Clyde-Hirsch-Sowers RESPECT Act

Summary: Clyde-Hirsch-Sowers RESPECT Act or the Restraining Excessive Seizure of Property through the Exploitation of Civil Asset Forfeiture Tools Act  This bill revises the authority and procedures that the Internal Revenue Service (IRS) uses to seize property that has been structured to avoid Bank Secrecy Act (BSA) reporting requirements.   The IRS may only seize property it suspects has been structured to avoid BSA reporting requirements if the property was derived from an illegal source or the funds were structured for the purpose of concealing the violation of a criminal law or regulation other than structuring transactions to evade BSA reporting requirements.  Within 30 days of seizing property, the IRS must: (1) make a good faith effort to find all owners of the property, and (2) notify the owners of the post-seizure hearing rights established by this bill. The IRS may apply to a court for one 30-day extension of the notice requirement if it can establish probable cause of an imminent threat to national security or personal safety.  If the owner of the property requests a court hearing within 30 days after the date on which notice is provided, the property must be returned unless the court holds a hearing within 30 days after notice is provided and finds that there is probable cause to believe that the property was derived from an illegal source or the funds were structured to conceal the violation of a criminal law or regulation other than a structuring violation.   The bill amends the Internal Revenue Code to exclude from gross income any interest received from the federal government with respect to an action to recover property seized by the IRS pursuant to a claimed violation of the structuring provisions of the BSA. 

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Clyde-Hirsch-Sowers RESPECT Act'' or 
the ``Restraining Excessive Seizure of Property through the 
Exploitation of Civil Asset Forfeiture Tools Act''.

SEC. 2. INTERNAL REVENUE SERVICE SEIZURE REQUIREMENTS WITH RESPECT TO 
              STRUCTURING TRANSACTIONS.

    Section 5317(c)(2) of title 31, United States Code, is amended--
            (1) by striking ``Any property'' and inserting the 
        following:
                    ``(A) In general.--Any property''; and
            (2) by adding at the end the following:
                    ``(B) Internal revenue service seizure requirements 
                with respect to structuring transactions.--
                            ``(i) Property derived from an illegal 
                        source.--Property may only be seized by the 
                        Internal Revenue Service pursuant to 
                        subparagraph (A) by reason of a claimed 
                        violation of section 5324 if the property to be 
                        seized was derived from an illegal source or 
                        the funds were structured for the purpose of 
                        concealing the violation of a criminal law or 
                        regulation other than section 5324.
                            ``(ii) Notice.--Not later than 30 days 
                        after property is seized by the Internal 
                        Revenue Service pursuant to subparagraph (A), 
                        the Internal Revenue Service shall--
                                    ``(I) make a good faith effort to 
                                find all persons with an ownership 
                                interest in such property; and
                                    ``(II) provide each such person 
                                with a notice of the person's rights 
                                under clause (iv).
                            ``(iii) Extension of notice under certain 
                        circumstances.--The Internal Revenue Service 
                        may apply to a court of competent jurisdiction 
                        for one 30-day extension of the notice 
                        requirement under clause (ii) if the Internal 
                        Revenue Service can establish probable cause of 
                        an imminent threat to national security or 
                        personal safety necessitating such extension.
                            ``(iv) Post-seizure hearing.--If a person 
                        with a property interest in property seized 
                        pursuant to subparagraph (A) by the Internal 
                        Revenue Service requests a hearing by a court 
                        of competent jurisdiction within 30 days after 
                        the date on which notice is provided under 
                        subclause (ii), such property shall be returned 
                        unless the court holds an adversarial hearing 
                        and finds within 30 days of such request (or 
                        such longer period as the court may provide, 
                        but only on request of an interested party) 
                        that there is probable cause to believe that 
                        there is a violation of section 5324 involving 
                        such property and probable cause to believe 
                        that the property to be seized was derived from 
                        an illegal source or the funds were structured 
                        for the purpose of concealing the violation of 
                        a criminal law or regulation other than section 
                        5324.''.

SEC. 3. EXCLUSION OF INTEREST RECEIVED IN ACTION TO RECOVER PROPERTY 
              SEIZED BY THE INTERNAL REVENUE SERVICE BASED ON 
              STRUCTURING TRANSACTION.

    (a) In General.--Part III of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 is amended by inserting before section 
140 the following new section:

``SEC. 139G. INTEREST RECEIVED IN ACTION TO RECOVER PROPERTY SEIZED BY 
              THE INTERNAL REVENUE SERVICE BASED ON STRUCTURING 
              TRANSACTION.

    ``Gross income shall not include any interest received from the 
Federal Government in connection with an action to recover property 
seized by the Internal Revenue Service pursuant to section 5317(c)(2) 
of title 31, United States Code, by reason of a claimed violation of 
section 5324 of such title.''.
    (b) Clerical Amendment.--The table of sections for part III of 
subchapter B of chapter 1 of such Code is amended by inserting before 
the item relating to section 140 the following new item:

``Sec. 139G. Interest received in action to recover property seized by 
                            the Internal Revenue Service based on 
                            structuring transaction.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to interest received on or after the date of the enactment of 
this Act.