IRS Seizes Funds In “Structuring” Cases Without Filing Criminal Complaints


Using a law designed to catch drug traffickers, racketeers and terrorists by tracking their cash, the federal government has gone after run-of-the-mill business owners and wage earners without so much as an allegation that they have committed serious crimes, the New York Times reports. The government can take the money without ever filing a criminal complaint, and the owners are left to prove they are innocent. Many give up and settle the case for a portion of their money. “They're going after people who are really not criminals,” said David Smith, a former federal prosecutor who is now a forfeiture expert and lawyer in Virginia. “They're middle-class citizens who have never had any trouble with the law.”

In response to questions from the Times, the Internal Revenue Service announced it would curtail the practice, focusing instead on cases where the money is believed to have been acquired illegally or seizure is deemed justified by “exceptional circumstances.” Richard Weber, the chief of criminal investigation at the IRS, said, “This policy update will ensure that C.I. continues to focus our limited investigative resources on identifying and investigating violations within our jurisdiction that closely align with C.I.'s mission and key priorities.” He added that making deposits under $10,000 to evade reporting requirements, called structuring, is still a crime whether the money is from legal or illegal sources. The Institute for Justice, a Washington, D.C.-based public interest law firm that is seeking to reform civil forfeiture practices, said the IRS made 639 seizures in 2012, up from 114 in 2005. Only one in five was prosecuted as a criminal case.

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