But isn’t this why we have a 4th Amendment? And didn’t we fight a revolution to stop crap like this?
ARNOLDS PARK, Iowa — For almost 40 years, Carole Hinders has dished out Mexican specialties at her modest cash-only restaurant. For just as long, she deposited the earnings at a small bank branch a block away — until last year, when two tax agents knocked on her door and informed her that they had seized her checking account, almost $33,000.
The Internal Revenue Service agents did not accuse Ms. Hinders of money laundering or cheating on her taxes — in fact, she has not been charged with any crime. Instead, the money was seized solely because she had deposited less than $10,000 at a time, which they viewed as an attempt to avoid triggering a required government report.
“How can this happen?” Ms. Hinders said in a recent interview. “Who takes your money before they prove that you’ve done anything wrong with it?”
The federal government does.
Using a law designed to catch drug traffickers, racketeers and terrorists by tracking their cash, the government has gone after run-of-the-mill business owners and wage earners without so much as an allegation that they have committed serious crimes. The government can take the money without ever filing a criminal complaint, and the owners are left to prove they are innocent. Many give up.
“They’re going after people who are really not criminals,” said David Smith, a former federal prosecutor who is now a forfeiture expert and lawyer in Virginia. “They’re middle-class citizens who have never had any trouble with the law.”
On Thursday, in response to questions from The New York Times, the I.R.S. announced that it would curtail the practice, focusing instead on cases where the money is believed to have been acquired illegally or seizure is deemed justified by “exceptional circumstances.”
Richard Weber, the chief of Criminal Investigation at the I.R.S., said in a written statement, “This policy update will ensure that C.I. continues to focus our limited investigative resources on identifying and investigating violations within our jurisdiction that closely align with C.I.’s mission and key priorities.” He added that making deposits under $10,000 to evade reporting requirements, called structuring, is still a crime whether the money is from legal or illegal sources. The new policy will not apply to past seizures.
Well, if you read the articles, it does appear that most of the people they got particulars on admitted that they did intentionally “structure” their deposits to avoid the reporting requirement, even if their motives might have been harmless or ill-informed. And at least two of those anecdotes had details that made me a little bit suspicious of what might actually have been going on with the depositors.
It would have been nice of those folks at the banks to give them “better safe than sorry” advice, and tell them about the consequences, but it’s not like those banks were the ones to take a fall, and it was more paperwork for them.
After reading this, I will now make sure they report any deposit I make over one or two grand (as if that will ever happen. And I haven’t even been into a bank lobby since I can’t even remember. Must have been about 10 years ago when I needed a certified check for a down-payment on my first house).
On the bright side, this is the IRS, which can’t catch a break in DC. So it would be nice if Congress took up this issue and put the brakes on this whole civil forfeiture scam that runs from the lowest locality to the feds. More realistically, Congress will probaby just spank the IRS, and the other forfeitures will go on unabated..