Multiple states, including Florida, have recently taken steps to either eliminate or restrict the universally reviled practice of civil asset forfeiture, which essentially provides law enforcement officials with carte blanche to confiscate any property that they believe is connected to a crime regardless of whether an arrest has been made, charges leveled or a conviction handed down.
Despite this progress at the state level, the practice has continued largely unabated among federal agencies, including the Internal Revenue Service, which ironically enough introduced a policy designed to curtail its use just two years ago.
In recent developments, however, it appears as if the IRS is now looking to improve its enforcement of this policy and, more significantly, help aggrieved property owners recover their assets.
What exactly did this IRS policy dictate?
In 2014, the IRS announced a new policy whereby it would stop the seizure of bank accounts in cases in which the only real wrongdoing suspected was "legal source" structuring, meaning the consistent structuring of cash transactions below the $10,000 threshold in a bid to escape the reporting requirements of the Bank Secrecy Act.
Has the IRS been honoring this policy?
Reports indicate that the agency has still been pursuing civil asset forfeiture since the enactment of the 2014 policy and, consequently, the ranks of people whose money was seized and never returned have continued to swell.
What has the IRS now pledged to do differently?
In response to growing pressure from federal lawmakers, the IRS announced last week that it will be mailing letters to property owners who saw their assets forfeited in "legal source" structuring cases dating back to October 1, 2009, informing them of how they can petition to get their money.
Specifically, these petitioning property owners will have to demonstrate 1) the funds at issue were derived from a legal source and 2) there's a lack of evidence showing that they undertook structuring to mask other illegal activity (drug crimes, money laundering, etc.).
It's worth noting that those property owners who saw assets forfeited in "illegal source" structuring cases will not be mailed letters.
How exactly will the IRS handle these petitions?
If the "legal source" structuring case of the petitioning taxpayer was administrative in nature, meaning there was no formal judicial proceeding, the IRS can remit the seized funds directly to the petitioning taxpayer.
However, if the "legal source" structuring cases was judicial in nature, the IRS is only permitted to make recommendations to the Justice department, which has the final say on the matter.
Does it appear likely that the IRS will make more of an effort to live up to its policy to avoid civil asset forfeiture in "legal source" structuring cases going forward?
Given the amount of pressure being exerted by Capitol Hill, it's a good bet the agency will back off the policy at least for the foreseeable future.
Stay tuned for updates ...
If you are confronted with the IRS seizing your bank accounts, contact the Law Offices of Mark L. Horwitz, P.A. to learn more about your rights and your options if the IRS or any other agency has seized your assets.