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U.S. House Passes IRS Civil Forfeiture Reform

Updated: Apr 13

The U.S. House last week unanimously passed legislation restricting the Internal Revenue Service’s ability to confiscate cash from law-abiding Americans.

From the Institute for Justice (IJ):

Today, the U.S. House of Representatives unanimously approved a bill to stop the Internal Revenue Service from raiding the bank accounts of small-business owners. Under so-called “structuring” laws, the IRS has routinely confiscated cash from ordinary Americans simply because they frequently deposited or withdrew cash in amounts under $10,000. And thanks to civil forfeiture, the IRS can keep that money without ever filing criminal charges. To rein in the IRS’ civil-forfeiture power, the Clyde-Hirsch-Sowers RESPECT Act would:

  1. Limit forfeiture for currency “structuring” only when funds in question are derived from an illegal source or used to conceal illegal activity. This would codify a IRS policy change from October 2014 and prevent the agency from backtracking;

  2. Allow property owners to challenge a seizure at a prompt, post-seizure hearing. Previously, property owners targeted for structuring had to wait months or even years to present their case to a judge.

The law is named after two business owners who had hundreds of thousands of dollars seized by the IRS — despite never being charged with a crime.

The legislation was passed by the House last week on a voice vote, which can only be done if all members agree that it should be passed unanimously.

Last week’s vote is more evidence of the growing consensus on both the right and the left that civil asset forfeiture is ripe for reform. While it’s unclear whether the Senate will follow the House’s lead on this issue, civil asset forfeiture is being reformed at the state level as well.

Fourteen states currently require a criminal conviction for most forfeiture cases, and twenty-four states have made some reforms to existing forfeiture laws.

Unfortunately, Arkansas is not one of these states.

Legislation requiring a criminal conviction before property could be seized through civil asset forfeiture died in the Senate earlier this year, in part because of what appeared to be a misunderstanding of the issue.

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