RESPECT Act

To amend title 31, United States Code, to prohibit the Internal Revenue Service from carrying out seizures relating to a structuring transaction unless the property to be seized derived from an illegal source or the funds were structured for the purpose of concealing the violation of another criminal law or regulation, to require notice and a post-seizure hearing for such seizures, and for other purposes. 1. Short title This Act may be cited as the Restraining Excessive Seizure of Property through the Exploitation of Civil Asset Forfeiture Tools Act RESPECT Act 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 (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 clause (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. . 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 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.

Summary: Restraining Excessive Seizure of Property through the Exploitation of Civil Asset Forfeiture Tools Act or the RESPECT 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 in connection with an action to recover property seized by the IRS pursuant to a claimed violation of the structuring provisions of the BSA.