March 31, 2016

“Is anyone expecting a fax from the IRS?” That question—sent around IJ’s offices by email—heralded a major break in the fight against civil forfeiture.

The IRS had agreed to give back more than $150,000 taken from a North Carolina convenience store owner.

And, in doing so, the IRS had opened a pathway for hundreds of civil forfeiture victims to also seek to get their money back.

Regular readers of Liberty & Law will recall Ken Quran’s story. Ken came to America in 1997 with just $3,000. He bought a small convenience store, working days and nights for years to build the business.

Ken was able to put his kids through college, and, finally, he was looking toward retirement.

Then, in June 2014, IRS agents and local police showed up at his store. They blocked the entrance and demanded that Ken sign a piece of paper. At the top, it said: “Consent to Forfeiture.”

The agents informed Ken that they had seized all the money in his bank account because he regularly withdrew cash in amounts under $10,000. The agents called that “structuring,” invoking a law designed to target criminals but increasingly applied to innocent small-business owners.

Ken initially declined to sign the agents’ paper, telling them he could not read English very well. But the agents persisted and Ken eventually signed.

By the time the case came to IJ’s attention, it seemed Ken’s money was gone forever.

And Ken was not alone. Between 2007 and 2013, the IRS took $43 million from over 600 property owners, based on nothing more than a series of under-$10,000 cash transactions.

The IRS would not take that money today. In October 2014, in response to IJ’s litigation and communications efforts, the IRS announced a policy change severely restricting its use of the structuring laws. But that announcement came too late for Ken and other property owners whose money was taken before the policy change.   

So IJ came up with a plan.

IJ dusted off an obscure legal statute authorizing something called a “petition for remission or mitigation.” IJ filed just such a petition, asking the IRS to give Ken his money back. IJ also filed a petition on behalf of Randy Sowers, a Maryland dairy farmer who had $29,500 taken by the IRS. Six months had passed and we still had not heard from the IRS, so we teamed up with CNBC and USA Today to bring more attention in the media.

It was a long shot—the civil forfeiture equivalent of a pardon petition.

And it worked.

When the IRS’s fax came into IJ’s office, it said that Ken’s petition had been “granted in full.” Ken was getting back all the money the IRS had seized.

For the first time in years, Ken could see how he could afford to retire.

And, just as important, the IRS’s decision set a precedent for other property owners. The IRS still has not ruled on Randy Sowers’ petition, but there is no reason why it should be treated differently.

The IRS has done the right thing for Ken. IJ will not rest until the IRS does the same for Randy and others as well.

Robert Everett Johnson is an IJ attorney and the Institute’s Elfie Gallun Fellow for Freedom and the Constitution.

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