Let's start with the actual laws Tony violated. In the first movie he flew the suit to Afghanistan and back. Unfortunately for him it's illegal to take weapons outside the country. And "weapon" in the ITAR law is defined broadly enough to include equations. So Tony "exported" the suit to every country between here and Afghanistan. Assuming that's 27 countries, and guessing the suit has 5000 parts in it, he's looking at about 1.3 million years in prison. But hey, he could be out in 750,000 years with good behavior. So if the Feds call up to suggest handing over the suit as part of a plea bargain to just get probation Tony's lawyer will advise him to accept.
There's another law covering the Afghanistan jaunt. You've probably seen the bumper sticker "Don't Steal--The Government Hates Competition." War is another area the government wants a monopoly on. Tony violated the Neutrality Act, passed in 1794 to punish citizens who decide to privatize attacking other countries. That's another plea bargain in the making.
If the Feds want something lower profile, they can point to all the Federal contract money Stark Industries has received and claim Tony illegally based his design on Federal property or misappropriated government money to build it. Which claim would allow them to subpoena the design records for the suit, giving them everything needed to build a copy. Claiming a patent infringement would also allow for subpoenas and Hammer Industries has to have a big patent portfolio.
If they notice any health problems they could sic OSHA on the case and confiscate the suit and reactor to test them for hazards.
Or they could simply declare that the government needs the suit for public safety reasons and seize it under eminent domain. If the Supreme Court allows seizures just to increase tax revenue there's no doubt it would uphold getting weapons to arm our troops. If Tony renounced his citizenship to escape eminent domain proceedings the government would have to resort to angary instead. No change in the practical implications.
All of this leaves Tony Stark in a position to lawyer up and fight a media battle. Taking him out of play would require some playing fast and loose but nothing out of the ordinary for police operations. The Los Angeles District Attorney could offer a get out of jail free card for any cocaine dealer willing to testify that he delivered multiple kilos to the Stark estate. In a no-knock raid it's pretty easy for someone to get killed, and if they let Tony live he's far more constricted as a felon held without bail than as the subject of a civil suit.
Bringing the drug war laws into play also let them use asset forfeiture to grab the suit if they claim it was paid for with drug money. A stretch, but the burden of proof is on Tony to show it he paid for it with clean money and that lets the government play with it for a while.
Or some government agent could just walk into his house and take it. Yeah, that's a spoiler, cope.
As far as sacrificing realism for dramatic effect goes the above isn't as bad as the movie's abuses of the laws of physics. The problem is there's a lot of people who are claiming that the government actually doesn't have that much power and people who complain about the size of the government are just paranoid. Look at the reactions to the Tea Party protests. Pundits dismiss them as racist because the they couldn't have any sincere concerns about the size of the government. Feh. The federal government is big and scary and needs to be recognized as such, especially as it tries to grab more power to control our lives.