I’m interested in knowing why the IRS can simply seize someone’s savings for depositing less than $10,000n at a time. Surely confiscation and non-return of those funds seems like an overly harsh response to someone just "avoiding"paperwork in bank transaction. It’s something you would expect to see in a banana republic or an autocratically run country like Russia. I look forward to your feedback.
davidmich
IRS seizes woman’s entire savings because she deposits less than $10,000 at a time
An Iowa woman named Carole Hinders saw her bank balance go from $33,000 to zero thanks to IRS confiscation. Hinders, who owns a small, cash-only Mexican restaurant, has not been charged with any crime and is not suspected of tax fraud. The IRS says they took her money solely because she deposited too little of it at a time, and the agency claims she did so to avoid the required reporting of any bank transaction over $10,000. She says she just thought it was helpful to save the bank paperwork.
Though the $10,000 rule is ostensibly designed to help catch terrorists and drug dealers, it is far more often used on regular citizens who are unlikely to ever see their money returned. “I don’t think [the IRS is] really interested in anything,” said a lawyer representing another seizure case. “They just want the money.”
To keep her restaurant afloat following the confiscation of her savings, Hinders has had to take out a second mortgage and max out her credit cards. “How can this happen?” she asks. “Who takes your money before they prove that you’ve done anything wrong with it?” - - Bonnie Kristian
It’s legal because what the woman was doing is against the law. 31 USC s. 5324 makes it unlawful to structure your transactions so as to evade bank reporting requirements. The policy reasons underpinning such a law are obvious. In this case on the taxpayer’s own evidence her purpose was to evade the reporting requirements, so it seems like an open-and-shut case.
Oh absolutely the law says that it is illegal. It has never been an issue with the IRS acting badly and mistreating citizenry. Gosh, I just trust those agents of the Government with seizing and benefiting from seizures, why yes I do!!!
So presumably regular monthly deposits of less than $10,000 coming from a working individual would seem normal , whereas consistent deposits of less than $10,000 coming from a business like a restaurant (not that much really) would raise red flags immediately.
I suspect the timing of the deposits is important as well. If you make one $9000 deposit a week it is quite different from making a $9000 deposit every day.
WTF? My parents owned a restaurant and there were many weeks when they deposited much less than $10,000. Hell there were many weeks were they lost money and had to borrow.
She may have done something wrong in how it was deposited. But even if she did, shouldn’t she then pay some penalty, resubmit, pay necessary fees, file required forms etc.
I’m not seeing how they justify just taking and keeping all her legally earned money.
No, the point I got from the article was that when she needed to deposit cash more than $10,000 she would split it, make an early deposit of less, then deposit the remainder of the proceeds later so that instead of depositing, say proceeds of $11,000 one day, she would deposit $9,000 then $2,000.
Apparently the bank people originally advised her this was a good idea, to avoid the $10K deposit paperwork. Then the bank was taken over by a more strict management, who noted the pattern as fitting the definition of the “crime” of “structuring”, or evading the report limits. Deliberately breaking deposits into smaller amounts to avoid the cash reporting is a crime, regardless of the legality of the money obtained.
The USA has some very interesting forfeiture laws. There are areas of the USA where the police seem to basically rob people who carry any large sum of money, claiming it is evidence of crime. The victim is then forced to hire a lawyer at their own expense to get their money back, which is usually a zero sum game. In one instance (Texas?), a travelling couple was told to sign the waiver to forfeit their money, or be detained for investigation and have their children taken away and sent to Children’s Aid. The situation is so bad that the Canadian government recently warned that Canadians should not travel in some areas of the USA with larger sums of cash or they will be robbed by the police.
What the IRS is doing is no different. Presumably the money goes to their office’s funds, so the local IRS branch and DA have an incentive to take money regardless of the situation. The laws allow “civil forfeiture” of the money involved in a crime. Civil law means “preponderance of evidence”, rather than “beyond all reasonable doubt”. Civil also means no need to file pesky criminal charges that don’t generate revenue - just launch a civil action.
In a NY Times article, the IRS has apparently played “let’s make a deal” with the restaurant owners, offering some of the money back on the 800-lb gorilla principle - “we have your money, you don’t get anything until you settle, we have dozens of lawyers and we can stall for ages and you can’t”. Unlike most desperate citizens screwed by the government, they have chosen to fight.
The IRS has a long history of seizures, including armed entry to businesses, essentially on suspicion of breaking their own arcane rules. It’s all about as close to government-sanctioned extralegal action as we get in this country - the person targeted doesn’t even have to have any suspected ties to criminal activities.
If all this woman and her bank were doing was avoiding the paperwork, bad on both of them. You can’t really hide finances from the IRS and the technicality of a one-page form - which just declares yup, I made this money legally - is neither here nor there. Which is in no way justification for the jackboot response and strongarm tactics; a few days’ investigation would establish whether that was a reasonable amount for a restaurant owner to have and deposit.
This is really quite nasty. The IRS is saying that in response to an inquiry from a prominent news organization, they will curtail - but by no means discontinue - an abusive violation of due process.
Translation: We knew it was wrong, but were happy to enrich ourselves by persisting with it until faced with the possibility of bad publicity. Now that you’ve called us on it, we’ll try to be a bit more careful. And since we’re a powerful arm of the govt., when we see behavior that might be illegal, we don’t need no stinkin’ due process.
How about forming a private sector insurance company, so people can insure their assets against arbitrary and unreasonable police or government seizure. If said insurance company is big enough, it will have the clout to hold the police state to at least pay lip service to constitutional protections and due process. If my insurer has to indemnify me for a $33-k seizure on a trivial pretext, they’ll damn well find a lawyer to hold some feet to the fire.
Where are the banks with the balls to tell the IRS No, this money belongs to a depositor, and we will not turn it over to you without due process. Bring us an order signed by a judge who has heard the evidence for the legitimacy of the seizure. Until there are such banks, why does anyone actually believe the myth that their money is safer iin a bank than under their mattress?
In theory, a tax lawyer with a good reputation and connections should be able to fix this in the short term. But that could cost the woman a third of those assets or more.
Just possibly, sunlight will help fix this problem, and a few others. But the real problem is and always has been a tax agency empowered to act like something from Hagar the Horrible - literally shaking down citizens they choose to suspect of not dotting their i’s and crossing every t. Tony Soprano can only laugh in admiration.
OTOH… a tax agency with no teeth leads to a Greece. I don’t know where the solution lies, especially in a nation that’s collectively convinced it’s being horribly ripped off by the tax system.
It’s the bank that notifies the IRS about the supposedly suspicious deposits in the first place. Why would they notify then say ‘no we won’t give it to you’? Picking a fight with the IRS is not generally a good idea, even for a bank.