New Law Protects Small-Business Owners from IRS Seizures

For the first time in nearly two decades, Congress has ended a civil forfeiture program.

Enacted as part of a larger IRS reform package, the Clyde-Hirsch-Sowers RESPECT Act reins in notorious “structuring” laws, which let the IRS seize cash from hundreds of ordinary Americans simply because they made frequent deposits or withdrawals in amounts under $10,000. Small-business owners in particular were regularly targeted.

The Clyde-Hirsch-Sowers RESPECT Act is named in part in honor of two IJ clients: Jeff Hirsch and Randy Sowers. Both men testified before Congress about how they fell victim to IRS structuring seizures. When the agency seized more than $400,000 from the Long Island convenience store owned by Jeff and his brothers, IJ made their case a front-page story in The New York Times. We also fought to get $29,500 returned to Randy, a Maryland dairy farmer. Like many other structuring victims, neither man was ever charged with a crime.

Under the new law, structuring forfeitures would be strictly limited to cases where the money is derived from an illegal source or conceals illegal activity. The act also creates a new hearing process so that property owners can quickly challenge a structuring seizure. Previously, owners had to wait months or even years before a judge heard their case.

While politics today is quite polarizing, the Clyde-Hirsch-Sowers RESPECT Act is a welcome exception: It passed both houses of Congress unanimously before it was signed by President Trump. This legislation never would have happened without IJ taking on this issue, and it’s a victory we will build on as we fight to abolish civil forfeiture once and for all.