The House Ways and Means Committee on Thursday approved bipartisan legislation that would limit when the IRS can seize taxpayer funds.
The legislation, sponsored by Reps. Peter Roskam (R-Ill.) and Joe Crowley (D-N.Y.), passed the committee by voice vote.
The bill concerns cases where taxpayers are suspected of “structuring” transactions under $10,000 to avoid bank-reporting requirements.
Under the legislation, the IRS would only be able to seize funds in suspected structuring cases when the funds came from illegal sources or the transactions were structured in order to conceal other criminal activity. Additionally, the legislation would establish a process to review seizures.
The bill came about following hearings held by the Ways and Means Committee’s oversight panel about the IRS’s civil asset forfeiture practices.
It has been the IRS’s policy to only seize illegally sourced funds in structuring cases since 2014, but before then it would also seize taxpayers’ funds that came from legal sources. Several lawmakers who had their funds seized under the old policy testified about the difficulties they had getting their money back.
In March of this year, the IRS finished a review of contested cases that occurred before its policy change and returned or recommended that the Department of Justice (DOJ) return about 80 percent of the seized funds. However, Roskam said the DOJ has a backlog of cases.
“It’s clear to everyone involved that the IRS and DOJ abused their authority and took money from people who did nothing wrong,” Roskam said in a statement after the vote. “This bill will end that practice once and for all.”
The House unanimously passed Roskam and Crowley’s bill last year, but it didn’t get a vote then in the Senate.
The measure has bipartisan support in the Senate as well. The bill has been introduced in the upper chamber by Sens. Sherrod BrownSherrod Campbell BrownSenate race in Ohio poses crucial test for Democrats Powell says Fed will consider faster taper amid surging inflation Biden faces new pressure from climate groups after Powell pick MORE (D-Ohio) and Tim ScottTimothy (Tim) Eugene ScottHow expanded credit data can help tackle inequities Dems erupt over GOP 'McCarthyism' as senators vet Biden bank watchdog pick Why Democrats' prescription drug pricing provision would have hurt seniors MORE (R-S.C.).