As of Monday, July 3, 2017
In past columns, I have written about legislative efforts to stop the abuse of asset seizure laws to take Americans’ property without proof of a crime, or even an arrest or warrant. A recent report from the Treasury Inspector General For Tax Administration (TIGTA) sheds further light on the alarming property seizure practices of the Internal Revenue Service (IRS).
TIGTA’s mission is to provide oversight of the federal tax system to ensure the IRS “is accountable for the trillions of dollars in tax revenue it collects each year.” Following reports of the IRS seizing the legal assets of Americans, TIGTA looked into the IRS’s seizures of the property of Americans suspected of structuring their financial transactions to avoid Bank Secrecy Act (BSA) reporting requirements.
The Bank Secrecy Act of 1970 was intended to prevent money laundering and requires financial institutions to report daily cash transactions that exceed $10,000. Some small businesses with legal earnings have been accused of “structuring” cash deposits to fall below the reporting threshold and have been subjected to costly, drawn-out processes to try to get their money returned. However, the reporting requirements were never meant to be a means for stealing the assets of Americans making legal financial transactions, but rather a means to deter criminal activity. As TIGTA points out in the report, “the BSA reporting requirements were not put in place just so that the Government could enforce the reporting requirements. They were put in place to give the government tools to address criminal behavior.”
Unfortunately, based on the findings in the report and the accounts of Americans, including those who have testified before Congress, the overwhelming amount of funds seized by the IRS came from legitimate sources, many from mom and pop small business owners. TIGTA’s report includes the following alarming findings:
- “Most of the seizures for structuring violations involved legal source funds from businesses.”
- “$17.1 million was seized and forfeited to the Government in 231 legal source cases.”
- “Structuring seizures primarily involved legal source funds from businesses, and tax crimes were rarely established.”
- “Interviews with property owners did not meet all criminal investigation requirements, and advice of rights was not provided.”
- “There is a lack of evidence that property owners’ reasonable explanations were considered.”
- “Property owners were not adequately informed of pertinent information.”
- “Noncustodial advice of rights were generally not provided.”
TIGTA noted the IRS’s policy change to no longer pursue seizure of legal assets for banking law reporting violations, but also found inconsistencies in following this policy and made recommendations that include establishing controls to ensure cases pursued meet the policy; returning funds seized in legal source cases; and ensuring that reasonable explanations are considered. We must be ever watchful and maintain pressure to ensure that such practices are stopped for good.
I am continuing to question the IRS about its seizure practices and have again co-sponsored S. 642, the Fifth Amendment Integrity Restoration (FAIR) Act. Fellow Senator Rand Paul (R-Kentucky) introduced this legislation that would better protect property owners from wrongful property seizures and decrease potential monetary incentives for agencies to seize assets. The FAIR Act would put the burden of proof where it should be—on the government, not innocent Americans. Similar legislation has also been introduced in the U.S. House of Representatives.
Federal agencies must not ignore the limits on their powers to swipe the earnings of America’s small businesses. Property seizure abuses not only are unjust and run counter to our system of government, but also suppress innovation and growth. I will continue to press for adherence to and enactment of commonsense restraints to end these abuses.