Beat­ing the IRS

Amer­ica’s most no­to­ri­ous bank rob­ber gets a les­son in the law

The Washington Times Daily - - Editorial -

David beats Go­liath so rarely that the smart money is al­ways on Go­liath, and the tax col­lec­tor al­ways wins. But not quite al­ways. Two Michi­gan busi­ness­men have beaten the In­ter­nal Rev­enue Ser­vice at its own game. Af­ter a wave of bad pub­lic­ity — and a law­suit by the In­sti­tute for Jus­tice — the IRS agency beat a re­treat from us­ing civil for­fei­ture to seize $70,000 by ar­bi­trar­ily call­ing it “sus­pi­cious.” It agreed to re­turn the money last week.

That re­lieves Mark Zaniewski, pro­pri­etor of a Metro Marathon gaso­line sta­tion near Detroit. Mr. Zaniewski, who owns sev­eral gaso­line sta­tions and con­ve­nience stores, is fa­mil­iar with masked thieves who hit stores like his, but the IRS rob­bers wore only IRS badges. The of­fi­cers al­leged no crimes. The gov­ern­ment as­serted only that the way the stores and sta­tions col­lect and de­posit con­sid­er­able cash over the day looked “sus­pi­cious.”

With his cap­i­tal tied up by the IRS for more than seven months, Mr. Zaniewiski strug­gled to keep his busi­ness alive. He begged and bor­rowed money from mem­bers of his fam­ily to pay for weekly gaso­line de­liv­er­ies. The IRS even took some of the bor­rowed money, forc­ing him to close his sta­tions for two weeks.

Civil-for­fei­ture pro­ce­dures al­low mere sus­pi­cion to jus­tify such mis­chief. Un­der the rules of civil pro­ce­dure, an ac­cused is pre­sumed guilty and must prove his in­no­cence. Th­ese are rules di­rectly op­po­site from crim­i­nal pro­ce­dures, where the ac­cused is pre­sumed in­no­cent un­til proved guilty. Con­sti­tu­tional rights, such as the right to due process and a speedy trial, do not ap­ply.

More­over, po­lice and other law en­force­ment agen­cies are of­fered a cut of what­ever pro­ceeds the IRS takes, which makes law-abid­ing busi­nesses tempt­ing tar­gets. Jesse James and his boys, Wil­lie Sut­ton, and Bon­nie and Clyde never had it as good as this.

Terry Dehko, owner of Schott’s Su­per­mar­ket in Fraser, Mich., was trapped in this sys­tem when the IRS helped it­self to $100,000 from the store’s bank ac­count. Un­der pro­vi­sions of the Pa­triot Act, IRS agents were en­abled to look through the ledgers for ev­i­dence of money laun­der­ing. The IRS found “no vi­o­la­tions,” but nine months later, the IRS used a se­cret war­rant to empty the bank ac­count be­cause it found fre­quent cash de­posits of less than $10,000. As Mr. Dehko ex­plained in an op-ed col­umn in th­ese pages in Septem­ber, “My clerks rou­tinely de­posited cash earned at Schott’s at a bank right across the street. It’s never a good idea to risk let­ting too much money ac­cu­mu­late on­site. Like many other small busi­nesses, my store’s insurance pol­icy specif­i­cally lim­its cov­er­age for cash losses to $10,000.”

Hours af­ter a law­suit was filed in the Michi­gan cases, the IRS cut its losses and dropped the pro­ceed­ings against Messrs. Dehko and Zaniewski. The In­sti­tute for Jus­tice, how­ever, it not back­ing down, and says it will push the fed­eral courts to rec­og­nize the right to a prompt hear­ing when the gov­ern­ment uses civil pro­ce­dures to take prop­erty.

We wish the in­sti­tute well, but the courts can’t al­ways be trusted to do the right thing. Congress must step up to rec­og­nize that prop­erty should be seized only af­ter some­one has been con­victed of a crime. The rules should be re­vised so that no man or agency ben­e­fits from tak­ing the prop­erty of oth­ers. Oth­er­wise, the gov­ern­ment is lit­tle dif­fer­ent from the masked men who rob gaso­line sta­tions and gro­cery stores.

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