For years, the Internal Revenue Service has been stealing taxpayer assets from small businesses — not for breaking tax law, but for making legitimate bank deposits under $10,000. It’s one form of the increasingly well-known practice called “civil asset forfeiture.”
The IRS has the power to seize small cash deposits under $10,000. These deposits seem suspicious because cash deposits over $10,000 trigger a bank report to authorities. Terrorists, drug dealers, and money launderers all make cash deposits under $10,000 to avoid triggering the bank report. The illicit practice is called “structuring.”
The problem is that many small businesses accept cash payments and make large deposits that happen to fall under $10,000.
Sadly, this attempt to crack down on terrorist funding is used by the IRS to abuse small businesses. In October, the New York Times reported on the story of Carole Hinders, a small business owner who had over $30,000 seized by the IRS. The IRS does not even need to charge someone with a crime to seize assets under an alleged structuring scheme.
Thankfully, a bipartisan bill has been introduced in Congress that would end the practice.
On December 10, House Ways and Means Committee Chairman Dave Camp, R-Mich., and Ranking Member Sander Levin, D-Mich., introduced the Taxpayer Protections Against Abusive Seizures Act.
The act is a simple two-page bill. When the IRS seizes property under an alleged structuring scheme, the agency must return the property if the accused requests a hearing in court within 14 days of seizure. In order to maintain the law’s legitimate power against terrorists and money launderers, property is not returned to the accused if the court finds probable cause within 14 days. Of course, that is still enough time for many businesses to go under, but currently there is no protection at all.
The IRS only comments on legislation signed into law, and thus declined to comment on the introduced bill.
In a press release announcing the bill, Camp said, “All too often … our current laws allow the government to assume guilt without allowing the accused a speedy hearing, depriving them of much needed working capital.” Levin added, “Taxpayers have the right to due process when their property is seized, and this bill protects that right.”
When Congress reconvenes in January, it will do so without Camp. Still, the Taxpayer Protections Against Abusive Seizures Act represents precisely the sort of bipartisan accomplishment that the new Congress can pass.
