Lawmakers blast IRS, DOJ over seized funds

Lawmakers blast IRS, DOJ over seized funds

Lawmakers on both sides of the aisle blasted the Internal Revenue Service and Department of Justice on Wednesday for failing to return small-business owners’ wrongly seized assets and for not being clear about when the funds would be remitted.

“You’ve brought a subcommittee together who can’t agree about what time of day it is,” said Rep. Peter Roskam (R-Ill.), chairman of the House Ways and Means oversight subcommittee, which held a hearing on the topic.

“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,” Roskam added.

The top Democrat on the subcommittee, Rep. John Lewis of Georgia, agreed that this is a topic on which Democrats and Republicans are strongly united.

"On this issue, we are on one accord," he said.

Wednesday’s hearing was a follow-up to a hearing the subcommittee held last year. During that hearing, lawmakers attacked the IRS for seizing small businesses’ assets in cases in which the agency had accused business owners of illegally structuring transactions under $10,000 but had no evidence that the money came from illegal sources.

The IRS changed its policy in October 2014 to focus only on cases in which the structured money appears to come from illegal sources.

However, there are still some small business owners whose assets were seized years ago under the old policy and did not have funds derived from criminal activity but still haven’t gotten their money back. Two farmers who are in this situation testified at the hearing.

Robert Everett Johnson, an attorney at the Institute for Justice, said during the hearing that there are more than 600 people who have had a total of more than $43 million seized that are still waiting for some type of justice.

Previously, subcommittee members have called on the IRS and DOJ to review these cases and return funds when appropriate. But Roskam said that lawmakers haven’t actually received answers to lawmakers’ questions.

IRS Commissioner John Koskinen said the agency has apologized to “anyone innocent” who has had his or her funds seized.

The IRS has considered about 75 cases in which funds derived from legal sources have been taken, including petitions from property owners. In cases that were not taken to court, the IRS has control. In cases where the seizure went to court, DOJ has control, but the IRS makes recommendations, Koskinen said.

Kenneth Blanco, deputy assistant attorney general in the Justice Department's criminal division, said he couldn't comment on any specific case but that the department is reviewing petitions.

Roskam asked Blanco if they could provide or ballpark a date when the cases would be reviewed. But Blanco was unable to do that. He said that DOJ is trying to work on the cases as quickly as it can but that “justice should not be rushed.”

“That’s not good enough,” Roskam said. “It’s obtuse. It’s evasive. It’s condescending.”

Rep. Charlie Rangel (D-N.Y.) said, “If he can’t give us any idea how long it would take to repair this emergency situation … maybe we should set a date for our next hearing.”