IRS Takes Advantage of Forfeiture Law
Millions seized from individuals who were innocent of any criminal activity.
When a law designed to catch criminals instead hurts law-abiding citizens, it needs to be repealed or amended. The rule in question is designed to prevent “structuring” — the practice of making multiple bank deposits of just under $10,000 in order to avoid having to file a federal report for a large deposit. A recent report from the Treasury Department concluded, “When seizure and administrative forfeitures do not ultimately advance an investigation or prosecution, law enforcement creates the appearance, and risk the reality, that it is more interested in seizing and forfeiting cash than advancing an investigation or prosecution.”
The IRS responded to the report by stating that it had in recent years implemented new policies to address some of the issues raised regarding uninvestigated seizures, and that it was “proactive in revising the way in which structuring statutes are enforced to seek uniformity across the country.” That may be so, but how can this be publicly verified when the IRS continues to refuse to comply with Freedom of Information Act requests for records on seizures made for violating the structuring rule?
As the Washington Post reports, “While structuring is technically a crime, it’s something of a secondary one. The reporting requirements were enacted to detect serious criminal activity, such as drug dealing and terrorism. They ‘were not put in place just so that the Government could enforce the reporting requirements,’ as the IG’s report puts it. But according to the report, that’s exactly what happened at the IRS in recent years. The 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 criminal activity.”
In fact, the inspector general reviewed a random sampling of 278 IRS forfeitures cases from 2012 to 2015 in which structuring was the reason for the “seizure.” In 91% of those cases, the money seized by the IRS from individuals or businesses had been legally obtained. In other words, no criminal activity had occurred justifying the IRS action other than a failure to comply with the structuring rule. This seems to be a case of the IRS taking advantage of an ill-conceived law in order to enact penalties upon unsuspecting and non-criminal individuals.