Robert Johnson: The ultimate takeaway here is that civil forfeiture allows the government to take people's property based on the suspicion of criminal wrongdoing, but without actually having to prove to a court that somebody did something wrong. And that takes the presumption of innocence and it turns it on its head.
Sharyl: A federal law meant to help prevent money laundering and crime forces banks to report anyone making cash deposits greater than $10,000. And it's a crime for citizens to break down those deposits into smaller amounts simply to avoid the reporting requirements. But the Institute for Justice's Robert Johnson says the IRS is also seizing perfectly legal cash.
Robert Johnson: The problem is that this law has been applied to all kinds of innocent small business owners who aren't trying to hide anything from the govt they just happen to be depositing cash in the bank in amounts under ten thousand dollars.
Sharyl: The Treasury Department Inspector General looked at a sampling of cases and found that nine out of ten times, the IRS seized money that Americans had obtained legally. The IG also found the government pursued cases based solely on patterns of cash deposits without looking for associated criminal activity.
Robert Johnson: The IRS was basically trolling through people's bank statements looking for cases where they could find a pattern of under ten thousand dollar deposits and then when they found that pattern rather than going to the person and saying hey you know what's going on here is there some sort of explanation? Instead they would just seize the entire bank account and then they would hold it. You know the first time these people realize they're even potentially violating the law is when someone from the IRS shows up and tells them that they've already seized their entire bank account. I think what this really shows is nobody is safe from this kind of abuse of civil forfeiture and we all are potentially at risk for being targeted.
Sharyl: The IRS has agreed to make a number of changes recommended by the Inspector General, including seizing people's cash only when there is evidence of criminal activity.
Robert Johnson: In America people are supposed to be presumed innocent, but under civil forfeiture you're presumed guilty and then you have to prove your own innocence in order to get your property back. And that's wrong, it's un-American, it's unconstitutional and it has to end.