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July 17, 2016


‘Structuring’ suspicions and seized assets: An IRS about-face?

Under the Bank Secrecy Act, $10,000 is the threshold amount for triggering various reporting requirements for cash transactions. The law is supposed to deter money laundering by big-time drug dealers, organized crime figures or terrorist groups.

Far too often, however, federal authorities accuse ordinary citizens of “structuring” their transactions, i.e., using numerous sub-$10,000 deposits to avoid the required reports. And to make matters worse, authorities often use civil forfeiture laws to seize assets from people suspected of structuring – even if no criminal charges are ever brought.

In this post, we will update you on a high-profile case of a Maryland dairy farmer who fought the government for four years to get at least part of his seized money back.

If this all sounds familiar, it’s because it’s a long-standing problem. Last year, we wrote about a widely-reported case of a Michigan grocery business run by a father and his daughter that had its bank account drained by the IRS due to mere suspicion of structuring.

Recently, a similar case involving a husband-and-wife organic dairy farm in Maryland has received national attention. In the winter of 2012, the IRS drained the dairy’s bank account, to the tune of nearly $63,000.

Several months later, the dairy farmers’ agreed to give up more more than $29,000 of this amount. But with help from a nonprofit law firm called the Institute of Justice, they continued to fight, trying to get the money back. 

The husband also became a spokesperson for the cause of forfeiture reform, testifying before Congress on the issue.

Evidence of the scope of the forfeiture problem is not merely anecdotal. In recent years, the IRS has taken more than $43 million in forfeitures in cases involving suspected structuring violations. Hundreds of property owners – upwards of 600 – have been affected.

The good news is that the tide may be beginning to turn. In the wake of the dairy farmers’ case, the IRS has issued notices to hundreds of property owners, inviting them to file petitions seeking recovery of all or part of forfeited amounts.

In short, thanks to the dairy case, the IRS may need to stop milking forfeiture laws.

Tax Crimes