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Civil asset forfeiture, a tool used by law enforcement to seize property from individuals because they have merely been accused of a crime, has gotten a lot more scrutiny in recent days due to its lack of oversight and abuse. What many may not know though is that the Internal Revenue Service (IRS) also has the ability to seize property from businesses it is investigating. Fortunately, to address the abuses by the organization, Tax Policy Subcommittee Chairman Peter Roskam (R-Ill.) have introduced a bill to defend business owners from IRS forfeiture overreach.
The Clyde-Hirsch-Sowers RESPECT Act is a bill designed that “protects small business owners from IRS abuse and helps ensure their assets are not wrongly seized under civil asset forfeiture policies.” The bill would require the IRS to show probable cause that funds were for an illicit purpose, implement important procedural protections, and exempts interest on wrongly seized funds from the income tax. The last time it was introduced, it passed the House by the overwhelming vote of 415-0. Without a doubt, this will protect citizens from being wrongfully harassed by the IRS.
At the moment, transactions over $10,000 are required to be reported by banks to the IRS. Usually, repeated transactions of over $10,000 will result in suspicion by the IRS so they are more likely to start investigating them. However, since their use of civil asset forfeiture has little oversight, abuse is inevitable.
A report from the Treasury Inspector General for Tax Administration found that the IRS had seized $17 million from innocent business owners between 2012 and 2014, which was 91 percent of the total funds it seized. That means barely a fraction of the money seized had anything to do with criminal activity. As was said by Chairman Roskam, “If the IRS had used its civil asset forfeiture authority solely to disrupt criminal enterprises, we wouldn’t be marking up this bill, but of course that’s not what happened.”
Of course, the amount is not nearly as significant as the damage it caused. Convenience store owner Lyndon McLellan had $107,000 seized from him, commenting “It took me 13 years to save that much money, and 13 seconds for the government to take it away.” Meanwhile, the IRS raided the bakery of David Vocatura and took over $68,000 taken from him because he had made several transactions between 2007 and 2009 ranging from $7,000 to $9,900. Three years later, they returned his cash which has to be an acceptance that no wrong was committed.
This of course has happened across the country. $33,000 was seized after from Carole Hinders for “making frequent small cash deposits” despite the fact that it was all legally acquired through her Iowa restaurant (which only accepted cash) while in Michigan Terry Dehko and Sandy Thomas’s grocery store had $35,000 despite they had recently received an audit that found them committing no wrong. All of this is a lot of cash of which losing is a significant problem.
Overall, the RESPECT Act is of the greatest importance in the reform of civil asset forfeiture. The bill would significantly cut down on abuse by the IRS and protect the property rights of individuals. That is why it is important that it passes and should be supported.