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March 30, 2016
Roskam to Continue Oversight's Push for Asset Forfeiture Reform
by Kat Lucero

Full Text Published by Tax Analysts®


When Rep. Peter J. Roskam, R-Ill., investigated the IRS's civil asset forfeiture policy, he told agency officials they were just like Javert from Les Misérables.

"The guy that everybody hates," Roskam recalled in a March 22 interview with Tax Analysts, invoking the villainous police inspector who follows a strong desire to recapture an ex-convict-turned-benefactor in Victor Hugo's epic novel about 19th century French politics and society.

House Ways and Means Oversight Subcommittee Chair Peter J. Roskam, R-Ill.The IRS was operating in a similarly uncompromising manner through its forfeiture program, according to the chair of the House Ways and Means Oversight Subcommittee, a key watchdog post with jurisdiction over federal tax administration.

For years, he said, the agency had unfairly seized people's bank accounts. It had accused small business owners of "structuring," a serial practice -- often tied to criminal syndicates -- of conducting financial transactions under $10,000 to avoid reporting requirements under the Bank Secrecy Act.

As a result of the subcommittee's work, the agency changed its policy to pursuing only cases with signs of wider criminal activity. The panel even forced the IRS to return $150,000 to a North Carolina store owner it had confiscated, according to a February 19 release from the Institute for Justice.

But Roskam still wants to do more for individuals who had assets confiscated under the IRS's old policy. That is why he is working on legislation that would force the agency to review older cases and return assets it took from small business owners, the lawmaker said, by specifically targeting the IRS's policy on structuring. This legislation would be in contrast to broader measures such as the Fifth Amendment Integrity Restoration (FAIR) Act (S. 255), introduced in January 2015, which would require a court hearing within 14 days regarding any property seized as a result of an alleged structuring violation.

Roskam and the subcommittee's ranking minority member, Rep. John Lewis, D-Ga., in a March 23 letter requested that the IRS, the Treasury Department, and the Justice Department review all civil asset forfeiture cases, appropriately remit funds, and give due consideration to all pending petitions. The letter was signed by all members of the subcommittee and follows up on a similar request from August 2015.

IRS Commissioner John Koskinen, however, pushed back March 23, arguing that the agency has already changed its structuring policy after the subcommittee put a spotlight on some unwarranted cases, that it would review cases if requested, and that the bulk of cases are judicial cases under the domain of the Justice Department, not the IRS.

Early in 2015, Roskam launched an investigation and held hearings on civil asset forfeiture. The wrongful convictions the inquiry revealed "made no sense whatsoever from an actual justice point of view" because there was no underlying criminal case, he said.

The cases involved small business owners who didn't realize "they were running afoul of a technical banking statute, and all of a sudden the IRS shakes them down," he said, adding, "This is not a meth lab. It's not a human trafficking operation."

The full Ways and Means Committee considered the work on civil asset forfeiture as one of its major wins in 2015. Koskinen apologized before the Oversight Subcommittee for the agency's past mistakes and remitted funds to a few affected individuals. The IRS and the Justice Department also changed their policies so that they would pursue only cases with signs of criminal activity.


Not Always Bipartisan

While the subcommittee's ongoing work on civil asset forfeiture reform has been hailed as bipartisan, some critics say the rest of Roskam's projects tend to be politically driven.

Oversight Subcommittee member Joseph Crowley, D-N.Y., told Tax Analysts that although he has a good working relationship with Roskam, some of his hearings have been on issues "that I don't really see as moving legislation."

Roskam received some criticism at the March 3 subcommittee hearing about free speech on college campuses. Lewis in his opening statement immediately questioned the hearing's purpose.

"Mr. Chairman, I do not understand why we are here," Lewis said, noting that the subcommittee does not oversee freedom of speech, college curriculum, or school resources. Some of the witnesses' testimony at the hearing was better suited for hearings in other House committees, Lewis said.

In the interview, Roskam defended his motives. "These speech issues are obviously sensitive and can be misinterpreted. If an institution like Georgetown law school is misstating the law, we've got a challenge in our hands," he said.

While in law school, Roskam worked in his parents' nonprofit organization, which provided college scholarships to thousands of students. The lawmaker claimed that he is not "an expert by any stretch of the imagination" in the area, but said the experience gave him a deeper appreciation of the nonprofit sector.

"Our civil society is inextricably linked to our strength as a nation," Roskam said. "We absolutely need a thriving and dynamic civil society" that depends on section 501(c)(3).

One nonprofit-related win in 2015 for the subcommittee chair was the passage of his measure that permanently prohibited the IRS from imposing the gift tax on donations to some tax-exempt organizations, including those under section 501(c)(4). The House adopted it earlier in April and included it as part of the year-end tax and spending package (P.L. 114-113).

Roskam served in the Illinois state legislature for over a decade. He was elected to Congress in 2006, replacing his mentor, former Rep. Henry Hyde. He has served on the Ways and Means Committee since 2009, and as Oversight Subcommittee chair since the beginning of the 114th Congress. He is also on the Health Subcommittee.

"As Ways and Means chairman, I worked closely with Peter on a number of oversight issues," House Speaker Paul D. Ryan, R-Wis., said in a statement to Tax Analysts. "He has been a leader on everything from stopping IRS abuse to reining in Medicare fraud. I appreciate the seriousness and tenacity Peter brings to the subcommittee."


Paying for Cybersecurity

While Roskam admits he is not an information technology expert, he said he does understand the "natural tension" between convenience and security when it comes to taxpayers accessing their personal information online. However, the days of easy access "may be an indulgence," Roskam said, adding that ultimately the federal government may have to front-load its IT systems with more security.

Asked if he would recommend allocating additional funding to IRS cybersecurity because of the latest attacks, the lawmaker said, "I wouldn't presume that right now."

The IRS has faced ongoing budget cuts since 2010, but last year Congress agreed to an additional $290 million for the agency for fiscal 2016 for the sole purpose of improving customer service. Many lawmakers have resisted providing increased funding primarily because of the IRS's political targeting controversy. Roskam, who took part in Congress's investigation of the controversy, said the full committee continues to seek a "good assessment" of IRS spending.

A Ways and Means Committee source said that a hearing on IRS administration issues may take place near the return filing deadline.


Taxpayer Rights

Roskam has been an advocate for taxpayers he sees as victims of IRS abuse, sponsoring measures such as the Taxpayer Bill of Rights Act of 2015 (H.R. 1058), which also passed as part of the year-end tax and spending package.

On March 9 Roskam attended a public forum in his congressional district with National Taxpayer Advocate Nina Olson, the second of several events across the country planned by the Taxpayer Advocate Service to get taxpayer input on the Service's "future state" vision.

Roskam also attended a local volunteer income tax assistance clinic. He said the operation was "sophisticated" and met the needs of his constituents. His main takeaway from the experience: "I was particularly impressed with the caliber of the volunteers."

"These were people who have background and training and technical expertise, and [a] willingness to walk [clients] through some very complicated situations," he added.


Oversight's 2016 Agenda

Roskam said that for the rest of 2016, the Oversight Subcommittee will continue to work on last year's investigations and initiatives, including preventing U.S. companies from benefiting from the potential waiver by the Obama administration of tax code provisions giving unfavorable treatment to income earned in Iran in light of the nuclear deal with that country. The subcommittee held a hearing on the issue in November 2015.

The subcommittee will also once again look at the favorable tax treatment of large university endowments, carrying on its investigation from last year. Roskam said he is awaiting a response from the IRS on an inquiry regarding endowments.

Follow Kat Lucero (@kat_lucero) on Twitter for real-time updates.

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