Imagine a world where the tax man could take all your money simply because he thinks you’re a criminal — but he’s too busy to tell you he thinks you’re a crook, let alone prove it.
Sounds ludicrous, right? But that’s not merely some kind of fictional dystopia; it’s taking place right here in the United States, and has been for decades.
In 1989, U.S. Attorney General Richard Thornburgh remarked civil asset seizure laws allowed “a drug dealer to serve time in a forfeiture-financed prison after being arrested by agents driving a forfeiture-provided automobile while working in a forfeiture-funded sting operation.”
These days, civil asset seizure allows the Internal Revenue Service to pad the federal treasury with the fruit of hardworking small business owners’ labor, without so much as a court order or criminal trial.
According to research from the Institute for Justice (IJ), a public-interest nonprofit law firm based in Virginia, IRS enforcers took almost a quarter-billion dollars from private citizens’ bank accounts between 2005 and 2012, before even asking the accused parties whether they were in fact trying to hide illegal activity.
Using asset forfeiture laws, the IRS’s profitable raids enforced laws against “structuring” — concealing bank transactions from federal bank reporting laws. The practice is sometimes employed by money-laundering rings to evade detection.
The IRS requires banks to file “suspicious activity reports” with the U.S. Treasury Department if they suspect someone is guilty of structuring. Frequent or large deposits of even legitimately obtained cash can result in one’s account being red-flagged and seized before any charges have been filed.
Unfortunately for thousands of Americans, these overly broad forfeiture laws and excessively zealous government agents resulted in “seize first, ask questions later” cases like that of Carole Hinders. Hinders owned a small Mexican restaurant in Spirit Lake, Iowa.
Hinders’ restaurant, Mrs. Lady’s Mexican Café, was cash-only. In August 2013, IRS agents vacuumed up $32,821 without charging her with a crime.
After a year and a half, Hinders finally recovered her money with the help of IJ lawyers.
As more tales of how the government abuses asset forfeiture laws to pad its wallet have come to light, the need for asset seizure reform has become increasingly apparent. Congress should step in and clarify the matter with real constraints on the IRS’s authority to seize assets, preferably removing such authority altogether and requiring a court decision for such a serious action.
Until the law is reformed to rein in government enforcers — such as the IRS agents who cleaned out Carole Hinders’ bank account — the frequency and severity of these abuses will continue to increase, the way an emboldened schoolyard bully takes the weaker students’ lunch money. Our government is supposed to be a servant, not a thug.
Jesse Hathaway ([email protected]) is a research fellow with The Heartland Institute. Thinking of submitting an op-ed to the Washington Examiner? Be sure to read our guidelines on submissions for editorials, available at this link.
