How Feds Grab Bank Accounts, No Crime Needed

IRS confiscates big bucks with 'civil forfeiture' law
By Neal Colgrass,  Newser Staff
Posted Oct 26, 2014 5:20 PM CDT
The IRS Seizes Bank Accounts Without Proving Guilt

Carole Hinders was successfully running a Mexican restaurant in Iowa when IRS agents gave her the bad news: They were seizing her $33,000 checking account. She had committed no crime, but raised suspicions by repeatedly depositing amounts lower than $10,000 in her bank. And Hinders isn't alone, the New York Times reports: The IRS inflicted this brand of "civil forfeiture" (authorities taking people's money based on suspicion of a crime) 639 times in 2012, 525 times more than it did in 2005, according to a public interest law firm that's going after the government practice. Responding to the Times, the IRS said it would stop such forfeitures unless they were warranted by "exceptional circumstances," but refused to review past cases. The Times, however, did look at a couple.

On Long Island, the IRS seized $447,000 from a cigarette and candy distributor; in Arlington, Va., the feds took $66,000 from an Army sergeant who eventually settled for $21,000, but the loss forced one of his daughters to delay going to college. So why the $10,000 deposit rule? Many criminals, knowing that banks must report deposits over that amount, often deposit less in order to keep their money laundering or drug trafficking secret. To counteract that, the feds tell banks to report any repeated deposits under ten grand. The law once said that perpetrators of "structuring" (as it's called) had to do it "willfully," but that changed after a defendant did it on purpose yet claimed not to know it was illegal, the Washington Post reports. So Congress struck out the "willfully" requirement, "leaving us with the mess we now have," the Post says. (Read more civil forfeiture stories.)

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