Bills
| 3.23.22

Blocking the IRS From Using Civil Forfeiture to Seize Assets Unless There’s Probable Cause of a Crime (H.R. 1843)

Do you support or oppose this bill?

What is H.R. 1843?

(Updated August 17, 2018)

This bill would place limits on the ability of the Internal Revenue Service (IRS) to use civil asset forfeiture to seize a person’s assets unless they’ve been charged with a crime. It would narrow the IRS’s authority so that property could only be seized if it was derived from an illegal source or the funds were structured to conceal the violation of a law or regulation other than structuring transactions to evade Bank Secrecy Act reporting requirements. Additionally, a process would be established that the IRS has to comply with when it seizes property.

WIthin 30 days of seizing property, the IRS would be required to make a good faith effort to find all owners of the property and notify them of post-seizure hearing rights. The IRS can apply to a court for one 30-day extension if there’s probable cause of an imminent threat to national security or personal safety.

If the property owner requests a court hearing within 30 days of receiving notice, the property must be returned unless the court holds a hearing within 30 days of providing notice and finds probable cause that the property was derived or illegally or conceal a violation of a law other than a structuring violation.

Any interest received from the federal government related to the recovery of property seized by the IRS related to a claimed violation of BSA structuring provisions would be excluded from gross income for tax purposes.

Argument in favor

The IRS has abused its civil asset forfeiture authority and taken money from people who have done nothing wrong. It should only be able to use civil asset forfeiture related to criminal behavior, not just deposit structuring violations.

Argument opposed

The IRS should be able to take assets from people it suspects of structuring financial transactions to avoid reporting requirements.

Impact

Those the IRS suspects of structuring violations; and the IRS.

Cost of H.R. 1843

The CBO estimates that enacting this bill reduce revenues by about $1 million over the 2018-2027 period.

Additional Info

In-Depth: Sponsoring Rep. Peter Roskam (R-IL) introduced this bill to limit the IRS’s ability to use civil asset forfeiture on people without charging them with a crime:

“It’s clear to everyone involved that there was rampant abuse in the forfeiture program. The IRS and DOJ abused their authority and took money from people who did nothing wrong. With today’s legislation, we’re making sure they can never do it again. With the support of so many lawmakers from both sides of the aisle, we can finally put this ugly chapter to rest.”

Lead cosponsor Rep. Joe Crowley (D-NY) added:

“Civil asset forfeiture may have begun as a tool to combat criminal activity, but it has morphed into a complex process that unfairly entangles innocent individuals. There is no question that the laws are deeply flawed and the process was riddled with abuse. I am proud to work with Congressman Roskam on this legislation.”

This legislation has the support of 14 cosponsors in the House, including 13 Republicans and one Democrat. Its predecessor passed the House on a 415-0 vote during the last Congress but wasn’t considered in the Senate.


Of Note: The Bank Secrecy Act requires financial institutions to report transactions involving $10,000 or more. The IRS has used civil asset forfeiture to take assets from individuals and business owners suspected, not convicted, of structuring transactions to avoid those requirements in about 700 cases between October 2009 and June 2016. Structuring transactions can lead to criminal and civil penalties.


Media:

Summary by Eric Revell

(Photo Credit: pglam / iStock)