The IRS reimbursed a Maryland dairy farmer Wednesday for thousands of dollars wrongly seized under civil forfeiture laws.
The restitution could be the first in a deluge of similar compensatory payments.
In February 2012, the IRS seized $29,500 from Randy Sowers, a Maryland dairy farmer. The cash was seized under structuring or “smurfing” laws, designed to target criminals evading bank secrecy laws. Sowers raised eyebrows at the agency because of frequent cash deposits at or near $10,000. Authorities seized Sowers’ money without warning and without a rigorous review process. (RELATED: Congressman Exposes Legal Loophole That Lets ‘Cops Go Treasure Hunting’ For Your Stuff)
Sowers consistently deposited cash made selling dairy products at farmers markets. Bank officers advised keeping the deposits under $10,000 to avoid additional paperwork. In 2012, IRS agents seized the farm’s bank account, which totaled $63,000. The Sowers family, in desperate need of money to operate the farm, agreed to settle with the IRS, forfeiting $29,500 of the original $63,000.
The Sowers’ were never charged with a crime, nor did the government even allege they were implicated in a criminal conspiracy.
In 2014, the IRS reformed its internal civil forfeiture procedures to avoid such seizures.
In 2015, the Institute for Justice, a public interest law firm, petitioned the IRS and U.S. Department of Justice on the Sowers’ behalf, asking the agency to retroactively apply the 2014 reforms against the Sowers, so the family could recoup the wrongfully seized funds.
The IRS announced it would fully refund the forfeited money in a letter on Wednesday.
The agency also circulated a letter to approximately 700 individuals with similar cases indicating they had a right to file an appeal to get seized money returned. A Freedom of Information Act request filed by the Institute for Justice indicates that between 2007 and 2013, the IRS seized over $40 million in 6818 structuring cases in which there was no suspicion of criminal activity other than regular deposits of cash in amounts less than $10,000.
“This is exactly what we wanted,” Randy Sowers said in a statement. “I hope they give other people’s money back. And beyond that I just hope they quit taking people’s money.”
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