Congress to IRS: Return Your Ill-Gotten Gains

Bipartisan Letter Urges IRS to Return Money Seized through Civil Forfeiture From Maryland Dairy Farmers, Other Small Business Owners

  • The IRS took more than $29,000 from Maryland dairy farmers Randy and Karen Sowers simply because they deposited money in the bank in amounts under $10,000.
  • Although the IRS changed its policies to stop such forfeitures in the future, that change came too late to help people like Randy and Karen, whose money was seized before the policy change.
  • The letter from the House Ways and Means Oversight Subcommittee urges the IRS to return money seized from Randy and Karen—as well as other property owners.

Arlington, Va.—Randy and Karen Sowers are waiting to learn if the IRS will return $29,500 seized from their Maryland dairy farm using civil forfeiture. Yesterday, a bipartisan coalition of members of the U.S. House of Representatives sent a letter to the IRS lending powerful support to the Sowers’ cause, urging the IRS to return these ill-gotten gains.

Randy and Karen were targeted for civil forfeiture in May 2012 under so-called “structuring” laws, simply because they made a habit of depositing cash in the bank in amounts under $10,000. Structuring laws were intended to target criminals who break cash deposits into small amounts to avoid bank reporting requirements, but they have been increasingly applied to innocent small business owners like Randy and Karen.

In July 2015, Randy and Karen joined with the Institute for Justice to file a petition seeking the return of their money. The petition noted that the IRS changed its policies in October 2014 so that it would no longer take money from property owners like Randy and Karen. If it would be wrong to take the money today, the petition argued, the IRS should give the money back.

The letter from 14 bipartisan members of Congress expressed support for Randy and Karen’s petition. But it also went much further, urging the IRS to return money seized from hundreds of Americans under the structuring laws. The letter asked the IRS to review all past structuring cases and return forfeited money in each case where the money would not be seized under current policy.

Read the letter here:

http://ij.org/wp-content/uploads/2015/07/2016-03-23-WMOS-to-Lew-CAF.pdf

Randy Sowers talks about structuring:

Media backgrounder on this issue:

http://ij.org/case/structuring-petition/#backgrounder

“Of course we want our money back, but that’s not the only reason we filed our petition,” Randy Sowers said. “We want the IRS to do the right thing for everyone and give back the money it took from all these innocent people. We’re glad to see that Congress agrees.”

Between 2007 and 2013, the IRS forfeited approximately $43 million from more than 600 property owners in cases where there were no allegations of wrongdoing other than the mere act of engaging in a pattern of under-$10,000 cash transactions.

Yesterday’s letter detailed the steps that Congress has taken to urge the IRS to return the forfeited money, and it also accused the IRS of being less than cooperative in its response. The letter noted that the IRS dragged its feet for months before agreeing to meet with members of Congress to discuss the issue. According to the letter, when the IRS did finally agree to meet, agency representatives “seemed unconcerned that the IRS and DOJ’s actions in these cases unfairly harmed American citizens and have undermined Americans’ trust in their government.”

The letter asked a series of questions to facilitate congressional oversight and gave the IRS a deadline of April 6 to respond. Among other things, the letter asked the IRS to identify the “standards and procedures that will be used to review” structuring cases and to provide an estimate of the amount of money the IRS believes should be returned.

The letter also noted that the IRS had agreed in February 2016 to return more than $150,000 seized from a North Carolina convenience store owner under the structuring laws. Having agreed to grant relief to at least one property owner, the IRS has identified no reason to deny a similar remedy to Randy, Karen, and other property owners.

“The IRS has repeatedly acknowledged that it was wrong to take this money,” said Robert Everett Johnson, an attorney with the Institute for Justice. “Now they need to do the right thing and give it back. Randy and Karen worked hard for their money, and it rightly belongs to them—not the IRS.”

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