A win for small businesses over the IRS

  • 20 June 2019
  • NormanL

Congress did something right! It's big news, especially considering the partisan split between the House and Senate. But on an issue of protecting small businesses from IRS bullying, the two sides came together and did something good. The Institute for Justice writes:

...the U.S. Senate unanimously approved legislation that stops the Internal Revenue Service from raiding the bank accounts of small-business owners. The Clyde-Hirsch-Sowers RESPECT Act, passed as part of the Taxpayer First Act (H.R. 3151), is named after Institute for Justice clients Jeff Hirsch and Randy Sowers, two victims of the IRS’s aggressive seizures for so-called “structuring.” Through structuring laws, the IRS has routinely confiscated cash from ordinary Americans simply because they frequently deposited or withdrew cash in amounts under $10,000. And by using civil forfeiture, the IRS can keep that money without ever filing criminal charges.

The RESPECT Act was originally introduced by Reps. John Lewis (D-GA) and Doug Collins (R-GA) after Jeff and Randy testified before the House Ways and Means Oversight Subcommittee about their experiences: Jeff had over $400,000 seized from his convenience store distribution business on Long Island while Randy, a Maryland dairy farmer, lost $29,500 to the IRS. Neither man was ever charged with a crime.

Both Jeff and Randy ultimately recovered their wrongfully taken money, but only after years of legal proceedings and high-profile media coverage—including a front-page article in The New York Times and an editorial in The Wall Street Journal.

If the president signs the bill, it would:

Limit forfeiture for currency “structuring” only when the funds in question are derived from an illegal source or used to conceal illegal activity. This would codify an IRS policy change from October 2014 prompted by lawsuits from the Institute for Justice and would prevent the agency from backtracking;

Allow property owners to challenge a seizure at a prompt, post-seizure hearing. Previously, property owners targeted for structuring had to wait months or even years to present their case to a judge.

This is an excellent step toward righting a long-standing IRS wrong. We hope the president will sign the bill.

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