Finance

IRS taking new steps to review cases of seized assets

Internal Revenue Service (IRS) Commissioner John Koskinen said the agency is taking new steps to review cases in which the agency seized small-business owners’ assets.

Koskinen’s comments, in a letter sent on Friday, come after both Democrats and Republicans on the House Ways and Means oversight subcommittee repeatedly urged the IRS to return the wrongly taken funds.

{mosads}The IRS in the past has seized the funds of small-business owners in cases where the agency believed taxpayers were “structuring” transactions under $10,000 to avoid bank-reporting requirements. The IRS had taken the assets even when it believed the money did not come from illegal sources.

In October 2014, the IRS changed its policy and now only seizes assets when it believes the structured funds came from illegal sources. But there are a number of taxpayers who had their assets seized under the old policy and still haven’t had their funds returned.

Koskinen said the IRS is sending notices this week to people and businesses that had their property seized for structuring reasons between October 2009 and the date of the policy change. The notices will inform the taxpayers that they may be entitled to get their assets back through remission or mitigation. About 700 taxpayers are entitled to receive these notices.

Once the IRS receives a petition as a result of a notice, it will either make a decision in administrative cases or make a recommendation to the Department of Justice in judicial cases. In cases where the IRS makes the decision, property owners can get their assets back if they can establish the funds came from legal sources and that there is no evidence they structured funds to hide criminal activity, Koksinen said.

Koskinen also said the IRS has already reviewed 76 cases where assets were seized prior to the policy change. Of those cases, 17 resulted in assets being returned to their owners; 16 led to the IRS making a recommendation to the Justice Department; 35 cases resulted in the IRS proceeding with forfeiture and referring the case for prosecution; and eight had other outcomes.

The leaders of the Ways and Means oversight subcommittee praised the IRS’s new steps.

“I’m glad to see the IRS finally recognize the need to return the money they stole from innocent Americans,” said Rep. Peter Roskam (R-Ill.), the chairman of the subcommittee. “It took two years, two hearings, and letters from every Republican and Democratic Member of the oversight subcommittee, but we can now see justice on the horizon.”

Rep. John Lewis of Georgia, the top Democrat on the subcommittee, said, “The IRS and the Department of Justice must make every effort to do what is right for small business owners who were not engaged in illegal activities but were unintentionally captured by the law.”

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