IRS Seized Millions From People Who Got Money Legally

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The Internal Revenue Service has seized millions of dollars in cash from individuals and businesses that obtained the money legally, says a Treasury Department inspector general’s report, the Washington Post reports. The report covers IRS cash seizures against businesses and individuals suspected of trying to avoid federal reporting requirements for large bank deposits. Individuals and businesses are required to report all bank deposits greater than $10,000 to federal authorities. Intentionally splitting up large sums of cash into sub-$10,000 amounts to avoid that reporting requirement is known as “structuring” and is illegal under the federal Bank Secrecy Act.

Many business owners engaged in perfectly legal activities may be unaware of the law. Others are covered by insurance policies that don’t cover cash losses over $10,000. Others simply want to avoid extra paperwork, and keep deposits under $10,000. Structuring is a secondary one. The reporting requirements were enacted to detect serious criminal activity, such as drug dealing and terrorism. Yet IRS pursued hundreds of cases from 2012 to 2015 on suspicion of structuring, but with no indications of connections to any criminal activity. Simply depositing cash in sums of less than $10,000 was all that it took to arouse agents’ suspicions, leading to the eventual seizure and forfeiture of millions of dollars in cash from people not otherwise suspected of crime. The pattern of seizures — targeting businesses that had obtained their money legally — was deliberate. “One of the reasons why legal source cases were pursued was that the Department of Justice had encouraged task forces to engage in ‘quick hits,’ where property was more quickly seized and more quickly resolved through negotiation, rather than pursuing cases with other criminal activity (such as drug trafficking and money laundering), which are more time-consuming,” the inspector general said.

 

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