of the structuring.
    And our files don't distinguish, at this point, looking 
backwards, is which of those would in fact meet the criteria we 
are talking about here and which of them actually, while there 
is not a criminal prosecution, did have evidence of----
    Mr. MEEHAN. But why wouldn't somebody be required to 
identify the potential criminal nature for the seizure in the 
record?
    Mr. KOSKINEN. Remember, these were cases that were filed 
before our policy was changed. And, ultimately, the Department 
of Justice files----
    Mr. MEEHAN. Well, I know that. This is why this is of 
concern. I go back to the point, justice delayed, justice 
denied. That is fine, we move forward, and we can talk about 
the policy moving forward. But you see we are talking about 
cases from 2007 to 2013.
    We have a farmer here who is looking to pay for a wedding. 
We have somebody, the bills have not stopped coming in for the 
$49,000 that this farmer is looking to get back which has been 
wrongfully seized.
    Mr. KOSKINEN. Yes. And as I have noted, we have looked at--
we have received petitions, more than just the couple that were 
referred to. As noted, as I said, if they were administrative--
that is, they didn't go into the court system--we have control. 
If they went into----
    Mr. MEEHAN. My time is up, but I know----
    Mr. KOSKINEN. I would be happy to answer the question, 
though. I think we can----
    Mr. MEEHAN. Well, but IRS is blaming it on Justice, Justice 
is blaming it on IRS. Let's----
    Mr. KOSKINEN. I am not blaming it on anybody. I am just 
telling you what we can do. And what we can do is we have 
reviewed 75 cases either with petitions or that were caught in 
the middle and----
    Mr. MEEHAN. Can you get back to us on the status of 618 
which are part of our record correctly?
    Mr. KOSKINEN. I would be delighted to do that to the extent 
we have that information.
    Mr. MEEHAN. Thank you.
    Chairman ROSKAM. Mr. Lewis.
    Mr. LEWIS. Thank you very much, Mr. Chairman.
    Let me thank the witnesses for being here today.
    I have been on this committee for some time, and I have 
never, ever seen in a very long time this degree, this spirit 
of togetherness. On this issue, we are on one accord.
    Citizens, taxpayers, landowners, farmers coming, pleading 
with their government to help them. They feel like they have 
been wronged. This is not their first time coming in to testify 
before us. They have invested their livelihood, everything they 
have. And they have been told by their government, by the IRS, 
Department of Justice, by somebody that we are coming to get 
you. They feel like they haven't done any wrong.
    So I understand that both the IRS and the DOJ updated their 
policies for assets being seized without proving criminality. 
In general, is it fair to say that, unless there is evidence of 
criminal activity, that your agency would not bring seizure 
charges that are solely based on structure of bank deposit?
    Mr. KOSKINEN. That is correct.
    Mr. LEWIS. Well, Mr. Commissioner, DOJ, tell me, how do you 
inform these people that are hurting, that are suffering? How 
do you inform them? When do you make it right for them? How 
long does it take? How long must people wait?
    Mr. BLANCO. Is your question directed to me?
    Mr. LEWIS. Any member of the panel.
    Mr. BLANCO. Great.
    Congressman, prior to a petition for mitigation, a couple 
of things have already occurred. And what has already occurred 
is that agents, prosecutors, and a judge has found that the 
individual has structured funds and that those funds were 
structured to a crime of structuring.
    So, at this point, when somebody comes for mitigation, what 
we are looking at is evaluating the case under the factors that 
I have seen. And what ends up happening, Congressman, is it is 
not just one person making that decision. There are career----
    Mr. LEWIS. But how long does it take for one person or two 
or three people to make the decision?
    Mr. BLANCO. Good question, Congressman.
    What I have seen in my 27 years is, with respect to Justice 
and all matters of law enforcement, it does take time. There is 
a thorough review of the matter to make sure that we are doing 
the right thing, as the Congressman has mentioned earlier. It 
is about doing the right, and it is always about doing the 
right thing.
    Clearly, the government should never be in the business of 
taking money from people who have never violated the law. That 
is very clear. And I think everybody in this room believes the 
same thing.
    But it is a process that we must go through. There are 
career agents who are looking at cases that are pending before 
the Department of Justice, career prosecutors. And it will be 
made--the decision will made by a career prosecutor. And there 
are layers.
    Mr. LEWIS. When we find out that the people didn't do 
anything wrong, do we amend? Do we say we are sorry? How do you 
make them whole again?
    Mr. BLANCO. Congressman, at the point that we are at right 
now in many of these pending cases, there has already been a 
finding that there was probable cause that the funds used were 
attached to a crime, and this crime was the crime of 
structuring. It is still a Federal crime.
    And so, given that, there is mitigation in this process. 
And what we are talking about is pardoning the rest of the 
money that was not already given back to the individual. And 
that takes some time. Mr. LEWIS. Well, I don't want to get 
involved in maybe a particular case, but I am not sure--maybe, 
Mr. Chairman, you can help me out here somewhat--that a letter, 
an email was sent to someone saying we are treating you 
different because you did an interview. Is that right in 
America? Don't we have--people are free to say what they want 
to say during an interview with a member of the press? Because 
you did an interview, so we are going to go after you. I mean, 
we are not going to be--we are going to be hard on you.
    Mr. BLANCO. Congressman, I will tell you this. My family 
are immigrant exiles in this country, and my grandmother always 
said one thing to me: ``We didn't come to this country to be 
silent.'' So nobody believes stronger in the ability of U.S. 
citizens or anybody else to speak up against their government. 
And I think everybody in this room feels the same way.
    I am not going to comment on any particular case that is 
standing before the Department of Justice. You know I can't do 
that. But I can tell you that people have a right to be able to 
say what they want when they want and to whom they want in this 
country. And I think that is something that we all can stand 
by.
    Mr. LEWIS. Mr. Chairman, I yield back. Thank you.
    Chairman ROSKAM. Mr. Blanco, just for your benefit, Mr. 
Lewis and I wrote to the Attorney General, brought this to the 
Attorney General's attention, the issue that Mr. Reed raised. 
And it is part of this, you know, larger contours of these 
people who are just run roughshod by this process. And so we 
will have an opportunity to inquire further----
    Mr. BLANCO. Okay.
    Chairman ROSKAM [continuing]. After we hear from all the 
members.
    Mr. Holding.
    Mr. HOLDING. Thank you, Mr. Chairman.
    Mr. Weber, will you restate your title, please?
    Mr. WEBER. Sure. Chief of Criminal Investigation at the 
IRS.
    Mr. HOLDING. And you are a sworn law enforcement officer, 
correct?
    Mr. WEBER. I am not a law enforcement officer. As Chief, I 
am not an 1811 special agent.
    Mr. HOLDING. Okay. But the agents that work for you are 
sworn----
    Mr. WEBER. They are, yes.
    Mr. HOLDING. They are 1811s, which--an 1811 in kind of the 
parlance of the law enforcement community means that you have a 
badge, carry a gun, serve warrants, and so forth, correct?
    Mr. WEBER. That is correct. I have a badge. I don't have a 
gun.
    Mr. HOLDING. Got it.
    So the actions of your department, you know, IRS Criminal 
Investigations, who is ultimately responsible for your actions?
    Mr. WEBER. Well, as Chief of CI, I would be responsible for 
the actions of my agents. I report up to a deputy commissioner 
and then to the Commissioner, who ultimately oversees the 
entire IRS.
    Mr. HOLDING. But you, as Chief, report to a deputy 
commissioner, correct?
    Mr. WEBER. I do.
    Mr. HOLDING. So that is your direct report.
    Mr. WEBER. Yes, sir.
    Mr. HOLDING. This deputy commissioner, does he have any law 
enforcement background?
    Mr. WEBER. I don't believe so. I believe he was with the 
IRS for 30-plus years on the civil side, but he may have had 
some supervisory responsibility over the criminal side before 
the Restructuring Act.
    Mr. HOLDING. So this deputy commissioner is a longtime IRS 
employee, but he is not a Presidential appointee, is he?
    Mr. WEBER. No.
    Mr. HOLDING. Can you think of any other Federal law 
enforcement agency that directly reports to a non-Presidential 
appointee other than you?
    Mr. WEBER. I am not aware of one.
    Mr. HOLDING. So how often do you have to report to this 
deputy commissioner?
    Mr. WEBER. Often, in terms of meetings, in terms of 
communication----
    Mr. HOLDING. Let me ask, what is the protocol?
    Mr. WEBER. I have a monthly meeting with the Deputy 
Commissioner. I have a monthly meeting with the Commissioner. I 
routinely report on the activities of everything that is going 
on within CI.
    Mr. HOLDING. So if you need additional resources for your 
department, what do you do? Who do you talk to?
    Mr. WEBER. That would be the Deputy Commissioner and the 
Commissioner. And, actually, the entire senior executive team 
is involved in decisions regarding budget appropriations.
    Mr. HOLDING. So have you had any difficulty getting 
additional resources when you have asked for them?
    Mr. WEBER. That is probably a difficult question for me to 
answer. You know, I think the budget cycle for the IRS has been 
especially difficult during the 4 years that I have been here. 
So I think it has been difficult for every part of the IRS, not 
just Criminal Investigations.
    Mr. HOLDING. So, I mean, your criminal investigation 
department, it competes for resources with the rest of the IRS 
and the other things that they do, correct?
    Mr. WEBER. We do.
    Mr. HOLDING. So how much of your work, your criminal 
investigations, are on tax-related investigations versus, you 
know, other types of investigations?
    Mr. WEBER. Approximately 70, 73 percent of our work is 
related to tax investigations. The other work would be on the 
money-laundering side, public corruption, terrorist financing, 
money laundering connected to drug trafficking, identity theft, 
cyber crimes.
    Mr. HOLDING. And I can speak from personal experience that, 
you know, the agents of the IRS Criminal Investigations, you 
know, are top agents. I mean, when I was a United States 
attorney, we always wanted to have an IRS CI agent, you know, 
on our most difficult cases, whether it is a corruption case, 
terrorism case. They are very, very capable agents.
    Mr. WEBER. Thank you. Thank you, Congressman. I have worked 
with all of the agencies as a former Federal prosecutor. I have 
a lot of respect for the other agencies, but I do believe that 
IRS CI special agents are the best financial investigators in 
the world. So I appreciate that comment.
    Mr. HOLDING. Well, it is borne out by a lot of experience 
and results.
    Mr. Chairman, I will tell you, this investigation of IRS' 
civil asset forfeiture authorities has brought to light to me 
some problems that I didn't know of with IRS CI regarding the 
resources they have and the supervision and so forth. And I 
don't think that housing a criminal investigative agency that 
investigates a wide variety of crimes, as we have heard here--
everything from tax crimes to public corruption, terrorism--
under the IRS makes much sense.
    And as this committee and this Congress examine ways to 
improve the Tax Code and the structure of the IRS, you know, I 
think it is important to give the Criminal Investigations of 
the IRS the resources it needs, as well as accountability. And 
I don't think this can be done in an agency, like the IRS, that 
is scandal-ridden, that is plagued with a bureaucracy that 
seems to be somewhat unaccountable.
    And that is why I have introduced the CI Realignment Act, 
which would create an independent bureau of criminal 
investigation housed under main Treasury, taking the criminal 
investigations out from under the IRS. So I look forward to 
working on that.
    Thank you.
    Chairman ROSKAM. Mr. Rangel.
    Mr. RANGEL. Thank you, Mr. Chairman.
    I thank all of you for giving us your understanding of the 
law, but, quite frankly, that is not the problem we have today, 
Mr. Blanco. We all understand the law. We, together, are a part 
of government. We answer to constituents. They are our 
political family. And when one of them are mistreated, they 
come to us for a solution to that problem.
    You are part of this family. So to say that it takes a long 
time to right a wrong--no, it doesn't. Because we are the 
political structure of that government, and we have a 2-year 
contract. And so, therefore, it is not your love and respect 
for a person's right to speak out against government. We have a 
problem. And the best way we can handle it is to come together 
to share it and not to talk about how long it takes to resolve 
it.
    I would like to believe that this is one of the things, the 
terrible things, that fell between the cracks because some 
agent, some person misunderstood and made one big mistake. But 
no. Someone said there are 600 cases, and then I think the 
answer was, ``Not exactly.'' Someone said that this is 
happening to millions of people, and they said, ``Well, that's 
the different between IRS and Treasury.''
    You know, as a former assistant U.S. attorney, when a judge 
asks, was the government ready, they don't ask whether IRS is 
ready or whether Justice is ready. They say the United States 
Government. That is us.
    So please don't talk about how long it is going to take in 
the regular course of procedure to determine whether or not our 
government committed a crime, made a mistake, or that you need 
our help in order to change the law.
    So when someone asks how long does it take and you knew we 
were coming, why wasn't this put on the special detail? No, 
don't take away agents--people away from those that are trying 
to bring some justice to the statutory situation. That is not 
what we are talking about. But when you know we have a problem 
and you know you are coming before this committee, why in God's 
heaven didn't you have somebody get on these 600 cases?
    Are there 600 cases, Mr. Blanco, or do you know?
    Mr. BLANCO. Congressman, I don't know. That is----
    Mr. RANGEL. Did you hear that there was an accusation that 
it could be 600 cases?
    Mr. BLANCO. I heard that today during the testimony.
    Mr. RANGEL. That is the first time you heard about it?
    Mr. BLANCO. First time I heard about it.
    Mr. RANGEL. Did anyone, did you ever hear that there was 
accusation that what happened today with these two witnesses 
was the tip of the iceberg and that some people got caught in 
this before you changed the policy? Did you know that there was 
this accusation?
    Mr. KOSKINEN. I noted, when we changed the policy--and we 
were the first law enforcement agency that changed that 
policy--a year and a half ago, we understood that there would 
be some cases that were in process.
    Mr. RANGEL. Did you go out of your way to pull out those 
cases because you felt that the policy was wrong, an injustice 
has been done, not to these 2 people, but to--I think you used 
70.
    Mr. KOSKINEN. Seventy-five.
    Mr. RANGEL. Seventy-five.
    Mr. KOSKINEN. And we looked at all the cases that were 
caught where they had not----
    Mr. RANGEL. As far as those 75, aren't you in a position to 
come before this committee and say that, ``Yes, some mistakes 
were made, we changed our policy, 75 people we looked into, and 
this is our report,'' without violating any--can't you tell us 
that--you know, I cannot believe that two farmers had deposits 
less than $10,000, and someone reported it or someone found out 
about it, they technically violated the old law, they milked 
cows and whatever farmers do--pray to chickens--and someone 
said that we are going to have to look into this from a 
criminal or even a civil thing.
    Now, you and I know why we have this structure. Law is for 
people who want to avoid the law. And so, if you know that we 
have 75 cases, why don't we have 75 explanations of what 
happened? Why can't you make us feel like we made a mistake and 
we are correcting it?
    And this 600 figure, Mr. Blanco, is that we are supposed to 
have--and, Mr. Chairman, you may have to help me--600 cases 
that the forfeiture bureau said that they have and where they 
have checked off a box that is saying that, to their knowledge, 
there is no criminal activity involved to refer it to be 
prosecuted. And no one seems to know where these cases--you 
don't know about these 600 cases?
    Mr. KOSKINEN. As I noted, of those 600, there is a box that 
is whether they are going to be criminally prosecuted. The box 
does not explain to you whether, in fact, there is illegal 
sourcing as part of that.
    Mr. RANGEL. Listen, you have 600 cases----
    Mr. KOSKINEN. Right.
    Mr. RANGEL [continuing]. That are in question. You know 
where they are. And Mr. Lewis said, how long, how long, how 
long is it going to take? Now, let me make it abundantly clear. 
This is not going to take as long as you think it is going to 
take. I have never seen the bipartisanship on this committee on 
anything, and I am going to take advantage of it. I am going to 
take advantage of it. It is not going to take the regular 
length that it takes to investigate the so-called 600 cases, 
period. And we are not going to do injustices to other 
investigations that Justice has.
    Now, you may come and throw up your hands and say, ``We 
don't have resources to do it.'' This is just one of those 
things. Six hundred cases is bigger than you ever would think. 
But you have to tell us something. You have to find those 600 
cases. You are going to find out which one of these people were 
suggested to be a drug dealer.
    You know, you couldn't pull these farmers out of central 
casting in terms of representing what America wants to look 
like, you know. And so they didn't come from my neighborhood, I 
know that. Because I could understand why you would be giving 
them a hard time for that. But we have a case now for America. 
We could not have done better in picking out two Americans that 
got a bad deal from our government. That is our government.
    And so, whoever follows me, you tell them what you are 
going to do. Don't tell us what the law is. It is good law.
    Mr. KOSKINEN. We can give you the exact response to all 75.
    Mr. RANGEL. What happened to the 600?
    Mr. KOSKINEN. The 600, as I noted, a number of those do not 
meet these criteria. A number of those were people where there 
was not enough evidence to convict them of crimes----
    Mr. RANGEL. Okay.
    Mr. KOSKINEN [continuing]. But there was clear indications 
that the money was illegal-sourced.
    Mr. RANGEL. Okay. Somebody just told us that they have to 
pay you to find out whether or not there is evidence of 
criminality. This committee doesn't have to pay you to find 
that out, do we?
    Mr. KOSKINEN. No.
    Mr. RANGEL. No, right?
    Mr. KOSKINEN. The FOIA----
    Mr. RANGEL. No, no, no. We don't want to know the names, 
but someone is going to say that it may not be a sufficient 
violation of the law for it to be prosecuted, but there is 
sufficient evidence that some wrongdoing is there. We want to 
know. Someone else wanted to know, and they said that you told 
them that, in order to get the 600, they had to pay a quarter 
of a million dollars. Now, we don't have to pay for that, 
right?
    Mr. KOSKINEN. No. And nor does----
    Mr. RANGEL. Forget him.
    Mr. KOSKINEN [continuing]. Most people.
    Mr. RANGEL. Us. We don't have to pay for it.
    Mr. KOSKINEN. You don't have to pay for that.
    Mr. RANGEL. So we are going to be able to determine, with 
your help, how many of these 600 people have some evidence of 
wrongdoing, right?
    Mr. KOSKINEN. Right. It will be, as I say, because the 
file--you will have to go through every file----
    Mr. RANGEL. I understand that.
    Mr. KOSKINEN [continuing]. Because a number of--our 
experience is----
    Mr. RANGEL. Listen, if this was our grandkids that was 
going through this, we will find some way to expedite it. These 
are our grandkids. They vote, you know?
    Mr. KOSKINEN. Our experience is the hearings that this 
committee held a year and 14 months ago, the work that has 
gone, the visibility, the visibility that has gone when we 
remitted, there aren't many people out there who don't know 
that, in fact, we are entertaining petitions. And so the people 
who have any claim at all----
    Mr. RANGEL. We are not waiting for them to petition.
    Mr. KOSKINEN. We can----
    Mr. RANGEL. We want to know how many of these cases there 
is some evidence of wrongdoing, whether it is criminal or not. 
And we want, categorically, immediately, the disposition of the 
75 cases.
    Mr. KOSKINEN. We can give you that.
    Mr. RANGEL. And we are going to have a press conference. We 
will do all of the notification. And you are not going to 
embarrass us any further. Because we have to find some way to 
get the weight off of us. You know that.
    So please help us to help our constituents, to help our 
country. And then on the question as to whether you don't have 
the resources to do it, because we know how badly the Congress 
has treated you, talk about that. But don't say it can't be 
done. We expect for it to be done.
    Thank you for your patience.
    Chairman ROSKAM. Thank you, Mr. Rangel.
    Just for the record, people don't know that money is being 
remitted. We had to tell some of our own witnesses about this 
process. So there is work to be done, to Mr. Rangel's point.
    And, Mr. Blanco, just for the record, every member of this 
subcommittee wrote to the Department of Justice in March of 
this year and requested a complete and thorough review. So, at 
the end, one of the inquiries I will make of you is what is 
happening on that.
    So I would like to yield to Mr. Smith.
    Mr. SMITH. Thank you, Mr. Chairman.
    Like the chairman said, in October 2014, the IRS announced 
a new policy, that it would only seize structured assets that 
came from an illegal source.
    During our hearing last year, Mr. Koskinen, you agreed with 
Congressman Holding that, if the IRS seizes assets of a person, 
they could go to court and argue the government doesn't have 
cause if the document doesn't show the funds came from an 
illegal source. You said, and I quote, ``Private citizens 
should have the ability to do that.''
    A few weeks later, though, you said in a letter to the 
committee that, quote, ``Decisions above what specific evidence 
is included within a warrant affidavit ultimately falls within 
the discretion of the U.S. Attorneys Office, in consultation 
with law enforcement agents. In the interest of operational 
considerations, the assistant U.S. attorney and case agents may 
have sound reason for not including certain evidence in a 
seizure warrant affidavit involving illegal-source 
investigations. So the evidence of a legal source may not be 
included in every seizure warrant affidavit.''
    I would like to enter your letter and the letter that the 
committee sent in response into the record, Mr. Chairman.
    Chairman ROSKAM. Without objection, so ordered.
    [The information follows:]
    
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    Mr. SMITH. Thank you.
    I take it that your revised version is correct?
    Mr. KOSKINEN. The revised version is correct, but I think 
the original statement was correct. What I said was, under the 
process, no matter what the evidence is in there, anyone whose 
assets are seized has the right to, in fact, go to court.
    And, in fact, that is the distinction of, if they come to 
us and it is an administrative proceeding, we can, when they 
make a petition, remit the funds directly. If they have gone to 
court or the process has gone to court, it is within the U.S. 
attorney's jurisdiction.
    And that is what my letter says, that it is up to the U.S. 
attorney as to how much evidence is in the case. But the 
citizen, as I said at my hearing, has the right to come to 
court and challenge the validity of the seizure, challenge any 
other claims that are being made.
    Mr. SMITH. Citizens have due process, of course.
    Mr. KOSKINEN. Yes, of course.
    Mr. SMITH. Absolutely. Thank goodness for the Constitution.
    But, Mr. Weber, this question is for you. You are the one 
implementing this policy. If the IRS does not include evidence 
that money came from an illegal source in an affidavit, 
shouldn't the property owner be able to argue that the 
affidavit was deficient and his property shouldn't have been 
seized?
    Mr. WEBER. So it is not required, Congressman, for the 
specific allegations of illegality of the source of funds to be 
in the affidavit. So there are circumstances where the agent 
and the prosecutor make a determination that the source of 
funds is tied to an illegal activity. And those are the only 
cases and investigations that my agents are allowed to work 
with respect to structuring seizures now.
    But there may be a decision by the prosecutor working that 
case that they are not going to include certain evidence and 
information with respect to the illegality within the 
affidavit. That doesn't necessarily mean that that case is not 
an illegal-source structuring case.
    Mr. SMITH. So, without requiring that information, you all 
can present an affidavit to any citizen without proof or 
documenting that it came from an illegal source. So that is 
what you are saying.
    Mr. WEBER. Under our current policy----
    Mr. SMITH. Under your current policy, you could go after 
any citizen and not provide in the affidavit that it is from 
solely an illegal source?
    Mr. WEBER. Under the current policy, yes, there is no 
requirement that----
    Mr. SMITH. Unacceptable.
    Mr. WEBER [continuing]. That information would be detailed 
in the affidavit.
    Mr. KOSKINEN. I am not a law enforcement person, but there 
are cases----
    Mr. SMITH. The question is to Mr. Weber.
    Mr. KOSKINEN. Okay.
    Mr. SMITH. That is interesting.
    Okay. I have another question then. The IRS' October 2014 
policy includes an exception for exceptional circumstances. 
What happened to due process? What counts as exceptional?
    Mr. WEBER. So a couple things, Congressman.
    So, in the year and a half that that policy has been 
implemented, we have had not--we haven't had one situation 
where a special agent in charge has requested from headquarters 
the exception to be applied in their case. So we have not had 
one of those cases.
    In my view, what we have told our field offices--we have 25 
field offices across the country, and we have told our SACs 
that it would be in the rarest of situations that we would 
approve--and that has to be approved by Washington, in 
executive and headquarters--under the rarest of situations.
    If it was a case that hypothetically could be connected to 
terrorism, where there is information or evidence where the 
property may be going overseas, we may not have the specific 
evidence or proof that it is tied to terrorism or illegal 
activity, they have committed the crime of structuring, but 
that property is going to be heading over to another country, 
that may be a situation--with the approval of the U.S. 
Attorneys Office and the approval of a headquarters executive, 
that may be approved.
    We haven't had a single case in the 1\1/2\ years that the 
policy has been implemented.
    Mr. SMITH. Okay.
    Mr. WEBER. And I don't think there will be any of those----
    Mr. SMITH. One quick question for Mr. Blanco. In my prior 
questioning of the folks that testified, I submitted into the 
record an email that showed that a U.S. attorney, it seemed 
like, was giving harsher penalties in a settlement agreement 
because an individual went and spoke to the media.
    Is there any policy in the Justice Department that makes 
harsher penalties to anyone that you are investigating or 
researching if they speak to the media?
    Mr. BLANCO. Not that I am aware of.
    Mr. SMITH. Okay. Thank you.
    Chairman ROSKAM. Mr. Crowley.
    Mr. CROWLEY. I appreciate especially Mr. Smith's last 
question, because I think that pertains to two of the witnesses 
in the first panel that made that allegation.
    It wasn't as definitive. It is just, to your knowledge, you 
don't know of that. But you don't know if that does--that that 
may very well happen within the Justice Department is what you 
may have also suggested.
    Mr. BLANCO. Without commenting on any pending case in any 
part of the Department of Justice, in my 27 years I am not 
aware of any policy that would treat any citizen or noncitizen 
in this country differently because their voice was heard in a 
publication.
    Mr. CROWLEY. I will yield.
    Chairman ROSKAM. Mr. Blanco, in light of that, what would 
your recommendation be to the Department of Justice if it came 
to your attention that somebody did something like that that 
shouldn't have ever happened in your 27 years of experience?
    Mr. BLANCO. Congressman, you are really close to me 
commenting on a particular----
    Chairman ROSKAM. I am not asking you to comment on a 
particular case.
    Mr. BLANCO. Congressman, I can't comment on that. You know 
that.
    Chairman ROSKAM. I yield back.
    Mr. CROWLEY. I would suggest not in any case, but if you 
became aware, hypothetically, that someone in your department 
had done that or made that statement, would you believe that 
they were in violation of the law, that they themselves were 
being oppressive?
    Mr. BLANCO. You are putting me in a bad spot, Congressman. 
You know I can't talk about those issues.
    What I can tell you is the following. I can say this, that 
no citizen or noncitizen should ever been treated differently 
because their voices were heard. That is what I will tell you. 
You can take from that----
    Mr. CROWLEY. That is interesting. That is interesting.
    For a point of information, just to clarify for the 
committee's sake, Mr. Johnson requested a FOIA request with the 
IRS and not with the Justice Department. Is that correct?
    Chairman ROSKAM. I think that is right, yes.
    Mr. CROWLEY. Mr. Johnson, you are nodding yes.
    Okay. So I don't necessarily expect that you would have 
that request before you, et cetera. Because Commissioner 
Koskinen has mentioned 75 cases. They may very well be a part 
of the 600 that Mr. Johnson is speaking of. Is that correct?
    Mr. KOSKINEN. I am reasonably confident that they are.
    Mr. CROWLEY. That they are.
    In terms of when a case is deemed as being structure alone, 
with no criminal intent, just that a person who is a farmer has 
$8,000 sitting in their house, they are not comfortable with 
that, they will bring it to their bank, and it happens a couple 
of times, and the bank reports it, therefore that is what 
brings the attention and focus, so there is no--they are not 
drug dealers, they are not terrorists, not doing anything else, 
and it is a structure--you could be deemed as structuring, but 
that is not the intent, they don't have that intent----
    Mr. BLANCO. May I just quickly, Congressman?
    Mr. CROWLEY. Uh-huh.
    Mr. BLANCO. You wouldn't be a structurer, because you would 
have to have the intent to evade.
    Mr. CROWLEY. Understood. But what they may be doing and 
what your interpretation of what they were doing may be two 
different things.
    But you then deem that it is not really criminal activity, 
and they are pardoned, right? You mentioned something about 
pardoning?
    Mr. BLANCO. There is a procedure that we use. It is a 
petition to file, and it is called mitigation.
    Mr. CROWLEY. Do they get all their money back?
    Mr. BLANCO. It depends. They could. They could get nothing 
back. They could get part of it back. They could get all of it 
back.
    Mr. CROWLEY. So, if they did nothing--if they had no 
criminal intent, what they were doing was they just simply were 
uncomfortable having the money in their house, putting it in a 
bank so it is more secure--but they could potentially be 
found--they could be pardoned for it because there was no 
criminal intent, but they may not get any money back. So the 
question of do they get their money back with interest is not 
even a--shouldn't even be in query at this point, I suppose.
    The key job of this committee is to determine wrongs or 
injustices and use all of our abilities address those wrongs 
and injustices. And I think, in the spirit of Mr. Lewis, I 
haven't seen it done in such a bipartisan way as I have today, 
myself. So I want to thank my colleagues on the other side of 
the aisle.
    A lot has happened since we last met on this topic back in 
February, as was mentioned earlier. I still think that a lot 
more needs to be done.
    At our last hearing, I think we were all disturbed to learn 
that the IRS, as well as the U.S. attorney and the Federal 
judges, had the ability to seize American's bank accounts while 
never charging the account holders with a particular crime. 
This policy turns the basic principle of American justice of 
innocent until proven guilty, as I mentioned earlier, on its 
head.
    At that hearing, the Commissioner did apologize for the 
past abuses of the agency, abuses that did not occur on his 
watch, and took quick and early action in his tenure as the 
Commissioner of the IRS to reverse the rules used by the agency 
in civil asset forfeitures. And for that, we are very, very 
grateful. But we also learned that Congress must also get 
involved to change the underlying laws that allowed these past 
seizures of legally acquired funds to happen.
    Yesterday, Mr. Roskam and I, Chairman Roskam and I, 
introduced bipartisan legislation to fix the law and prevent 
the seizures of bank accounts of law-abiding citizens. Our bill 
would prohibit the IRS from undertaking any civil asset 
forfeiture related to structuring unless the funds were derived 
from an illegal source or the funds were structured to conceal 
other criminal activity, which got to my initial question to 
you, Mr. Blanco.
    We also require the IRS to notify an account holder of a 
seizure within 30 days of that seizure and guarantee a post-
seizure hearing within 30 days to see if there was 
justification to seize the assets and, if not, to return them 
forthwith to the account holder.
    But passage of this bill won't solve all of the problems 
particularly for the past victims of asset seizures, such as 
the people as we had with us in panel 1 or behind you today. 
The people in panel 1 are victims and not criminals. And they 
need to be made whole of any funds that were wrongly seized 
and, I would suggest, with interest.
    That is why this subcommittee also needs to make sure the 
IRS goes through its old files and returns all the funds 
wrongly taken from law-abiding citizens in these civil asset 
forfeitures, and done swiftly and quickly.
    Civil asset forfeiture is an important tool, as we have all 
recognized, that the IRS and other Federal agencies need in 
order to go after ill-gotten funds from drug dealers, human 
traffickers, terrorists, and other criminals. But we need 
strong protections in place to ensure that these seizures never 
target law-abiding citizens. It has become oppressive. We also 
need to correct past seizures. And I look forward to hearing 
from you in the future as to how we can further strengthen the 
law to make sure that law-abiding American citizens are not put 
through this oppression in the future.
    I would like to ask specifically, or just real quickly, in 
terms of the bakery issue in Connecticut. I have been in 
communication with Congressman Joe Courtney. He has assured me 
that he will address this issue, adding his weight to make sure 
that full restitution takes place.
    And, finally, Mr. Chairman, I want to also address the 
larger issue that is outside the purview of this committee but 
not of our Congress: the need for comprehensive criminal 
justice reform overall.
    You know, this is just another portion of it that doesn't 
get as much highlight in terms of the media today. As this 
hearing shows, the government can seize your money without 
pressing charges. But there are too many cases of the 
government seizing not only people's money but their freedoms 
as well.
    We need to address and clean up the problems in civil asset 
forfeiture. Representative Roskam and I have a bill that would 
do that. But we also need to enact comprehensive criminal 
justice reform across the board, both civilly as well as 
criminally.
    And, with that, I yield back the balance of my time.
    Chairman ROSKAM. Mr. Reed.
    Mr. REED. Thank you, Mr. Chairman.
    And, Commissioner, you and I go way back, and I have always 
given you the benefit of the doubt.
    And, first of all, Mr. Taylor is behind you, over your 
right shoulder. Mr. Sowers I think you have already apologized 
to, if I got your testimony at the last hearing correct. You 
may want to have a conversation with Mr. Taylor. An apology 
goes a long way still in America. So maybe, on behalf of the 
IRS, you may have that conversation.
    Second, I appreciate you taking the bait. When I talked 
about the financial incentive of the IRS, you made it perfectly 
clear in your testimony that that had in no way influenced any 
of your agents or any of your activities in the IRS. Now, I 
don't concede that point. I think that may still be there. And 
I haven't been in D.C. that long, but $22 million, as you 
testified to, that 2 percent of those recovery funds going into 
the agency's budget, is still a lot of money to a lot of 
Americans. $22 million is a lot of money. Maybe you have been 
in D.C. quite some time and to you that is chump change, but I 
will tell you, to most Americans, that is a lot of money.
    And, at the end of the day, that leads me to the conclusion 
that, if there is not a rational reason why the agents are 
doing this for financial purposes for the budget, that I still 
believe is potentially there, then what you are conceding is 
that these agents are abusing their authority, they are abusing 
their position.
    And so I want to go to one thing here. Because after the 
last testimony, or last hearing, there was an additional 
exchange. And I would like to offer in preparation for my 
testimony an email that was between Steve West, Assistant 
United States Attorney, and a Michael Petty, who represented an 
individual in the prior testimony.
    And so I seek unanimous consent to enter that into the 
record.
    Chairman ROSKAM. Without objection, so ordered.
    [The information follows:]
    
    
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    Mr. REED. So this is the attorney for one of the other 
individuals that was involved in the last hearing. And this was 
after the hearing, and this is from Mr. West, United States 
attorney, to Michael Petty, the attorney for the individual 
involved in that case.
    And what it says in here was--they were sharing some 
information about the hearing. And Mr. West indicates, ``My 
intent was for you and your clients to be able to actually know 
the facts so you could review them and have an intelligent 
discussion with me. Whoever made it public may serve their own 
interests, but it will not help this particular case. Your 
client needs to resolve this or litigate it, but publicity 
about it doesn't help. It just ratchets up feelings in the 
agency. My offer is to return 50 percent of the money.''
    That is the exact email from one of your U.S. attorneys, 
Mr. Blanco.
    Mr. BLANCO. I would imagine it is an assistant U.S. 
attorney.
    Mr. REED. Assistant U.S. attorney.
    When it says ``ratchets up feelings'' because someone is 
talking about their case publicly--and you heard my questioning 
previously and Mr. Smith's questioning about the email that was 
sent in the other case. These are two different cases, but it 
seems like there is a theme developing here.
    So if it is not for financial purposes, as I may think--and 
my opinion is still there, but the Commissioner doesn't believe 
it is going on--it sounds like a U.S. attorney is a little 
upset people are talking about their situation publicly.
    And I know, as you indicated in your response to testimony, 
that puts you in a bad spot. And you know what? I don't give a 
damn.
    Mr. BLANCO. Not a bad spot. An inappropriate spot, 
Congressman.
    Mr. REED. Inappropriate. No, I think your testimony was a 
bad spot.
    Mr. BLANCO. Okay. It is inappropriate.
    Mr. REED. Inappropriate.
    So if a U.S. attorney is chastising someone from a previous 
congressional hearing that discussed their case publicly, would 
you say that is appropriate behavior by the United States 
Attorneys Office?
    Mr. BLANCO. So I am not going to comment on that. I don't 
know where that is in----
    Mr. REED. Not about this case. But just publicly talking 
about it.
    Mr. BLANCO. I am not going to comment on that.
    Mr. REED. Not going to answer the question. Not going to 
answer the question to the American people.
    Mr. BLANCO. As I mentioned earlier, I think when people 
speak up they should not be punished. That is what I told you.
    Mr. REED. So if someone is using their position to go after 
somebody for speaking up publicly, your official testimony to 
this is that is not appropriate. Right?
    Mr. BLANCO. Congressman, if that is the way you want to 
interpret it, that is fine. I don't think power of the 
government should be used against anybody if they speak up. I 
think I have been pretty clear about that.
    Mr. REED. And if you uncover that, if we uncover that, what 
would you recommend we do about that?
    Mr. BLANCO. I can't recommend on behalf of the Department, 
Congressman. That is something that I will take back with me 
now that you have mentioned it today.
    Mr. REED. Mr. Commissioner, how about your IRS agents? 
Would you feel that is an appropriate action by some of your 
IRS agents dealing with these cases?
    Mr. KOSKINEN. No. And I have no evidence that there is a 
case of that. And if there is a case of that, it is 
inappropriate. I think Mr. Blanco is right. We spend a lot of 
time training, in particular, as Congressman Holding knows, our 
revenue agents, officers, and criminal investigators about the 
importance of their work and the seriousness of protecting 
taxpayers' rights.
    Mr. REED. One last point, if I could, Chairman.
    Chairman ROSKAM. Sure.
    Mr. REED. The other thing that is frustrating here is you 
all are hiding behind due process and saying that individuals 
can take their case to court. But you understand; these are 
hardworking Americans. It is going to cost them tens of 
thousands of dollars to hire a lawyer, go win their day in 
court and stand with you. And you know what your agents are 
telling them? I will give you 50 cents on the dollar.
    Mr. KOSKINEN. I have not----
    Mr. REED. That is legal? That is a shakedown.
    Mr. KOSKINEN. I have not suggested these people need to go 
to court. As I say, we have entertained petitions and will 
continue to entertain them and treat them quickly and 
efficiently.
    Mr. REED. No, but you said that is what is available to 
them and they can pursue that as their avenue of recourse. But 
you understand, these people have to pay money to lawyers. They 
have to take time away from their farms. They have to come here 
to D.C. to meet with you. And then what you guys do--what you 
guys do is you have their cash. And what you say to them is, 
``You know what? I'll be kind to you today. I'll give you 50 
cents on your dollar.''
    Mr. KOSKINEN. That is not----
    Mr. REED. You don't have a right to the money. You don't 
have a right to the money.
    Mr. KOSKINEN. That----
    Mr. REED. Because as what is indicated here, you don't have 
an illegal basis--or you don't have a basis in law where you 
can say these guys are engaged in illegal acts. Mr. Taylor and 
Mr. Sowers, they are just farming.
    Mr. KOSKINEN. Right. We do not have----
    Mr. REED. And what you are doing is telling them, ``We'll 
settle it up with you.''
    Mr. KOSKINEN. We don't have a position of giving people 50 
percent of their money back. That is not our case.
    Mr. REED. With that, I yield back.
    Mr. KOSKINEN. And I would also state, just to make sure the 
record is clear as to why we may have a disagreement, of that 
$6 billion, the vast majority of that is illegal funds from 
drug traffickers, money launderers, terrorists trying to 
finance it. The vast majority of that is there. It has been 
seized so that it would not continue to be used for----
    Mr. REED. But $22 million goes back into your coffers.
    Chairman ROSKAM. Mr. Rice.
    Mr. KOSKINEN. And $22 million of that comes to us subject 
to the jurisdiction of the Treasury Department, about 2 percent 
of those funds. So it is clearly not what we are chasing.
    Mr. RICE. Thank you, Mr. Chairman.
    These 600 cases where the box hasn't been checked that 
there is any--I am speaking to you, Mr. Commissioner--the box 
hadn't been checked there is any underlying criminal activity--
--
    Mr. KOSKINEN. That is not what the box is. The box is 
checked that there is a not a criminal prosecution. It doesn't 
tell you what the underlying circumstances are.
    Mr. RICE. Okay. Is there an ongoing process where you are 
reviewing those 600 cases right now?
    Mr. KOSKINEN. No. The ongoing process we have had is we 
have reached out and reviewed any case that was decided before 
the policy was implemented and has not been concluded. And 
there are a number of those. And then we have reviewed the 
petitions that have come in, of which there have been a number. 
And all of those reviews----
    Mr. RICE. Okay.
    Mr. KOSKINEN [continuing]. Have been handled----
    Mr. RICE. But the 75 cases you mentioned, that is the 
petitions?
    Mr. KOSKINEN. That 75 is, in effect, included--we didn't 
make--those aren't new cases. Those are part of the inventory.
    Mr. RICE. So how many of these 600 cases has the IRS taken 
upon itself to review, determined that they were in the wrong, 
that the taxpayer's money was taken illegally, and has returned 
the money to the taxpayer?
    Mr. KOSKINEN. We have reviewed, as I say, the ones that 
were pending before and not concluded.
    Mr. RICE. Okay.
    Mr. KOSKINEN. There are about 50 of those. We have reviewed 
those and either made remissions or recommendations.
    Mr. RICE. Okay. So those were already pending, or the 
taxpayers brought them to your attention. How many, again--
let's ask the question again----
    Mr. KOSKINEN. No, we reached out to the bulk of those.
    Mr. RICE. How many of these 600 cases that weren't pending, 
okay----
    Mr. KOSKINEN. All right.
    Mr. RICE [continuing]. That were decided before this policy 
change, has the IRS taken it upon itself to go on and check and 
make sure we didn't take these people's money illegally and 
decided that we were wrong and returned the money to the 
taxpayer? How many?
    Mr. KOSKINEN. At this point, the 75 are part of that 600, 
those are the cases----
    Mr. RICE. Those were the ones that were already pending. 
Let's throw those out.
    Mr. KOSKINEN. No, those are actually some reasonable number 
of petitions. So anyone who has petitioned we have taken and 
given an appropriate response.
    Mr. RICE. Okay, I understand if they are petitions, but----
    Mr. KOSKINEN. Beyond the 75 that we have reviewed, we have 
not reviewed the other part of that inventory.
    Mr. RICE. Okay. Is there a plan to start? I mean, are we 
going to start that soon? Or are we going to--are we just going 
to wait until these taxpayers come to us, realize, figure it 
out, I don't know, somehow, by magic, that we have changed our 
policy and wait for them to come to us? Or are we going to 
aggressively go out and try to locate where we have taken these 
people's money inappropriately?
    Mr. KOSKINEN. At this point, again, these are part of the 
reason the FOIA request for the entire files is there, massive 
files. A big chunk of them, a majority of them, are initially, 
when we looked at them, as cases come in, criminal sourcing. So 
we do not have a plan at this point.
    Mr. RICE. Mr. Johnson here from the Institute for Justice, 
he is worried about these 600 files, and he has filed a FOIA 
request, and you have told him, ``Yeah, we'll give you the 
information if you pay us a quarter of a million dollars.''
    Mr. KOSKINEN. The FOIA charges--the media pay no charges. 
The FOIA charges, we are obligated to charge the cost of 
production. So I don't know what his FOIA request was, but for 
the amount to be that much, that large, he must have asked for 
a lot of material. Because it is just simply a question of what 
does it cost to produce. We actually----
    Mr. RICE. All right. So what we have done here--he has 
identified 600-plus cases where there is apparently no 
underlying criminal activity, that people's money has been 
seized. I think the Fourth Amendment says that you can't seize 
people's money without probable cause.
    Mr. KOSKINEN. Yes, that is correct. And probable cause 
was----
    Mr. RICE. And before your policy change, I guess you were 
relying for probable cause on the act of structuring in itself 
and not any underlying crime. But we have decided that is 
wrong. So maybe what we should do is kind of reverse the 
presumption here and say, if we don't have probable cause to 
seize based on some underlying crime, these people need to be 
getting their money back. And we need to be notifying these 600 
people that, hey, perhaps we acted wrongfully here.
    Because I will tell you--how long have you been the 
Commissioner of the IRS now?
    Mr. KOSKINEN. Two and a half years.
    Mr. RICE. Uh-huh. And we had this discussion last time you 
were here, that we just continue to see scandal after scandal 
after scandal after scandal.
    Mr. Johnson, I believe it was, said earlier--you know, 
whose faith in the government has been eroded. I think that is 
absolutely justifiable. I think the American people's faith in 
the government has been eroded. I think that is a lot of the 
frustration you see in the election, in the primaries in both 
parties right now. People are sick of it.
    And you guys, particularly you guys with the badges, you 
have an elevated level of duty to the public. You hold the 
public's trust, and you are eroding that trust.
    How long does it take, Mr. Koskinen, to stop the scandals? 
You have been there 2\1/2\ years. How much longer is it going 
to take?
    Mr. KOSKINEN. Again, as the chairman noted, we changed the 
policy on our own a year and a half ago dealing with this.
    Mr. RICE. Yeah.
    Mr. KOSKINEN. It has not been a scandal. The law is clear. 
If you intentionally structure deposits, it is a violation of 
the law. The issue here is not that that is not a violation of 
law. The issue here----
    Mr. RICE. These fellows have been trying to get their money 
back longer than that. I mean, we have 600 people who we are 
sitting here saying today we don't know if we took their money 
wrongfully or not. And we are not actively going out to try to 
determine that.
    Mr. KOSKINEN. We will pursue that, but I would stress that 
it was not wrongfully taken at the time. The law is clear--the 
law is clear today--that if you intentionally structure your 
deposits you are violating the criminal law.
    The fact that the policy before that allowed a seizure when 
no illegal source of the funding has been changed does not mean 
that structuring is no longer a crime. Now what we are saying 
is, if you intentionally structure but the source of the funds 
is legal, so you are simply hiding the assets or trying to 
protect yourself or avoiding taxes, we won't seize the funds. 
That doesn't mean intentionally violating the law is no longer 
a violation of the law.
    Chairman ROSKAM. Mr. Marchant.
    Mr. MARCHANT. Commissioner, what is the conduit that the--
--
    Chairman ROSKAM. I am sorry, Mr. Marchant. I made an error. 
It is Mr. Davis' turn, of Illinois. I regret that.
    Mr. Davis, I apologize. I recognize you.
    Mr. DAVIS. That is quite all right, Mr. Chairman.
    And thank you, gentlemen, very much.
    Commissioner, the policy was changed because of recognition 
that there were individuals who might be unduly penalized. And 
now we are hoping that, with this policy change, individuals 
who fit that category will no longer have this problem.
    But we also have the problem of trying to retrieve the 
assets that individuals have already had forfeited, taken from 
them. And I guess, no matter what it is that we do in the 
future, those individuals are still going to feel that their 
money was taken from them without just cause.
    And so I guess we are trying to figure out a way----
    Mr. KOSKINEN. Right.
    Mr. DAVIS [continuing]. How do we legally--how do we get 
their money back in their pockets, back in their family 
accounts.
    We have indicated that, of course, the courts are a refuge 
of last resort, that you can end up in court.
    Mr. Blanco, let me ask you, is it not true that prosecutors 
oftentimes make recommendations to the court? And so it 
occurred to me that there might be a way that the agency, 
through its prosecutors, makes some recommendations to the 
court that might get these individuals their money back, and, 
at the very least, they would feel a different way or a greater 
sense of not having been violated.
    Does that sound like any kind of possibility that 
prosecutors could take in court situations?
    Mr. BLANCO. Congressman, we actually have a process where 
the agencies, in particular the IRS, and also the U.S. 
attorneys offices get together to decide whether or not those 
factors that I mentioned earlier exist in mitigation cases, 
whether or not the money should be returned.
    Those recommendations come to the Asset Forfeiture Section 
of the Criminal Division of the Department of Justice, where a 
career prosecutor makes the decision whether or not the 
mitigation--taking into account the recommendation--whether or 
not these funds should be mitigated.
    So there is that process in place, and we are working that 
process in every matter or every petition that we receive, 
whether from the IRS or other agencies. So there is that 
possibility, yes.
    Mr. DAVIS. Could that also include court costs, in terms of 
expenses for the individuals who have had to come into court to 
try and get the matter resolved?
    Mr. BLANCO. Congressman, I am unaware of us doing that in 
the past. But let me look into that and see whether we have 
done that in the past, and I can get back with you on that.
    Mr. DAVIS. It seemed to me that all of us are actually in 
agreement that there are two things we want to do. One, we want 
to prevent these instances from ever reoccurring or from 
happening again; and find a way to compensate the individuals 
who have been or, at the very least, feel that they have been 
violated.
    And I think, if there is--I have been told, if there is 
righteousness in the heart, there is beauty in the character. 
And I think the character of our government should be that we 
would find a way to make sure that we don't leave any citizens 
with the feeling that they have been violated by their 
government.
    I thank you gentlemen and yield back.
    Chairman ROSKAM. Mr. Marchant.
    Mr. MARCHANT. Thank you, Mr. Chairman.
    Before we leave the issue of how a person files a petition, 
Commissioner, do you know how many people are actively filing 
petitions now to get their money back, of this group? It might 
be 600, it might be 1,000, or it might be 75.
    Mr. KOSKINEN. As I was saying, the 75 include people who 
have filed petitions as well as those that we actually reached 
out ourselves to review out of that 600.
    Mr. MARCHANT. And then, so that I understand exactly how 
the process works, it never gets to the U.S. Attorneys Office 
until you have gone through that complete process?
    Mr. KOSKINEN. Yeah. They can petition to Justice if they 
like. As I said, if the process itself initially, in the past, 
before the policy, was one where the taxpayer came to us to 
mitigate or negotiate, that is an administrative case, and we 
have total control of that, and those are the ones we have 
mitigated.
    To the extent that the taxpayer went to court or the case 
went to court and became judicial, handled by the U.S. 
attorney, who originally has to obviously review it to allow 
the seizure, that then is a case where we will make a 
recommendation but the case is within the control of the 
Justice Department.
    Mr. MARCHANT. But Mr. Blanco testified earlier that, in the 
cases that get to you, it is strictly a mitigation. It is 
strictly, you used the word ``pardon.'' It is assumed that the 
party was guilty of structuring, and it is purely a pardon/
forgiveness mitigation, not--we are no longer trying the fact 
that they didn't structure.
    Mr. BLANCO. That is correct, Congressman. And making a very 
short version, because there is also remission that has to do 
with victims and innocent owners. But what we are talking about 
today is mitigation, and you are right about that.
    Mr. MARCHANT. So the people that actually prevail at the 
end, if they can afford it or have the perseverance to do it, 
still are very stigmatized. Because the assumption going into 
your department was that they were guilty of structuring----
    Mr. BLANCO. Congressman, there was a----
    Mr. MARCHANT [continuing]. In the strictest terms.
    Mr. BLANCO. There was a finding that there was probable 
cause that the person did the structuring and did it knowing 
that there was a rule against structuring and did it to evade 
that rule. So there is that probable cause that was found. So 
you are right. They do come into that process, and, in coming 
into the process, those funds have already been seized and 
forfeited.
    Mr. MARCHANT. And getting past that filter, coming to your 
filter, is it 10 cases, is it 20, I mean, out of the United 
States----
    Mr. BLANCO. Well, I don't know that yet. We will see. We 
have petitions that are already in place for mitigation. Some 
of them are pending positions that we are looking at. This 
process has been in place for a number of years. This is 
nothing new. And we will see how many petitions we get.
    Mr. MARCHANT. But to obviously address the concerns of this 
committee, both sides, it isn't 600 or 700 cases that are 
immediately before you. I mean, it is a manageable number of 
cases that are before you that can be looked at in a reasonable 
amount of time. And I know there are way different definitions 
of ``reasonable amount of time'' in the government, but----
    Mr. BLANCO. Right.
    Mr. MARCHANT. And you heard me ask the previous witnesses, 
you know, how have they altered their way of doing business 
now. And, to me, the government actually puts itself at a 
disadvantage when law-abiding citizens decide to alter their 
way of doing business so that they don't fall into this great 
filter, this funnel.
    You know, we have this conduit that was--I mean, we don't 
have IRS agents driving up and down rural roads in Virginia and 
Maryland looking for people selling stuff on the side of the 
road. That isn't the way they got into the system, right?
    Mr. KOSKINEN. No. And, in fact----
    Mr. MARCHANT. The system captured them----
    Mr. KOSKINEN [continuing]. They can continue to do business 
the way they did. What has to be filed simply is a simple bank 
report. Structuring is if you intentionally avoid the 
reporting. If you want to continue to deposit $10,000, $8,000 
regularly, you can simply have the bank file the report.
    So it is not as if you have to change the way you have done 
the business. You can keep doing the business the way you did. 
The question here is whether the report is being filed.
    Mr. MARCHANT. And we appreciate the policy change. My 
concern, with the chairman's, is that the next IRS 
Commissioner, the next administration, can change that policy 
and can go back to this kind of activity.
    And, Mr. Chairman, I know that is a great concern of yours, 
it is of mine, it should be of every American, that before we 
end this subject, we have to kind of--we have to make sure that 
this is just not a policy decision. It has to be the law.
    Thank you.
    Chairman ROSKAM. Mr. Kelly.
    Mr. KELLY. Thank you, Mr. Chairman.
    Mr. Koskinen, do you think a legal doctrine that allows law 
enforcement officials at either the Federal or State level to 
confiscate a family's cash, car, home, or business without ever 
being charged with a crime is a good thing? It is just a yes or 
no.
    Mr. KOSKINEN. That is what the law is. The law says, if you 
violate the----
    Mr. KELLY. You don't need to build me a watch. Just tell me 
what time it is. Is it a yes or a no?
    Mr. KOSKINEN. I am sorry, the question----
    Mr. KELLY. All right. Here is my point. We are seizing 
people's assets because we think they may have done something 
wrong. We are talking about due process here----
    Mr. KOSKINEN. There has to be a probable cause finding by a 
U.S. attorney, and----
    Mr. KELLY. Somebody selling corn and tomatoes isn't the 
same as a member of a terrorist group, okay?
    Now, if you look up on the wall here--because this is what 
I believe is going on. This is extortion. The practice of 
obtaining money, property, or services through coercion, force, 
or threats is synonymous with a shakedown.
    Now, I know that really rankles the IRS. And it should. But 
it should not just rankle the IRS; it should rankle every 
single American. Because you know what? We all work for the 
same people. We are all trying to get to the same end.
    This isn't grilling you for the sake of grilling you. This 
is a fact that Americans' rights have been taken from them by 
an agency that somehow equates a guy who gets up at 12:30 in 
the morning to milk cows is the same as a guy who structures 
some type of a scheme in order to be a terrorist.
    Mr. KOSKINEN. And that is why we have changed the policy.
    Mr. KELLY. Listen, I am not asking you about that.
    Mr. KOSKINEN. We have changed the policy.
    Mr. KELLY. I am going to ask Mr. Weber.
    So when you sit down, Mr. Weber, with the people you work 
with, do you all sit down and say, sometimes we look at what we 
do and I think that we are really far from where we are 
supposed to be?
    Mr. WEBER. Yeah. That is why I changed the policy a year 
and a half ago.
    Mr. KELLY. Okay. But, now, all those folks that you have 
deemed under a possible structure, you seized their assets, 
right?
    Mr. WEBER. We don't seize based upon a possible 
structuring, Congressman. What we do is we work with the U.S. 
Attorneys Office----
    Mr. KELLY. They haven't been convicted of anything, though.
    Mr. WEBER. And they don't have to be, pursuant to the law 
that has been on the books for 30 years.
    Mr. KELLY. I understand.
    Mr. WEBER. So what we do is----
    Mr. KELLY. I understand.
    Mr. WEBER [continuing]. We go to the U.S. Attorneys 
Office----
    Mr. KELLY. I understand.
    Mr. WEBER [continuing]. There, we get a warrant signed by a 
judge----
    Mr. KELLY. Mr. Weber, I understand. It is wrong. It is 
wrong. You can say it is--hey, just because it is the law 
doesn't make it right.
    Mr. WEBER. Right.
    Mr. KELLY. It is wrong. You know it is wrong, and the 
people you work with know it is wrong.
    So what I would suggest is you do the same type of a look 
inside that Congress does of what is it that we are doing that 
is actually hurting people, how are we keeping people from 
reaching the American Dream, and shouldn't we maybe turn around 
and fix it.
    I am not coming after you because I don't like you. I am 
coming after you because this is absolutely insane, that we 
have to have a committee meeting to talk about people who are 
being wronged. Their assets are being seized. You keep their 
money. In some cases, they get some of it back. In some cases, 
they get none of it back. Who determines that? In some cases, 
we say to them, ``Hey, you know what? Give me 50 cents on the 
dollar, and you can go away.''
    You are seizing money from real people. Real people. 
Americans. These are not people who are terrorists. These are 
not people who are running some kind of a drug chain. And you 
know it. You know it.
    There is an article in The Washington Post I would like to 
put in, Mr. Chairman, and it does have to do with the asset 
seizures fueling police spending.
    [The information follows:]
   
    
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    Mr. KELLY. And I know, Mr. Koskinen, it was only $22 
million or $23 million. And, honest to God, back where I am 
from, that is a lifetime of ultimate success, okay? So it is 
not peanuts. But here is----
    Mr. KOSKINEN. It is a very different situation than----
    Mr. KELLY [continuing]. What I want to get to though. 
Listen, I want to tell you something. When we can get to the 
point that we look at each other and decide we are going to do 
what is right for the American people, not that somehow people 
are going to ask you ``gotcha'' questions--because I know that 
is what happened to the Taylors and the Sowers. It was all 
``gotcha'' stuff.
    These people come in, sit down at your kitchen table, have 
a glass of iced tea, talk a little bit about this, a little bit 
about that. The next thing you know, you better have a lawyer 
the next time we talk. And the meter starts to run. And it 
continues to run, and it continues to run. And you know the 
people who don't have to worry about picking up the tab on the 
bill? You all. The same people that fund you fund all the 
different legal activity. Every single penny comes from 
hardworking American taxpayers.
    Mr. Weber, please, I am talking to you. I know you don't 
want to look at me on this. And, listen, I understand that. I 
understand that. But here is what I want to get to. There has 
to be some point in time that we do the right thing for the 
American people because that is basically who we are. That is 
the very fabric of who we are as a people.
    Just as a biblical reference, you know why David went in to 
fight the Philistines? Do you know why David went to fight the 
Philistines? Because he went to feed his army, the Israelite 
army that was afraid to go into the valley against Goliath 
because Goliath was so big, Goliath was so intimidating. Nobody 
would go out. David--his dad says, ``Hey, take corn, take 
water. They need your help.''
    He goes there, and you know what he finds? Nobody in the 
army is willing to go into the valley. Nobody. You know what 
David says? He goes out himself. You know what he declares? 
``Is there not a just cause? Is there not a cause?''
    And I would hope that each member of the IRS understands 
that we are not painting you all as being bad people. But you 
are having a dramatic effect and a negative effect on the 
American people. And I think, as Kenny just talked about, when 
we, as a government, no longer stand up for the rights of 
individuals and freedom, we have turned our back on 1.4 million 
people in uniform that gave their lives that we could practice 
our type of government today.
    This is not coming at the IRS because we don't like you. 
This is coming after the IRS because you have hurt our people--
our people, together, all of us. And I think that is the thing 
that we have to start understanding. It is not a me-versus-you. 
It is not you versus the American people. But, at some point, 
doesn't somebody say, is there not a cause? And can we not take 
a wrong and make it a right?
    You don't pay them for loss of income. You don't pay them 
interest. You don't pay them for damage to their reputation. 
What you do is say, ``Hey, we may give you some of it back. 
Maybe we won't. Depends how I'm feeling.'' Okay.
    And I am so sick and tired of hearing about it is legal. 
There is a hell of a difference between what is legal and what 
is right. You all know that. I know it. I have suffered it in 
my personal business life.
    And that is why we are here. This is America's House, 
representing every single American, including every member of 
the IRS, by the way. I do appreciate your service. But I think, 
when we realize--when we realize that we are doing the wrong 
thing, stand up and just say, ``We were wrong, and we're going 
to make it right.'' That is so basic and what we believe as 
Americans. It just is so fundamental. And there truly is a 
cause.
    Mr. Chairman, I yield back.
    Chairman ROSKAM. Thank you, Mr. Kelly.
    I want to thank the panel for your testimony today. I want 
to thank our witnesses for your journey and your willingness. 
As I said before, you really do exemplify and reflect some 
things that are very, very powerful. And you evoke a very 
strong feeling in all of us, and we are trying to sort out how 
it is that we get to the right place.
    I want to thank my members on this committee, who have 
really risen to an occasion to try and do a right thing.
    Let me just close by asking a couple of questions.
    Mr. Blanco, I am trying to size you up, and I can't quite 
figure it out, which is maybe, you know, part of one of your 
gifts, but you are fairly sphinx-like. I can't figure out if 
you are playing straight with me or if you are hustling me. And 
I will continue to be mystified by it, and part of it is some 
of your answers.
    But here is a question that you can answer as it relates to 
the allegations of misconduct. Mr. Lewis and I wrote to the 
Department in March of 2015. We brought these questions to the 
attention of the Attorney General. We made representations that 
were really echoed by a number of other members today.
    And way down deep, you know this stuff is wrong, but you 
can't--you know, you have to put your game face on, and I get 
that. But here is a question that you can answer. Have these 
cases that we have brought to your attention, have they been 
reviewed? The attorney misconduct cases, have they been 
reviewed?
    Mr. BLANCO. Let me say two things.
    Yes. One is that we have our review process, which is an 
independent part of the Department of Justice, our OPR section, 
Office of Professional Responsibility. I know via letter that 
you have been informed that at least one of those cases that 
you spoke about, maybe two--I am not certain, and I don't want 
to say that they all have or they haven't been referred to OPR 
for review.
    I can tell you this--and you are going to size me up, which 
is great. I can tell you that every allegation of misconduct by 
any employee of the Department of Justice is taken very 
seriously.
    Chairman ROSKAM. Okay. That is not my question.
    Mr. BLANCO. And I can tell you that OPR is going to do 
their review of cases that you have referred to Department of 
Justice.
    Chairman ROSKAM. Okay. That is why I can't figure you out. 
Because I have given you a complete opportunity to say, 
``Congressman Roskam, I've got good news for you. Every 
allegation, everything that you've brought to the attention 
with Mr. Lewis has been reviewed and disposed of and we have 
dealt with it.'' And you can't give me a straight answer on 
that.
    Mr. BLANCO. I will tell you this. I can get back to you on 
those answers. I just don't want to give you the information 
that is inaccurate.
    Chairman ROSKAM. All right. That is fair.
    Mr. BLANCO. And I am happy to do that.
    Chairman ROSKAM. Can we have the answer by the end of the 
week?
    Mr. BLANCO. You can have it probably by the end of the day.
    Chairman ROSKAM. Fantastic. Thank you. That is helpful, and 
I appreciate that.
    So this is a question now, just more broadly. You have 
heard that the Sowers are pending for 10 months. And, listen, 
there is not a person here that is going to--if you are asked 
to describe the Sowers' case--and you don't have to acknowledge 
this, but I just know intuitively. If you are describing the 
Sowers' case in other circumstances and the Taylors' case in 
other circumstances, you are going to be pretty sympathetic to 
it, upon the telling of this case.
    And so the question then is, if you are sympathetic to it--
and I think you are, and you want this to go away--it doesn't 
make any sense to me that this should take 10 months, that they 
should just be hanging out there for 10 months.
    So is there a date certain or can you make a representation 
to this subcommittee about when you can have these cases, not 
the process but the individual cases, reviewed so that they can 
be disposed of?
    Mr. Blanco.
    Mr. BLANCO. You want a specific date? I can't give you a 
specific date.
    Chairman ROSKAM. Give me a frame of reference. Give me a 
season of the year. Give me an epoch. You know, give me a--you 
know what I am saying.
    Mr. BLANCO. I do know what----
    Mr. RANGEL. Mr. Chairman, would you yield?
    Chairman ROSKAM. I will yield.
    Mr. RANGEL. I am trying to be a friend, but maybe if they 
can't----
    Chairman ROSKAM. Turn your mike on.
    Mr. RANGEL. If they can't give us any idea how long it 
would take to repair this emergency situation--which stains the 
government, it stains the executive branch, and it stains us--
maybe we should set a date for our next hearing. I hope they 
don't want that. But we can have a press conference and let the 
whole world know that we are having a hearing over 600 
taxpayers. I don't know how many taxpayers we have, but that is 
an infinitesimal number for the integrity of the Service.
    So I just say that I hope they can come up with some 
answer, but I will be encouraging the chair to help them 
thinking--if they can't come up with an answer, ``I don't 
know,'' we can tell them when they come back to tell us again 
they just don't know.
    Chairman ROSKAM. Mr. Blanco, what can you tell us about how 
long this will take?
    Mr. BLANCO. I can tell you that we are looking at those 
matters that have been referred to us. We have, as I mentioned, 
a process. We are working as expeditiously as possible. Nobody 
wants to give an answer as quickly as I do, and we are trying 
to work there as quickly as we can.
    One thing I will say, Congressman--and I feel very deeply 
about this--you know, justice should not be rushed. It is a 
very thorough process. It is a process that I think is a fair 
process and a just process. And, at the end of the day, we will 
use those factors, we will follow the facts where they take us, 
and we will make a decision.
    Chairman ROSKAM. Okay, that is just not good enough. Do you 
understand that? So let me just--because you are not going to 
give me an answer today. What I am communicating to you, on 
behalf of this whole subcommittee: That is not good enough. It 
is obtuse, it is evasive, it is condescending--not to us, but 
it is condescending to these people.
    And can I just tell you that when we had the briefing with 
DOJ and the IRS in February in this room, when I asked where 
was the money, for example, for the people to whom everybody 
agrees the money should be restored, by the way, I was told, 
``Well, Congressman, the money has been dissipated into the 
system.'' I said, ``Dissipated into the system? What does that 
mean?'' Because if my constituents spend tax money that they 
owe the government, what does the government do? The government 
takes their house and puts them in prison. That is what 
happens.
    So do you understand the level of frustration? Sort of 
these non-answers, obtuse briefings, the passive-aggressive 
nature about trying to get information from your staff. We are 
basically stiff-armed. You tell the chairman, you tell the 
ranking member, you tell basically the entire subcommittee, 
``We're not that interested in what you have to say.'' You pat 
us on the heads. You say, ``Off with you. Be lively. We're 
going to do our business.''
    And now what you have done is you have brought a 
subcommittee together that can't agree about what time of day 
it is. We can't agree on the Affordable Care Act. We cannot 
agree on the Iran sanctions deal. We cannot agree on tort 
reform and tax reform and entitlement reform. But we are all 
together in thinking you are the problem and they are the good 
guys and that you are not bringing your game.
    The same sense of urgency--Mr. Rangel said it best. If this 
were our kids or our grandkids, if this was one of your kids or 
my kids, we would be scandalized, we would be outraged, and 
this wouldn't happen.
    And so the capacity to treat people in the dismissive way 
in which the departments have treated them is the part that all 
of us really find just jarring, actually, just really, really 
jarring.
    And so it is very unsatisfying, the nature of where this 
stands. The Internal Revenue Service made a decision to change 
this policy, and we as a group said that is a good thing. Now, 
it only goes to show that the review process needs to be 
reevaluated, but not just the process, not just that feeling 
of, ``Oh, we've got really sharp people working on this, 
Congressman Roskam, we've got our A team all over this,'' 
because the A team is not all over this. It has clearly been 
completely dismissed. It is off to the sidelines.
    And the subtext or the notion that everybody is going to 
lawyer up and come running? You wouldn't come running back in 
if you got your head kicked in by a Federal agency that is 
stomping all over your property and giving you a hard time and 
threatening criminal prosecution. It is scandalous, it is 
outrageous, and yet the remedy of this is, ``Make it go away.''
    Do the right thing. Do the right thing according to the 
Rangel standard. Go through case by case by case. Don't be 
passive-aggressive and jerking the guys around who are told 
this is a commercial enterprise. This is not a commercial 
enterprise, their FOIA request. It is a group that is trying to 
bring justice. They are not making any money. They are a 
501(c)-something, and they deserve this information. And, as I 
said, we are going to get to this information.
    So why don't we do the right thing? And that is restore the 
confidence in these people, where they go, ``You know what? 
Yeah, it was a bummer. We really got jerked around by the 
Federal Government. But we were able to bring attention to 
things, and things were made right.''
    And your disposition, in particular, as it relates to the 
DOJ, is just completely unsatisfying. And so I find it simply 
amazing that the simple response of, ``Hey, we're reviewing 
every case, here's the date certain when they will be reviewed, 
and we're going to give you an answer, and we're going to get 
this disposed of and get it off our backs''--just let's be done 
with this. But the simple remedy is let's do it and let's do it 
with dispatch.
    So, again, I want to thank the members for their 
participation today.
    To the Taylors and to the Sowers, we are sticking with you. 
And you reflect a larger group. And we are going to do our best 
to make sure that a coequal branch of government is held to 
account, what we think is an abuse.
    And, with that, the committee is adjourned.
    [Whereupon, at 12:53 p.m., the subcommittee was adjourned.]
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