By Shana-Tara O’Toole | Due Process Institute | President and Devon Unger | Due Process Institute | Research + Writing Fellow
Perhaps it was overshadowed by the fanfare surrounding the 50th Anniversary of the Apollo 11 Mission, but Congress and President Trump have taken another small, but very important, step in criminal justice reform. On July 1, President Trump signed the Taxpayer First Act, which incorporated the Clyde-Hirsch-Sowers RESPECT Act—a bill that the Due Process Institute had supported because it makes it far more difficult for the government to unfairly seize your money based on what are known as “structuring” offenses.
Structuring is a federal law that probably shouldn’t ever have been a crime. Under the Bank Secrecy Act of 1970, banks are required to report transactions of more than $10,000 to the IRS. It is a federal crime if you deliberately “structure” transactions (like dividing up your deposit of $20,000 into 2 separate transactions) to avoid this $10,000 reporting threshold. Importantly, until now, even if you could prove that the funds came from a completely legal source, your money could be forfeited to the federal government.
The RESPECT Act brought some common sense into the equation by requiring the federal government to show that your funds came from an “illegal source” or the “structuring” was done with the intent to actually conceal criminal activity before they can seize the money. This is important because these types of forfeitures often target small unsophisticated businesses that deal with a lot of cash such as hairdressers and farmers’ market vendors. In case you’re wondering: there are often completely legitimate reasons why these folks would regularly make transactions of less than $10,000 and punishing them simply for engaging in wholly legitimate financial transactions is simply unfair.
The RESPECT Act was named, in part, after two clients of our friends at the Institute for Justice–Randy Sowers and Jeff Hirsch. Both men own small, cash-preferred businesses: Randy owns a dairy farm in Maryland, and Jeff owns a convenience store distribution business in Long Island. (Jeff’s case is particularly egregious because the IRS seized more than $400,000 without ever even filing a complaint against him. It took a lawsuit to get the feds to give the money back.)
Although there is a lot more to be done to reform this country’s forfeiture laws, this is one more welcome step on the path towards a more fair and just criminal legal system.