IRS took cash, asked questions later, report says

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Last edited Wed Feb 4, 2015, 03:01 PM - Edit history (1)

IRS took cash, asked questions later, report says

By Robert O'Harrow Jr. February 3
@robertoharrow

The Internal Revenue Service has routinely seized bank accounts from individuals in recent years without proof of criminal wrongdoing — and only then asked the account owners about allegations of suspicious activity. ... From 2005 to 2012, the IRS took almost a quarter-billion dollars in more than 2,500 cases, using authorities under federal asset forfeiture law. That’s the finding of a new study by the Institute for Justice, a libertarian-leaning civil liberties group. The group’s study, “Seize First, Question Later,” focuses on IRS enforcement of a law that prohibits “structuring,” a type of banking activity intended to launder ill-gotten money or hide the source of funds.

Civil asset forfeiture efforts by local, state and federal authorities have come under fire in recent months. Critics across the political spectrum say that civil seizures are often unfair and an abuse of police power.

Attorney General Eric H. Holder Jr. recently announced curbs on a Justice Department program called Equitable Sharing that allows federal and local authorities to share in the proceeds of seizures. Holder’s order prohibits federal agencies from accepting seizures from local and state police into the program unless a federal agent has been directly involved. The IRS has said it would follow suit. The change leaves the path open for civil seizures cases related to joint investigations involving local and state police working with federal authorities.

The Institute for Justice found that in one-third of the IRS cases it examined, there was no claim of any criminal activity besides the allegation that someone had made transactions of less than $10,000, with the aim of evading federal reporting requirements. It took owners who appealed the seizures a year on average to get their money back. Almost half of the money was later returned, according to the study. ... “It’s no accident the IRS overwhelmingly prefers civil forfeiture to criminal forfeiture,” said one the report’s co-authors, IJ attorney Larry Salzman. “If they can seize the cash first with no real criminal investigation — let alone a conviction — why not?”

Seize First, Question Later: The IRS and Civil Forfeiture

By Dick M. Carpenter II, Ph.D. and Larry Salzman
February 2015

Thanks to federal civil forfeiture laws, the Internal Revenue Service has seized millions of dollars from thousands of Americans’ bank accounts without proof of criminal wrongdoing. The IRS claimed the funds were illegally “structured”—deposited or withdrawn in small amounts to evade federal reporting requirements imposed on banks—and simply took the money. The IRS practice of “seize first, question later” highlights the need for broad reform to federal civil forfeiture laws that impose substantial burdens on property owners and make seizing property—and profiting from it—too easy for law enforcement.
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Civil forfeiture allows the IRS and other law enforcement agencies to take cash and property without charging, let alone convicting, the owner of any crime. The IRS’s track record with structuring seizures is a vivid example of how federal civil forfeiture law stacks the deck against property owners.

Download Seize First, Question Later: The IRS and Civil Forfeiture