March 09, 2015

Stopping IRS Mistreatment of Small Businesses

Guest column submitted by U.S. Senator Mike Crapo

At a recent House Ways and Means Subcommittee on Oversight hearing, a Maryland dairy farmer testified about Internal Revenue Service (IRS) agents seizing $62,000 from his family's bank account and filing criminal charges after his family made cash deposits from dairy sales.  Like many Idaho producers, his family gets up early every day to operate and manage the farm.  The farmer, who has faced losing the family farm several times throughout its operation, testified that the IRS returned little more than half of the farm's money despite the U.S. attorney admitting he did not think the farm was involved in criminal activity.  IRS abuse of small businesses must be stopped. 

There have been similar reports of the IRS using various methods, including the Bank Secrecy Act, to seize the bank accounts of other small businesses across the U.S. making cash deposits of money earned legally.  The Bank Secrecy Act of 1970 was intended to prevent money laundering and requires financial institutions to report daily cash transactions that exceed $10,000.  Some small businesses with legal earnings have been accused of "structuring" cash deposits to fall below the reporting threshold.  These small businesses are getting caught up in costly, drawn-out, bureaucratic nightmares to try to get their money returned.  

Reports of this outrageous abuse prompted me to contact the IRS late last year to request additional information about the reported cases of IRS mistreatment and the agency's October revision of some of its related policies.  IRS Commissioner John A. Koskinen recently responded to my inquiry recognizing that "small businesses and other bank account holders often make deposits under $10,000 without any intent to avoid the reporting requirements," and he detailed the process for asset seizure and what constitutes the "crime of 'structuring'".  While the commissioner pointed out that the "property owner has the opportunity to challenge the government's evidence in court," unjustly, this opportunity comes after the account has already been seized.  This is backward. 

We must not make it easier for drug dealers to operate, but it is not too much to expect the federal government to meet a high threshold of proving illegal activity especially when seizing personal property.  Our system of government should not give the IRS cart blanche to take an American's hard-earned money and then require the accused to prove the IRS should not have taken it.  That is beyond outrageous and requires immediate attention.  

I recently co-sponsored S. 255, the Fifth Amendment Integrity Restoration (FAIR) Act.  This legislation that was introduced by fellow Senator Rand Paul (R-Kentucky) would better protect property owners from wrongful property seizures and decrease potential monetary incentives for agencies to seize assets.  Most importantly, S. 255 would put the burden of proof where it should be-on the government, not innocent Americans.  The government would have to prove that the assets were used to facilitate criminal activity. 

I support the House Ways and Means Subcommittee on Oversight's recent hearing.  As the new Chairman of the Senate Finance Subcommittee on Taxation and IRS Oversight, it is my intention to hold a subcommittee hearing this year to review the implementation of the related, new IRS policies and to determine whether additional action is needed to protect taxpayers.  Americans across this country have enough challenges in trying to keep the doors of their small businesses open.  They should not also have to worry about depositing a day's earnings because it may look shady to the IRS.  Federal agencies must quit crushing American productivity.  

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