Nick Sibilla
For the first time in nearly 20 years,
Congress has reined in civil forfeiture, which lets the federal
government permanently confiscate property without ever filing criminal
charges. Following unanimous approval by Congress, President Donald
Trump last week signed the Taxpayer First Act (H.R. 3151),
an overhaul of the Internal Revenue Service that includes the
Clyde-Hirsch-Sowers RESPECT Act. Named after Institute for Justice
clients Jeff Hirsch and Randy Sowers, two small-business owners who had
their bank accounts raided by the IRS, the RESPECT Act curbs the IRS’s
power to seize cash for “structuring” offenses. Under the Bank Secrecy Act
of 1970, banks must report any cash transactions greater than $10,000.
But if someone frequently deposits or withdraws their cash in amounts
under $10,000, the IRS could seize it for “structuring.” Even though
their money was earned legitimately and despite the fact that they were
never charged with a crime, in 2012, the IRS seized nearly $63,000 from
Randy and more than $446,000 from Jeff. It took years of litigation and
high-profile coverage before they won their money back. Structuring can be a Kafkaesque nightmare for small-business owners,
especially for entrepreneurs like Jeff and Randy who work in cash-heavy
industries: Jeff runs a convenience store distribution business with his
brothers on Long Island, while Randy is a dairy farmer in Maryland. Their cases weren’t isolated incidents. Between 2005 and 2012, the IRS used civil forfeiture to seize nearly $200 million
in over 2,100 cases. Roughly half of all seizures involved amounts
under $34,000—hardly the proceeds of the sprawling criminal enterprises
structuring laws were supposed to target...MORE
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