Democrats, GOP Reps Demand IRS Return Money to Small Businesses

Two opposing parties of Congressmen, the House Ways and Means Oversight Subcommittee, sent a formal notification to the Secretary of Treasury, John Lew, to demand immediate action against the IRS, which has unjustifiably seized a substantial amount of money from small businesses, acting under federal asset and forfeiture laws.

The letter stated, “As the Secretary of Treasury, you have the power to fight for the rights of small business owners.” The Congressional letter also stated, “You have the option of reversing this decision made by the IRS and have them return the money, wrongly seized from various small businesses.”

A bipartisan involvement to find a way around solving this mess by the Congressmen occurs once in a blue moon. The Congressmen have unanimously come together to help small businesses escape from the unreasonable clutches of the IRS. The seizing of assets and money can deal considerable damage to the financial integrity of small businesses, negatively impacting growth in the long run. Seizing bank accounts of small businesses under the presumption that they are used for money laundering and drug transactions without showing any proof is beyond cruel.

The IRS has withheld millions of dollars from small businesses under false pretense, failing to provide substantial evidence under the forfeiture laws. The letter composed by the subcommittees was signed by Republican Congressmen Peter J. Roskam, chair of the subcommittee, and both republicans John Lewis and Charles Rangel, and was also dispatched to Attorney General Loretta Lynch as well as IRS commissioner John Koskinen.

The IRS argues that the bank accounts of the businessmen in question were structured unlawfully, which means that the amount of money being withdrawn or deposited was below $10,000. The agency states that this was done to purposely circumvent government reporting laws that all banks must act in accordance with.

The Congressmen formed a rebuttal that the accounts were seized without any prior notice and without due process because the amounts were being deposited inadequately – plus, the IRS had been doing this with other businesses, seizing accounts without warning, never filing any charges.

Since the issue came afloat, the agency has been apologizing for dealing such harsh repercussions and has also stated that there were changes made last year in regards to regulation for seizing funds and bank account on the basis of assumption. That is, unless they prove that the money is being laundered or being used for illegal activities. The Department of Justice too stated that it would abolish going after businesses, basing their judgment on suspicion.

In light of this, the Institute for Justice, a law firm based in Washington that is increasingly striving to amend civil forfeiture practices, stated that this blatant act of holding money and freezing bank accounts without any prior notice or evidence by the IRS further bears testimony to the fact that the government must implement a broader set of reforms. It needs to have flexible civil forfeiture reforms, lessening the effects of the burden on small businesses.

There are several businesses that have had the sword of impending doom looming over them as a result of fund seizure. Carol Hinder from Iowa had to close down her Mexican restaurant, which was a cash only business, solely because the IRS wrongfully withheld a sum of $33,000 from her. Chairman Roskam stated that Hinder had to wait for a year and half before getting her money back. The letter strongly recommends that the money seized from small businesses must immediately be returned.

It is important to understand that small businesses need a steady stream of cash flow and working capital to meet day-to-day operational expenses. Engaging in legal confrontations with the IRS puts more burden on the financial aspects of small businesses, and they in turn risk becoming bankrupt. Legal costs of fighting with the IRS can cost up to $20,000.

According to statistical data gathered by the Institute for Justice, the IRS can be credited for a total of 639 unsubstantiated seizures in 2012. Cases that showed criminal elements amount to only 1 per 5 seizures. Furthermore, in span of 8 years from 2005 to 2012, the IRS withheld cash amounting up to $242 million on the basis of criminal suspicion, indicting over 2,500 businesses.