Tax reform appears poised to be the number one topic of debate this fall in Congress, but before the debates begin, the House of Representatives recently approved a bill that would curtail, in part, the IRS’ power to seize personal property.
The new measure stems from complaints over innocent taxpayers being ensnared in illegal activity probes. Small business owners who make a series of transactions under $10,000 may be mistakenly suspected of generating them to avoid Bank Secrecy Act regulations designed to report major transactions to the IRS.
The bill, entitled the Clyde-Hirsch-Sowers RESPECT Act, requires the IRS to make good faith efforts to reach owners of seized property to inform them of their right to a hearing. If and when a property owner requests such a hearing, the property must be returned pending a probable cause finding that the property was used or obtained in furtherance of violating BSA regulations.
The bill is named after two small business owners who had nearly $500,000 worth of cash and property seized even though they were never charged with a crime. Lawmakers saw that innocent people being bullied by having their property taken was not the answer.
According to a recent accountingtoday.com report, two additional bills are being considered that would prevent the IRS from keeping money seized if criminal charges are not filed, and to prohibit “equitable sharing” of seized assets between state and federal law enforcement agencies.
It remains to be seen whether these measures are passed.
The preceding is for informational purposes only and is not legal advice.