The federal government should meet a high threshold of proving illegal activity when seizing personal property in a criminal investigation.
The Internal Revenue Service (IRS) should not be given carte blanche to take an American’s—hard-earned and legally-earned money—and then require the accused to prove the IRS should not have taken it in order to get it back. Unfortunately, there have been reports over the years of the IRS seizing the bank accounts of small businesses making cash deposits of money earned legally and then only returning portions of the accounts after an exhaustive, drawn-out and nebulous investigation. I have pressed for an end to this abuse. Thankfully, progress is being made in making reasonable changes to federal law putting better restraints on the IRS, requiring it to prove criminal intent to seize property.
The Bank Secrecy Act of 1970 was intended to prevent money laundering. It requires financial institutions to report daily cash transactions that exceed $10,000. The problem is some small businesses with legal earnings have been accused of “structuring” cash deposits to fall below the reporting threshold. Small business owners have been caught up in costly, drawn-out, bureaucratic nightmares to try to get their money returned for deposits of legally earned money. As I have looked into this issue and questioned the IRS about it, I have found that while property owners have the opportunity to challenge the government’s evidence in court, this opportunity unjustly comes after the account has already been seized.
For example, at congressional hearings to look into this abuse of small businesses, a Maryland dairy farmer detailed his family farm’s awful experience with the IRS. The agency seized more than $60,000 from his family’s bank account and filed criminal charges after his family made cash deposits from dairy sales. He testified about the difficult and lengthy process to try to get the money returned while trying to keep the farm afloat. Another producer, who grows corn and raises chickens, was investigated by the IRS for cash deposits from sales of produce at farm stands. The farm was left with a zero balance in its bank account when the IRS seized all of the roughly $90,000 in the account. The producer testified that IRS agents told them that after being investigated they may get part of their money back, but they should not expect that to happen quickly. He explained how overwhelming this was during a challenging year stating the seizure left them without money for family living expenses, for their daughter’s wedding, or to pay the many farm vendors.
This is backward and beyond outrageous. The federal agency should have to prove illegal activity before seizing property. The property owners should not have to prove their innocence to get their property back.
Bipartisan legislation, known as the Taxpayer First Act of 2019, is making its way through Congress. This legislation includes important reforms aimed at curbing wrongful seizures that leave American small businesses in limbo. Among its provisions, the legislation would restrain the IRS from seizing bank accounts of taxpayers for “structuring” deposits to fall under the $10,000 threshold to avoid reporting requirements unless the funds are from an illegal source or connected to criminal activity. The House of Representatives passed this legislation unanimously by voice vote before sending the legislation to the Senate for consideration. I look forward to enactment of these much-needed restraints on shameful, federal bureaucracy run amuck.