IRS Doesn’t Care That You Haven’t Committed a Crime—It Will Still Steal Your Money.

The Institute for Justice has spent years
trying to get government agencies to stop stealing from the people they
serve, and its efforts are likely part of the reason for recent
media interest in thieving police departments and embezzling tax
collectors. The Washington Post last month devoted a

multi-part series to documenting highway robberies by cops
whose departments keep all or part of the proceeds. Now The New
York Times scrutinizes the curious IRS practice of draining
people’s bank accounts because they regularly deposit relatively
small sums of cash.

Writes
Shaila Dewan:

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.

The trigger for the seizures is regular deposits of under
$10,000, the threshold above which banks are supposed to report
financial activity. But depositing money below that amount
is considered suspicious “structuring” and is also
reportable.

According to the IRS’s
rules about reporting cash transactions over $10,000:

The penalties for failure to file may also apply to any person
(including a payer) who attempts to interfere with or prevent the
seller (or business) from filing a correct Form 8300. This
includes any attempt to structure the transaction in a way that
would make it seem unnecessary to file Form
8300. “Structuring” means breaking up a large cash transaction
into small cash transactions.

The IRS has regularly interpreted this rule to apply to
restaurants, corner stores, and other cash-heavy small businesses
that undergo the oh-so-suspicious process of bagging up the week’s
receipts and taking them to the bank. Keeping lots of cash on hand
is, in many cases, an invitation to a stick-up. And, as the
Times story points out, some small businesses are insured
only up to $10,000 for cash in their possession—so when the mount
gets close, they’re naturally inclined to make a deposit. After a
few such efforts at safekeeping the proceeds, the IRS feels
justified in taking it all.

Why don’t banks inform their customers of the danger they face?
Some do. But that could be interpreted as a “structuring
conversation,” which is illegal.

The Institute for Justice points out that “Eighty percent of
people from whom the federal government seized property for
forfeiture were never even charged with a crime.” That’s right,
it’s rare the feds even try to pretend that anybody did anything
wrong—they just make the people who lost the money chase after them
to get it back. If they can.

Media coverage can make a difference when government conduct is
this despicable. “[I]n 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.'”

Maybe that will make a difference to some people in the future
(depending on what “exceptional” means). But the feds specified
that nobody who has already been robbed is getting their money
back.