On January 27, Sen. Rand Paul (R-KY) and Rep. Tim Walberg (R-MI) announced the Fifth Amendment Integrity Restoration (FAIR) Act in an effort to curtail improper civil forfeitures by the IRS. The Act requires a court hearing within 14 days of a civil forfeiture of any property seized in an alleged structuring transaction. If the court does not find probable cause of a structuring violation, the IRS must return the property to the owner.
Under the illegal practice of “structuring”, a taxpayer can avoid IRS reporting requirements by depositing less than $10,000 at a time. In an effort to prevent such activities, the IRS has seized, at an increasing rate, assets of many of taxpayers who made a series of deposits under $10,000. The purpose of such seizures is to prevent criminals from making small deposits into bank accounts without government scrutiny. However, in many of these cases, taxpayers are law abiding citizens unaware of the legal ramifications of their deposits, and are not subject to a criminal complaint. In such instances no criminal charges were ever filed and the IRS was able to seize assets of middle-class taxpayers who were never informed that forfeiture was to occur.
The Act was introduced as a result of heightened scrutiny regarding such practices. It is a reintroduction of the Camp-Levin Bill which expired at the end of the 113th Congress before it had a chance to pass. The FAIR Act broadens the scope of the Camp-Levin bill by requiring a probable cause hearing within 14 days of the seizure and any proceeds from an asset seizure to be placed in the general fund of the Treasury Department, rather than the Justice Department’s budget. The Bill has strong bipartisan support and is likely to be a priority for the Senate Judiciary Committee.