Sen. Charles E. Grassley, R-Iowa, has expressed concerns about media reports of the IRS’s practice of prematurely seizing assets using civil asset forfeiture laws without suspicion of a crime. The Service indicated it would focus instead on areas where the funds are believed to have been acquired illegally or seizure is deemed justified by “exceptional circumstances.” Grassley, ranking member of the Senate Judiciary Committee, acknowledged that, while the IRS plays a role in fighting money laundering and other criminal activity, “it has to treat business owners fairly.”
Richard Weber, chief, IRS Criminal Investigation (IRS CI), said that, after a thorough review of the IRS’s structuring cases over the last year, “and in order to provide consistency throughout the country (between our Field Offices and the U.S. Attorney Offices) regarding our policies, IRS CI will no longer pursue the seizure and forfeiture of funds associated solely with “legal source” structuring cases unless there are exceptional circumstances justifying the seizure and forfeiture and the case has been approved at the director of Field Operations (DFO) level.”
Weber said that, while the act of structuring, whether the funds are from a legal or illegal source, is against the law, “IRS CI special agents will use this act as an indicator that further illegal activity may be occurring.” The policy update is intended to ensure that the CI continues to focus its limited investigative resources on identifying and investigating violations within its jurisdiction that closely align with CI’s mission and key priorities. “The policy involving seizure and forfeiture in “illegal source” structuring cases will remain the same,” he said.
“When I hear about legitimate business owners’ having their money seized without judicial review, it reminds me of the taxpayer abuses that led Congress to create taxpayer bill of rights laws and the IRS restructuring commission,” said Grassley in a statement. “If the pendulum has swung too far in favor of the government and against fairness for innocent people, then it’s time to reform civil asset forfeiture laws and procedures. I plan to look into the government’s use of civil forfeiture laws, including the IRS’ use, and develop potential reforms where necessary.”
According to an IRS spokesperson, structuring is a felony under title 31 of the Bank Secrecy Act and the federal statute authorizes all law enforcement agencies to seize and forfeit—both criminally and civilly—money and property connected to the structuring activities. Seizure affidavits are reviewed by the U.S Attorney’s Office and then signed by an independent federal judge who determines that there is probable cause that the money is subject to forfeiture. Many times, the seizure of these assets will also lead to evidence of other financial crimes that were not present at the onset of the investigation.