IRS Seizes Assets of Citizens Who Have Done Nothing Wrong
Under a law designed to catch drug lords, organized crime bosses, and terrorists, the IRS has been seizing funds of ordinary citizens without even alleging that they committed a crime.
Their offense has been to make bank deposits of cash under $10,000. Making such deposits to evade reporting requirements is called “structuring” and is illegal, whether the funds are the proceeds of a crime or not. But law-abiding citizens often make cash deposits without the goal of avoiding reporting requirements, and their accounts have sometimes been seized.
The policy has led to confiscations of funds from dairy farmers in Maryland, an Army officer in Virginia, and an Iowa restaurant owner. In many of these cases, no one is charged with a crime, though the owners of the funds must prove they are not guilty of wrongdoing to get their money back. In some cases, they have given up.
In response to reporters’ inquiries, the IRS has stated that, going forward, it would limit the practice to instances where the funds are believed to be the proceeds of illegal activity or where a seizure is justified by other “exceptional circumstances.”
In addition to the IRS, a number of law enforcement agencies are engaged in the practice. As many as 100 multiagency task forces may be engaged in searching for bank accounts they can seize. A bank statement showing a series of cash deposits may be all that is needed, even when a depositor has a valid business reason for limiting deposits to less than $10,000. One store had an insurance policy that only covered up to $10,000 in cash, so it made deposits before cash-on-hand reached that level.
Law enforcement is often rewarded for its actions by being allowed to keep seized money and property. Prince Georges County, Maryland has a new “mobile command bus valued at $1.2 million thanks to “civil forfeitures.”
Taxpayers often feel powerless when confronted with the might of the IRS and other government agencies, but with effective counsel, there is no reason to be intimidated. The Bethesda and Rockville, Maryland tax litigation attorneys at Longman & Van Grack have years of experience providing insightful tax advice and trial advocacy on behalf of clients involved in tax disputes with the IRS and the State of Maryland. If you have a tax question or concern, call (301) 291-5027 to schedule a consultation.
