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US Congress Gets Bill To Curb IRS Civil Asset Forfeitures

by Mike Godfrey, Tax-News.com, Washington

02 February 2015


Legislation to protect taxpayers from the inappropriate use of civil forfeiture laws has been re-introduced into both the United States House of Representatives and Senate.

The move follows criticism, late last year, of the operation of the Civil Asset Forfeiture Act of 2000, which was aimed at tackling money laundering, drug trafficking, or other crimes. Taxpayers have complained that it enables Government agencies, and in particular the Internal Revenue Service, to use greatly reduced standards of evidence to seize assets.

Government agencies are able to confiscate and sell the property of individuals suspected of (but not necessarily charged with) a crime. It has been noted that the law has also been used to seize funds from some small businesses, in some cases leaving them with no working capital to cover payroll costs and maintain needed inventory. The forfeiture proceeds are divided between the federal and state governments.

As the onus is often on the asset owner to prove their innocence, those affected must either pay for a lawyer or defend their property themselves. Overall, more than USD2bn was collected in 2013 from civil and criminal forfeitures.

Rand Paul (R – Kentucky), a member of the Senate Small Business and Entrepreneurship Committee, and Tim Walberg (R – Michigan), a member of the House Oversight and Government Reform Committee, have therefore introduced the Fifth Amendment Integrity Restoration Act (FAIR Act).

The bill would provide that an affected person would, within fourteen days of receiving a notice of a seizure, be able to request a court to hold a "probable cause" hearing within fourteen days. If, within fourteen days of such a request, no hearing is held, or if the Government fails to show probable cause, the seized funds would be automatically returned to the taxpayer.

In addition, the FAIR Act contains a measure to eliminate the federal equitable-sharing program that lets state law enforcement reap proceeds from turning over seized property to federal officials.

"America was founded on the principles of due process and property rights," Walberg said. "These principles must be defended, not undermined by a system that allows the government to seize an individual's private property without filing criminal charges."

Paul added that "the federal government has made it far too easy for government agencies to take and profit from the property of those who have not been convicted of a crime. The FAIR Act will ensure that government agencies no longer profit from taking the property of US citizens without due process, while maintaining the ability of courts to order the surrender of proceeds of crime."

TAGS: individuals | court | money-laundering | compliance | tax | small business | business | tax compliance | law | Internal Revenue Service (IRS) | enforcement | tax authority | legislation | United States | legislation amendments | Tax

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