Whenever we pass a law that could be applied to people not intended as targets, you can bet your ass that eventually it will be applied:
Wielding a banking law intended to thwart drug trafficking and money laundering, the IRS has a new target in its sights: a rural convenience store that sells catfish sandwiches.
Lyndon McLellan lost over $107,000 in an IRS raid after the agency seized the bank account belonging to his small business, L&M Convenience Mart in Fairmont, North Carolina. “It took me 13 years to save that much money and it took fewer than 13 seconds for the government to take it away,” he said.
For over a decade, Lyndon has run his mart, an unassuming place where locals stock up on soft drinks and cigarettes. But last year, the IRS wiped out the shop’s bank account using the Bank Secrecy Act. Under this law, banks must report all cash transactions over $10,000. Federal law also prohibits “structuring” deposits in amounts under $10,000 to skirt the reporting requirement.
But making frequent cash deposits under $10,000 is only a crime if someone deliberately intends to evade filing those reports. Lyndon had no such intention. According to his niece, who usually made deposits, a bank teller told her that depositing less than $10,000 would avoid burdensome paperwork. Moreover, forfeiting Lyndon’s cash would violate his constitutional right to due process and the Eighth Amendment’s protection against “excessive fines.”
Someone has to pay now that the Koch brothers don’t.
It’s impossible to know what the real story behind this is unless it goes to court, due to privacy laws. For now we only have one side of the story. And I have more questions than answers after reading that story.
$10K is a lot of catfish sandwiches paid for in cash. How often were they making cash deposits? Daily? $10K is a whole lot of cash transactions for a day.
Weekly? How would they get in trouble for this if they just decided to keep at least $2K but less than $5K on hand (or some other figures)? A deposit every time they had more than a threshold amount shouldn’t get them in that kind of trouble, unless they are depositing close to $10K most days.
And why are they letting some stupid bank teller tell them to structure their deposits a certain way in order to save the bank teller from some “burdensome” paperwork? Wikipedia says most banks have a system that automatically creates the currency transaction report electronically when they deposit or withdraw that kind of money, and when you click their link to the form, the form is gone because it seems like the only way to file for the last couple years is electronically. How burdensome is that for either the teller or the customer?
Also, Wikipedia says the bank teller shouldn’t be telling them about the reporting unless asked directly, and in the event that the customer changes their mind about the transaction after learning about the CTR, then the are supposed to file a different report. So the teller is trained by the bank on the filing requirements for the CTR, but he or she is not trained on the suspicious activity report? Or he or she is so lazy that they decided to risk someone’s livelihood and/or freedom to avoid filing out either report, and didn’t get the part of the training about not blabbing about the report to the customers? Why didn’t Forbes name the bank and the bank teller that are allegedly so backwards they don’t have electronic filing, and so lazy that they are counseling customers to break the law that they are at least partially familiar with?
Isn’t that a lot of cash to have in the till in the event of a hold up?
$107K is less than eleven times the threshold. It took this guy 13 years to build up $107K. That’s less than $10K per year. So cash is coming in at a rate that gets them near the $10K threshold from time to time. I would assume pretty often if because if $107K is your life savings, then it wouldn’t make sense to let a whole $9K or so lay around in the till for days or weeks at a time. Besides, that seemed like a pretty big store from the video. I would guess they must have sales in the thousands of dollars every day. If they sell beer and cigarettes, that could be a fairly high volume store. Plus liquor and ciggies mean lots of taxes, coupled with high cash transactions, and there is all sorts of potential for hanky panky that could have led to some sort of investigation.
Yet the money is going out almost as fast, so that it only builds up at about $700/month, and it goes out presumably by check or electronic transfer (because if they wanted cash for expenses or wages, they could just take that from the till before making deposits at the bank).
This story does not add up.
Didn’t we get a whole bunch of these kinds of horror stories in ’98 during the congressional hearings, which the IRS could not comment on because of privacy laws, and then years later when the CBO or someone checked out the story they turned out all to have been bogus?
And didn’t we get that whole dog and pony show about the tea party being singled out for scrutiny of their nonprofit status (but no mention of all the liberal groups that got the same scrutiny).
And here we have a story from *Forbes* about IRS jackbooted thugs. I guess they are not the WSJ or Foc Snews, but not exactly Mother Jones either.
I’m no fan of any sort of civil forfeiture laws. But this story does not add up for me. But don’t let that stop you from going down that garden path.