Is the IRS Seizing Innocent Americans’ Bank Accounts?

Is the IRS seizing the bank accounts of innocent Americans under civil forfeiture laws?

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Claim:   The Internal Revenue Service (IRS) is seizing bank accounts from innocent American citizens under civil forfeiture laws.


MIXTURE:






TRUE: Civil forfeiture laws enable law enforcement agents and the government to seize the assets of Americans who are neither guilty nor even suspected of any wrongdoing.
 
FALSE: Civil forfeiture laws are new or exclusive to the IRS.

Example:   [Collected via e-mail, October 2014]


Just read a Facebook post. It was an article regarding the IRS seizing bank accounts of innocent American citizens who have done nothing criminally wrong. Inspite of the problems this has caused individuals the IRS seems relatively unconcerned except they want to collect money for whatever reasons. Is this true? Does the IRS have the right to just take the money of American citizens from their accounts? Are they an acting collections agency for the government now?

I found this article a tad disturbing to say the least.

Thank you for amy information you might have regarding this article and subject matter.


 

Origins:   On 5 October 2014, the issue of civil forfeiture

and its effects on American citizens entered the spotlight after HBO host John Oliver addressed the matter at length on his show Last Week Tonight with John Oliver. During the segment, Oliver and guest Jeff Goldblum focused on seemingly arbitrary, unfair, and corrupt civil forfeiture practices allegedly perpetrated by law enforcement agents in a number of jurisdictions.

Oliver’s civil forfeiture segment sparked a number of conversations about the laws surrounding confiscation of assets under related laws. Then, on 25 October 2014, the New York Times profiled an individual who claimed the IRS had seized more than $30,000 in assets from her checking account under laws meant to ensnare drug cartels and organized criminals:



For almost 40 years, Carole Hinders has dished out Mexican specialties at her modest cash-only restaurant. For just as long, she deposited the earnings at a small bank branch a block away — until last year, when two tax agents knocked on her door and informed her that they had seized her checking account, almost $33,000.

The Internal Revenue Service agents did not accuse Ms. Hinders of money laundering or cheating on her taxes — in fact, she has not been charged with any crime. Instead, the money was seized solely because she had deposited less than $10,000 at a time, which they viewed as an attempt to avoid triggering a required government report.

Using a law designed to catch drug traffickers, racketeers and terrorists by tracking their cash, the government has gone after run-of-the-mill business owners and wage earners without so much as an allegation that they have committed serious crimes. The government can take the money without ever filing a criminal complaint, and the owners are left to prove they are innocent. Many give up.


It seems Hinders’ run-in with the IRS was triggered by her practice of keeping deposits under the mandated reporting threshold of $10,000. Deposits that exceed $10,000 must be reported to the government under the Bank Secrecy Act of 1970, but Hinders told the Times that she believed large deposits created unnecessary paperwork for bank employees:


My mom had told me if you keep your deposits under $10,000, the bank avoids paperwork. I didn’t actually think it had anything to do with the I.R.S.

 

Former federal prosecutor David Smith, an expert on such seizures, told the paper that the practice of civil forfeiture has shifted to focus on individuals not historically targeted by such laws:


They’re going after people who are really not criminals. They’re middle-class citizens who have never had any trouble with the law.

 

Richard Weber, Chief of Criminal Investigation at the IRS, described the seizures as “structuring” related, referring to suspicion triggered by a large number of deposits near the $10,000 threshold for reporting under the Bank Secrecy Act. In response to sudden interest in the IRS’s policies regarding “structuring cases,” Weber issued a statement indicating the IRS will curtail its seizure activities in cases where no crime is suspected:


After a thorough review of our structuring cases over the last year and in order to provide consistency throughout the country (between our field offices and the U.S. attorney offices) regarding our policies, I.R.S.-C.I. will no longer pursue the seizure and forfeiture of funds associated solely with “legal source” structuring cases unless there are exceptional circumstances justifying the seizure and forfeiture and the case has been approved at the director of field operations (D.F.O.) level. While the act of structuring — whether the funds are from a legal or illegal source — is against the law, I.R.S.-C.I. special agents will use this act as an indicator that further illegal activity may be occurring. This policy update will ensure that C.I. continues to focus our limited investigative resources on identifying and investigating violations within our jurisdiction that closely align with C.I.’s mission and key priorities. The policy involving seizure and forfeiture in “illegal source” structuring cases will remain the same.

 

The IRS is just one of several agencies engaging in civil forfeiture, and Oliver’s segment also addressed its application by local and regional law enforcement:

Prior to Oliver’s segment and the Times‘ profile, civil forfeiture practices had been extensively profiled in the media:


In general, you needn’t be found guilty to have your assets claimed by law enforcement; in some states, suspicion on a par with “probable cause” is sufficient. Nor must you be charged with a crime, or even be accused of one. Unlike criminal forfeiture, which requires that a person be convicted of an offense before his or her property is confiscated, civil forfeiture amounts to a lawsuit filed directly against a possession, regardless of its owner’s guilt or innocence.

One result is the rise of improbable case names such as United States v. One Pearl Necklace and United States v. Approximately 64,695 Pounds of Shark Fins. “The protections our Constitution usually affords are out the window,” Louis Rulli, a clinical law professor at the University of Pennsylvania and a leading forfeiture expert, observes. A piece of property does not share the rights of a person. There’s no right to an attorney and, in most states, no presumption of innocence. Owners who wish to contest often find that the cost of hiring a lawyer far exceeds the value of their seized goods. Washington, D.C., charges up to twenty-five hundred dollars simply for the right to challenge a police seizure in court, which can take months or even years to resolve.


 

Although the IRS has pledged to restrict its civil forfeiture activity to mainly “illegal source” cases, the practice is not limited to the tax agency and remains legal.

Last updated:   28 October 2014


Sources:




    Dewan, Shaila.   “Law Lets I.R.S. Seize Accounts on Suspicion, No Crime Required.”

    New York Times.   25 October 2014.

    Stillman, Sarah.   “Taken.”

    The New Yorker.   12 August 2013.