Published on: August 1, 2018 Last modified: August 1, 2019

Demands for Returning Seized Assets

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    It appears that members of Congress are demanding that the Justice Department return assets seized from taxpayers. This was in response to IRS actions levying finances contained in taxpayer bank accounts through civil forfeiture laws.

    The money seized from accounts was due to alleged structuring offenses. Such offenses concern making cash transactions under $10,000 as a means of avoiding federal reporting requirements.

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    Past handling of structuring offense cases

    We’ve discussed on this blog before the recording of holdings on the Report of Foreign Bank and Financial Accounts form (FBAR). Taxpayers need to report all foreign financial accounts that have values $10,000 or more. However, the IRS suspects that many taxpayers purposely set up accounts of less than $10,000 to avoid including such accounts on the FBAR form.

    There has been a significant backlash against actions taken against taxpayers in these matters, however. In fact, a couple of years ago, the IRS said it would notify taxpayers subjected to property forfeitures under structuring laws. Those taxpayers could file petitions for reimbursement regarding the seized assets.

    With regards to the property seizures, a significant number of taxpayers filed these petitions. Among petitions within the IRS jurisdiction, the IRS returned seized property in approximately 84 percent of the cases.

    For petitions, the IRS forwarded to the Department of Justice (DOJ), the IRS recommended returning the seized property in around 77 percent of the cases. Yet even with this recommendation, the DOJ accepted less than one in six of the petitions. This means there was a refusal to return millions of dollars seized.

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    What we may see going forward

    As far back as 2014, the IRS stated it would discontinue confiscating cash from “legal source structuring cases.” These are cases where the structuring cases did not concern any illegal activity. This was in response to lawsuits filed challenging the structuring practices of the IRS and DOJ.

    Despite policy changes, a number of property owners never had their property returned. These property owners were taxpayers who faced property seizures before the enactment of the new policies.

    With Congressional demands, we will likely see even more demand for the return of assets to taxpayers. An experienced and knowledgeable tax attorney can explain possible options to you and help you understand whether having seized assets returned is a viable option.

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