IRS Says it Will Cut Back on Civil Forfeitures of Peoples’ Cash

The Bill of Rights generally requires the government to acquire a search warrant before its agents can seize a person’s property. Though exceptions exist, few would suspect that federal authorities have the power to seize their bank accounts without the person being even suspected of a crime.

Believe it or not, the IRS, along with local law enforcement agencies, legally can get ahold of the property of individuals or businesses if they believe the property is tied to a crime. They are not required to wait until the person who owns the property has been charged with a crime, and it can be very difficult for people to get their seized property returned to them.

Though this power, called civil asset forfeiture, has been around for several years, it has only recently entered the spotlight. In part, this could be because the IRS is making use of civil asset forfeitures much more than it used to. The New York Times reports that the agency made 639 seizures in 2012, compared with just 114 in 2005.

Many of these people are small business owners, or simply individuals, who committed no crimes or tax fraud, but did something that the IRS considered suspicious. One restaurant owner routinely deposited less than $10,000 into her bank account, which the agency thought might have been to evade reporting requirements.

The IRS seized nearly $33,000 from the woman’s account. To keep her restaurant open, she has had to take out a second mortgage and rely on loans and credit cards.

In response to media inquiries, the IRS says it will curtail the use of civil forfeitures. But its new rules will not apply to past cases, the agency says.

Tags: Blog, IRS