Federal Forfeiture Reform
Current federal forfeiture laws create financial incentives for law enforcement to pursue profit over the fair administration of justice, facilitate the circumvention of state laws intended to protect citizens from abuse, encourage the violation of due process and property rights of Americans, and disproportionally impact people of color and those of modest means. A coalition of organizations, including the Institute for Justice, support civil forfeiture reform that will effectively address defects in current law and procedures that have becoming serious threats to the rights of property owners.
Pending Federal Reform
On March 27, 2019, Reps. Tim Walberg (R-MI), Jamie Raskin (D-MD), Thomas Massie (R-KY), Tony Cardenas (D-CA), Tom McClintock (R-CA), and Bobby Rush (D-IL) reintroduced the Fifth Amendment Integrity Restoration Act (FAIR Act), a comprehensive reform bill designed to protect innocent property owners from federal civil forfeiture.
The FAIR Act would enact the following changes to federal civil forfeiture:
- Bans the U.S. Department of Justice from retaining forfeiture proceeds and instead re-directs forfeiture proceeds to the General Fund of the Treasury. In 1986, the DOJ’s Assets Forfeiture Fund took in $93.7 million in forfeiture revenue. By 2014, annual deposits topped $4.5 billion, but by 2018, annual deposits had topped $1.3 billion;
- Abolishes the “equitable sharing” program, which allows local and state law enforcement to collaborate with federal agencies and pursue forfeitures under lucrative federal law, even if that would circumvent state restrictions. From 2000 to 2013, the DOJ distributed more than $4.7 billion in equitable-sharing money;
- Shifts the burden of proof from the property owner onto the government, restoring the principle of “innocent until proven guilty”;
- Raises the standard of proof in civil forfeiture proceedings from “preponderance of the evidence” (i.e. more likely than not) to “clear and convincing”;
- Provides legal representation for those who cannot afford it in civil forfeiture proceedings; and
- Allows individuals and small business owners to request a prompt hearing to contest the seizure of their funds for alleged structuring violations.
Enacted Federal Reform
In July 2019, President Donald Trump signed the Clyde-Hirsch-Sowers RESPECT Act, the first federal forfeiture reform enacted in nearly two decades. Named after Institute for Justice clients Jeff Hirsch and Randy Sowers, two victims of the IRS’s aggressive seizures for so-called “structuring,” the Act:
- Limits forfeiture for currency structuring only when the funds in question are derived from an illegal source or used to conceal illegal activity. This codifies an IRS policy change from October 2014 prompted by lawsuits from the Institute for Justice and will prevent the agency from backtracking; and
- Allows property owners to challenge a seizure at a prompt, post-seizure hearing. Previously, property owners targeted for structuring had to wait months or even years to present their case to a judge.