New York (MainStreet) - One of the country's worst hangovers from the ongoing War on Drugs got a little bit better when earlier this month the Justice Department announced that it will suspend the federal practice of civil asset forfeiture. Civil forfeiture, as MainStreet has written about in the past, is when law enforcement or tax officials seize property that they believe may be connected with criminal activity. But yesterday Sen. Rand Paul (R-Ky.) and Rep. Tim Walberg (R-Mich.) went one step further by introducing the FAIR Act, a bill which would amend elements of the federal civil forfeiture statute in response to widespread complaints regarding abuse.

The bill would address what many critics see as a series of perverse incentives by disallowing the Department of Justice from keeping seized assets for its own budget. Instead any products of confiscation would go into the General Fund of the U.S. Treasury.

The FAIR Act would also create an elevated standard of proof after any seizure and require that the government meet this "preponderance of the evidence" standard at a hearing within 14 days. While a hearing requirement does exist under current law, it is often neglected or left up to the defendant to disprove allegations.

Finally, the bill as proposed would tighten guidelines for IRS seizures. Currently tax officials often seize funds on the basis of suspicious transactions called "structuring," patterns of cash deposits that appear designed to dodge federal reporting laws. The FAIR Act would impose an intent standard, requiring the IRS to demonstrate not only that the transactions match a profile but that the defendant intended for them to do so. In order to prevent targeting of high-cash businesses the IRS would also have to demonstrate an illegitimate source for any seized funds.

"We've turned justice on its head," Sen. Paul said at a press conference announcing the FAIR Act. "Basically you're not innocent until you're proven guilty, under civil forfeiture you're guilty until you're proven innocent."

Listing off examples of abuse, Sen. Paul included the separate owners of a motel and a Pizza Hut who had their businesses seized because of drug deals taking place on the premises. He discussed a family that had its home taken after one teenage member was caught selling marijuana and Sen. Paul asked how citizens, especially the poor, are supposed to afford a lawyer to dispute seizures with all of their money in a government account.

"What is most galling about this is the government can take your stuff without ever charging you or without ever convicting you," he said. "That is not America in my point of view."

At its best this practice allows police to preserve evidence, more efficiently return stolen goods and reduce the profitability of crime by seizing its proceeds.

In practice, however, it has become a nationwide embarrassment for law enforcement at every level as news organizations have revealed a breathtaking degree of abuse by public employees. Far from its original roots, civil forfeiture has increasingly been used by law enforcement as a way to supplement strained budgets with police officers and tax collectors seizing cars, cash and even bank accounts based on nothing more than suspicion.

A public interest legal group, The Institute for Justice, has created an entire practice area based solely on IRS forfeiture actions against people who deposit too much cash.

Officials have no burden of proof and no evidentiary hearing in front of a judge. Generally they reach settlements with the victims, returning a portion of the seized assets rather than demonstrating actual culpability on the part of the defendant.

Although the Attorney General’s new decision will not directly impact state or local activities, it brings the practice to a halt for all federal law enforcement while the Justice Department reviews its policies. The Treasury has announced its intention to do the same. From the Attorney General’s statement earlier this month:

“This is the first step in a comprehensive review that we have launched of the federal asset forfeiture program.  Asset forfeiture remains a critical law enforcement tool when used appropriately – providing unique means to go after criminal and even terrorist organizations.  This new policy will ensure that these authorities can continue to be used to take the profit out of crime and return assets to victims, while safeguarding civil liberties.”

The new policy does not apply to seizures pursuant to a warrant. There is no information at this time regarding how the Department of Justice or the IRS will deal with money that has already been seized.

--Written for MainStreet by Eric Reed, a freelance journalist who writes frequently on the subjects of career and travel. You can read more of his work at his website A Wandering Lawyer.