Congressmen Introduce Bipartisan Bill to Curb IRS Civil Asset Forfeitures

[kcjenkins]

Washington, D.C. (December 11, 2014)
By Michael Cohn

 

The Republican and Democratic leaders of the House Ways and Means Committee have introduced bipartisan legislation to protect taxpayers against the inappropriate use of civil asset forfeitures by the Internal Revenue Service.

 

Ways and Means chairman Dave Camp, R-Mich., and ranking member Sander Levin, D-Mich., introduced the Taxpayer Protections Against Abusive Seizures Act, which would provide taxpayers with protections against the inappropriate application of civil forfeiture laws. The laws were enacted to curtail money laundering and terrorist activities, but a recent report in The New York Times found they have also been used to seize funds from some small businesses, in some cases leaving business owners with no working capital to make payroll and maintain needed inventory.

 

“In America, a citizen suspected of a crime is innocent until proven guilty,” Camp said in a statement. “All too often, however, our current laws allow the government to assume guilt without allowing the accused a speedy hearing, depriving them of much needed working capital. This bill provides average American small business owners the ability to challenge powerful government agencies like the IRS, and guarantees them their day in court.”

 

The laws are designed to prevent a practice called “structuring,” the act of making small cash deposits to avoid the $10,000 bank-reporting threshold that is commonly used by drug dealers, money launderers and terrorist entities to avoid detection by authorities. The laws authorize the government to seize the funds of those found engaging in structuring, and in the instance reported in The New York Times, there were inadequate opportunities for the business owner to challenge the seizures.

 

The legislation would provide that an affected person, within 14 days of receiving a notice of a seizure, could request a court to hold a probable cause hearing within 14 days of such request. In addition, the bill provides that if no hearing is held within 14 days of such a request, or if the government fails to show probable cause, the seized funds would automatically be returned to the individual.

 

“This legislation would give law-abiding taxpayers— including small business owners—an opportunity to challenge a notice of seizure and ensure that the IRS is acting appropriately and within the law,” said Levin. “Taxpayers have the right to due process when their property is seized, and this bill protects that right.”

[kcjenkins]

I hope you all not only write your Reps and Senators, but also Letters to the Editor of your local paper, supporting this Bill.  We need to gin up as much support as possible to end this abuse. 

[kcjenkins]

Prosecutors Drop IRS Civil Forfeiture Case
Arnolds Park, Iowa (December 15, 2014)
By Michael Cohn

 

Federal prosecutors in Iowa have agreed to drop a controversial civil asset forfeiture case in which the Internal Revenue Service seized nearly $33,000 from the owner of a Mexican restaurant whose cash deposits at her bank had aroused suspicion of criminal activity.

 

The government moved to drop its case against Carole Hinders, who owned Mrs. Lady’s Mexican Food in Arnolds Park, Iowa, after hearing her sworn testimony last week, according to the Institute for Justice, a libertarian law firm that represented her in the case.

 

In this case, the government will return all of the nearly $33,000 it seized from Hinders in 2013. The Institute for Justice teamed up with her in October to clear her name of any wrongdoing and get her money back.

 

However, the firm said the IRS is asking the court for the right to refile the case in the future and repeated its claim that the case was justified. The Institute for Justice plans to file a response, asking the court to deny the government any right to refile its case and clear the way for Hinders to get interest on the money that was seized.

 

“I actually wanted a trial, which would have cleared my name and helped to protect others, but it is good to get the money back,” Hinders said in a statement. “My fight is far from over, though. I am willing to tell my story to Congress to help change forfeiture laws so that no one else has to go through what I suffered.”

 

She may already have some support in Congress. Last week, the Republican and Democratic leaders of the tax-writing House Ways and Means Committee filed legislation to protect taxpayers against the inappropriate use of civil asset forfeitures by the IRS (see Congressmen Introduce Bill to Curb IRS Civil Asset Forfeitures).

 

Sen. Chuck Grassley, R-Iowa, the ranking member of the Judiciary Committee, also plans to introduce legislation in the Senate to curb the practice. Grassley is expected to become chairman of the Judiciary Committee in the next Congress. He is a senior member and former chairman and ranking member of the Finance Committee, with jurisdiction over the IRS.

 

“I’m working on civil asset forfeiture reform legislation to introduce in the new Congress,” he said in a statement Monday. “News reports including those in The Washington Post have detailed aggressive seizures of cash and property from drivers. In the case of the Iowa restaurant owner and others like it, the IRS has now adopted an enforcement policy under which it won’t seize assets under the structuring law without evidence of underlying criminal activity unless there are extenuating circumstances. I’m looking at ways to make sure the IRS and other federal agencies’ use of these statutes are reformed permanently going forward. Since the IRS changed its approach in these cases, it could change its approach again, and the same is true for other agencies. It’s important to look at getting the right policies set in statute going forward. The government’s power to seize assets should be used fairly and with common sense. The reforms I’m developing are meant to curb instances in which government power unfairly infringes on the rights of motorists, small business owners and other Americans.”

 

The IRS had seized Hinders’ money under the assumption that she had structured her restaurants bank deposits to keep them under $10,000 to avoid federal bank reporting requirements. Banks are required to file Suspicious Activity Reports if they see large cash deposits coming in over $10,000, but law enforcement also looks for patterns where depositors seem to be attempting to keep the deposits under the level required for the reporting. However, the IRS has indicated that it will not pursue new cases so aggressively.

 

The case has received significant attention from the press, including The New York Times and Des Moines Register. Hinders owned and operated Mrs. Lady’s Mexican Food for 38 years. The restaurant only accepted cash, which meant she made frequent cash deposits at the bank. Federal law requires banks to report cash deposits larger than $10,000. Since her deposits were less than $10,000, the government claimed she was deliberately making small deposits to evade the reporting requirement.

 

The IRS seized Hinders’ money using civil forfeiture, which allows law enforcement agencies to take cash, cars and other property without even charging the property owner with a crime. Carole has not been charged with a crime. The government has never claimed that any of the money that it seized from Hinders’ restaurant is the proceeds of illegal activity—only that civil forfeiture law allows them to seize money merely suspected of being involved in crime.  

 

“The IRS should not be raiding the bank accounts of innocent Americans, and it should not take a team of lawyers more than 18 months to get it back when they do,” said Institute for Justice attorney Larry Salzman in a statement. “This case again shows why civil forfeiture laws have become one of the most serious threats to private property rights in the nation.”

 

“Instead of simply returning the money with interest and an apology to Carole for the nightmare they put her through, the IRS is shamefully attempting to mask their retreat by insisting on the right to refile the case in the future,” said IJ attorney Wesley Hottot. “This was an outrageous abuse from the start and the government should recognize that.”