Rep. Roskam calls the seizure practice an “abuse by the federal government against citizens.”

[Politico] – On April 12, 2013, the IRS seized every penny of a nearly $1 million business account held by Georgia gun shop owner Andrew Clyde.

His misdeed — if you can call it that: depositing business checks into his bank account in increments under $10,000.

House Republicans are on Wednesday preparing to shine a spotlight on the government’s practice of seizing small business civil assets without charging them with a crime, signaling a new oversight focus on an issue gaining more attention.

“There is a strong indication that the IRS has been involved in civil forfeiture that has hurt innocent people,” said the committee’s oversight subcommittee chairman Rep. Peter Roskam (R-Ill.) in a brief interview, calling it an “abuse by the federal government against citizens.”

It’s the first hearing for the Illinois Republican, who takes over the panel that in the past year focused nearly exclusively on the IRS tea party targeting controversy. The lawmaker has spent recent weeks hounding the agency on a series of issues, from the agency hiring previously fired workers to its contract with a failed Obamacare vendor.

Although the seizure issue crosses several agencies, Roskam’s panel will narrow in on the IRS, bringing in small business-owner witnesses who had their money taken without a warning while the House Judiciary Committee is holding a separate hearing at the same time from a Justice Department perspective.

The IRS, which will send Commissioner John Koskinen to testify before Ways and Means, says it is addressing the problem, having announced last October that it would scale back the practice after a New York Times deep-dive on the matter.

Now, the agency says it will seize only assets of those they believe are engaging in illicit activity, such as fronts for drug cartels, terrorists or money launderers.

It will tell Ways and Means it is planning to publish the new policy in the Internal Revenue Manual, according to one panel source briefed on the matter, though IRS will caution that could take years.

And it’s unlikely to satisfy the panel — particularly the GOP — which has noticed an uptick in such activity in recent years and wants to know why they ever did this in the first place.

Under the law, banks must report cash bank deposits of $10,000 or more to the federal government — a provision aimed at catching illicit traffickers.

Criminals have tried to sidestep the reporting requirement by slyly keeping their deposits under the $10,000 threshold that triggers the reports, a practice called “structuring” that is also illegal.

The IRS — and other agencies that also engage in the practice, such as the DEA or FBI — has sweeping authority to take assets, only having to prove “preponderance of evidence.”

They don’t have to charge anyone with a crime or present any evidence that shows guilt beyond a reasonable doubt, but can get a seizure warrant solely by presenting bank statements showing that a business has deposited amounts under $10,000.

Critics say that shows nothing.

The broad power was aimed at making it easier to catch the bad guys. But the IRS in recent years has used the authority to net small-business owners they believe could be intentionally keeping deposits under $10,000 to avoid reporting requirements.

There is bipartisan backing to limit the practice.

Sen. Rand Paul (R-Ky.) and Rep. Tim Walberg (R-Mich.), last month introduced bipartisan legislation to increase the level of proof needed for seizures.

Former Ways and Means Chair Dave Camp (R-Mich.) and Ranking Democrat Sander Levin (D-Mich.) dropped similar legislation last year.

The IRS between 2005 and 2012 seized more than $242 million for suspected structuring violations in more than 2,500 cases, according to data obtained in a Freedom of Information Act request by the Institute for Justice, a conservative nonprofit representing a number of individuals affected by the practice. It made 639 such seizures in 2012, up from 114 in 2005.

And, according to the group, which will testify on Wednesday, “at least” a third of such seizures resulted simply because the businesses were making multiple bank deposits under $10,000. They say no other criminal activity was ever alleged.

The IRS will provide new data at the hearing Wednesday but did not offer a comment for this story.

Those caught up in the storm have a tough job of showing they didn’t do anything wrong, but sometimes they don’t get to see a judge for years.

“The burden of proof basically shifts — it’s incumbent on small businesses to prove they’re innocent,” said Kevin Brown, former acting IRS Commissioner, who was flabbergasted by the way the policy was being used on small businesses.

That’s what happened with Clyde, the owner of Clyde Armory. He kept his deposits under $10,000 because his insurance limited coverage for losses due to robbery over $10,000, according to his testimony obtained by POLITICO.

After the IRS seized his $940,313 account, he ended up settling to pay $50,000 to avoid a public dispute that could hurt his business and reputation, he will tell the panel. He spent $149,000 on legal bills trying to get his money back.

Small business often end up settling for three reasons: It can hurt their public image; it can take years to unfreeze their assets; and it costs money to fight back.

Jeff Hirsch, who will also testify, fought for two and a half years with his brothers against the IRS to get back more than $446,000 worth of assets the IRS seized from his family business in May 2012.

They never got to bring their case before a judge because the government never started the forfeiture proceedings, locking up the assets used to operate their Long Island-based company that distributes snacks to convenience local stores. They relied extensively on credit, paid $25,000 to hire an outside auditing firm to dig through their books and another $25,000 in lawyer bills.

Three weeks ago, the IRS dropped the case. It returned the funds, without any interest and without ever charging the brothers with a crime.

But some can’t afford to wait as Hirsch did.

Randy Sowers, also set to appear Wednesday, decided he and his wife couldn’t operate their Maryland-based dairy farm and creamery without their capital after the IRS took their entire business account balance of more than $62,000. They settled, forfeiting $29,500.

According to Sowers’ testimony, when his attorney asked why the fine was so steep, the U.S. Attorney’s office responded that the other asset-forfeiture victims got off easier because they “did not give an interview to the press.” Sowers had talked to a Baltimore-based paper, which ran a story on his predicament.

IRS has said from now on it will only focus on seizing the assets of those suspected of illicit activity unless it is an “exceptional circumstance,” but at least two former IRS experts weren’t sure how they could classify which accounts were illegal and which weren’t upon initial inspection and seizure.

Republicans intend to also push the IRS to apply the recent policy change retroactively, giving businesses that settled in recent years the opportunity to re-open their cases and get some sort of reprieve.

They’ll also be seeking more information for the hike in asset seizures in 2012 and 2013. While the number of IRS seizures between 2005 and 2014 often averaged around 1,500, totals reached more than 3,000 during 2012 and 2013. It decreased again in 2014.

Republicans want to know why they doubled, then dropped again. IRS will say the recent drop is because it had to scale back its resources, according to a panel source briefed on the position they’ll take.

The GOP also wants to know what percentage of assets seized were illicit and which were legally earned. The IRS has told the committee it does not have such a breakdown between what’s called “illegal source versus legal source cases.”