Facing criticism, IRS alters civil asset forfeiture policies

On Behalf of | Jun 18, 2016 | Tax Crimes

While the notion of law enforcement officials taking your property simply because they believe it might be connected to criminal activity and then failing to return it despite your innocence may sound both ludicrous and unconstitutional, it’s actually all too real and perfectly legal.

Indeed, law enforcement officials at both the state and federal level have recently come under fire for perhaps being a bit too reliant on this process, known as civil asset forfeiture. However, it’s not just your local police department or the FBI that is engaging in this practice, but also the Internal Revenue Service.

Congressional inquiry into this matter has revealed that the IRS has long relied on civil asset forfeiture in those cases where it suspects small businesses of engaging in illegal activity known as structuring.

For those unfamiliar with structuring, it essentially involves small businesses consistently making deposits in amounts just under $10,000 in a bid to skirt federal reporting laws, and/or conceal other criminal activity.

Somewhat shockingly, various small business owners and farmers testified before Congress that the IRS seized their bank accounts after suspecting structuring was occurring, but then failed to return their funds once it became clear that no criminal activity had occurred.

These somewhat embarrassing exposures prompted the IRS to officially alter its stance toward civil asset forfeiture back in October 2014, with the agency vowing — in the absence of extraordinary circumstances — to stop seizing bank accounts in those cases where only structuring was suspected.

It has since become clear, however, that this practice has continued unabated, leaving more innocent taxpayers unable to recover their hard-earned assets.

In recent developments, it now appears as if the IRS is finally yielding to Congressional pressure on its civil asset forfeiture policies, something we’ll examine in our next post.

If you have received any sort of correspondence from the IRS or state officials leveling any sort of accusations, consider speaking with an experienced legal professional as soon as possible.