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House Moves To Stop IRS Forfeiture Abuse

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House Moves To Stop IRS Forfeiture Abuse

Forbes October 25, 2016
Legal ReformOvercriminalization

The House of Representatives just took a major step to protect innocent Americans’ bank accounts and restore the principle of innocent until proven guilty by reforming the IRS’s abuse of civil forfeiture.

Under federal civil forfeiture law, the IRS can seize someone’s money if they make a close series of cash deposits or withdrawals under $10,000. This is evidence of “structuring,” or trying to evade reporting requirements, because the Bank Secrecy Act requires bank transactions over $10,000 to be reported to the government.

The IRS program as it existed was creating perverse incentives. The goal must always be to deliver justice, not maximize the number of seizures. — Chairman Roskam

While making a series of large cash deposits or withdrawals could be evidence of criminal activity, the IRS has no incentive to determine if any wrongdoing occurred. This is because the mere existence of these transactions is all the evidence that is necessary for confiscation.

Furthermore, if people want to get their money back from the IRS, the burden of proof is on them to prove their innocence. This is because the cash itself is charged with the crime, and protections afforded to criminal defendants do not apply to property. This makes it difficult, time consuming, and prohibitively expensive for people to fight for the return of their property.

Last month, H.R. 5523, known as the Clyde-Hirsch-Sowers RESPECT Act, passed the House by a vote of 415 to 0. In what follows, one of the H.R. 5523’s sponsors, House Ways & Means Subcommittee on Oversight chairman Peter Roskam (R-IL), explains why the Senate needs to follow the House’s lead and ensure that law-abiding Americans’ bank accounts are safe from IRS forfeiture.

Jared Meyer: In what major ways does H.R. 5523 change the laws the govern IRS forfeiture policy?

Chairman Roskam: The Clyde-Hirsch-Sowers RESPECT Act changes the law so the IRS cannot seize someone’s assets unless they can show probable cause that the money in question came from a criminal source. It also guarantees the right to a post-seizure hearing within 30 days of the money being taken away. These common-sense reforms preserve law enforcement’s ability to go after real criminals and money launderers, while providing recourse and protection for innocent people .

Jared Meyer: It seems surprising that you could get unanimous support for your bill in today’s political climate. Why was there such strong, bipartisan support in the House?

Chairman Roskam: I’m very proud to see our bill pass unanimously by a 415-0 margin. I give credit to Ranking Member John Lewis and Rep. Joe Crowley for working closely with us to write and pass a necessary bill which will protect innocent people from government abuse.

Jared Meyer: Do you have any data to prove that cases of IRS taking money from innocent individuals are not simply isolated incidents?

Chairman Roskam: There were more than 4,000 IRS seizures and forfeitures between 2005 and 2013, totaling more than $350 million. Of course, many of these are likely the result of criminal activity, but the IRS made no distinction in the past. This is precisely why we needed to pass a law to protect people who did nothing wrong. The Institute for Justice has flagged more than 600 cases in which money may have been seized despite no indication of underlying criminal activity.

Jared Meyer: There is no reason that Americans should have their bank accounts emptied when they did not commit a crime. How could this practice continue for so long?

Chairman Roskam: Structuring and forfeiture laws are not inherently bad concepts. When used appropriately and responsibly, they can be effective law enforcement tools to combat drug trafficking, money laundering, and terror financing. Unfortunately, the IRS program as it existed was creating perverse incentives. The goal must always be to deliver justice, not maximize the number of seizures .

Jared Meyer: What further steps should Congress take to combat civil forfeiture abuse from other agencies?

Chairman Roskam: I’m an original co-sponsor of a bill called the DUE PROCESS Act to fully overhaul our nation’s civil asset forfeiture laws. The DUE PROCESS Act goes a step further and implements common sense civil asset forfeiture reform government-wide to ensure that forfeiture laws are used to enforce the law, and not to harass innocent Americans. ‎

Jared Meyer: Many Americans have still not heard of civil forfeiture, but misuse of this tactic by law enforcement is becoming more difficult to ignore. To many, it is unbelievable that the government can take property from individuals without charging them with a crime. To put it frankly, this is the type of policy that is expected in Venezuela—not the United States . The Clyde-Hirsch-Sowers RESPECT Act is clearly necessary, as are further reforms to restore the principle of innocent until proven guilty.

This piece originally appeared on Forbes


 Jared Meyer is a fellow at the Manhattan Institute's Economics21. Follow him on Twitter here.