Civil Asset Forfeiture

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


Matthew G Bisanz

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.

NEXT: Frank Serpico Explains How Police Violence is the New Graft

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  1. Yes. Media coverage can make a difference. But it has to be sustained media coverage. Note all of the weasel words in the IRS statement. Only constantly hammering these people and holding them up to public shame will do any good.

    Sadly, I don’t think our media is up to doing that. They love government too much and love shaming their enemies on the culture war too much to devote very much time to these sorts of issues. I am frankly shocked the Times bothered to notice this.

    1. Agreed. The media will never challenge the establishments that provide their megaphones.

      1. Look at all of the time they spend covering shit like the Westboro Baptist Church or what the guy in Duck Dynasty said about guys and such. Meanwhile, the IRS is out robbing thousands of innocent people for years and they never bother to even look into it until now.

        I really do hate the major media with the fire of a thousand suns.

        1. The IRS means well!

          Like the old communists of the old USSR’s days past used to say: you can’t ever blame the system, or imply failure, so you ignore problems or find scapegoats you can assign the blame to.

          Today’s LSM shares the same ideology with these creeps and uses the same kind of logic.

    2. Part of the problem is they think, wow, they were robbed of 100 grand? That means they had 100 grand? which means they could afford to lose 100 grand. If they’re carrying around that much in cash, it’s literally pocket money to them! The gov’t takes it from them, they’ll just make another 100 grand to make up for it.

  2. 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.

    This is such utter bullshit one can hardly believe it’s true.

    Get ready for the audit, J.D., for revealing *that* nuance of the law.

    1. Can’t have the plebes thinking they have power and stuff!

    2. I can remember when conservatives in the US ridiculed the Soviet Union for having secret laws. Now we’re emulating them.

      1. Emulating? I think at this point we’ve gone past them on this front.

        1. ^^^^THIS^^^^

      2. Please, VG, “secret laws” are a fucking American innovation.

    3. Fuck the 1st amendment.

  3. It is the oldest rule of the taxman. I’m still looking for the guy’s name but his assessment was “If you’re living extravagantly, you must have a surplus and thus can afford to pay more taxes. If you’re living frugally you must have hoarded your wealth and can afford to pay more taxes…”

    1. It’s a medieval English law that actually codified that principle. I wish I could remember the king it was under, but I’m sure it was one of the earlier Plantagenets.

  4. Awesome. SO pretty much anyone who runs a cash business can get fucked over by the IRS at any time. Either that or keep larger amounts of cash around making them more likely to get robbed.

    1. Actually anyone period can get fucked over by the IRS. It has become a political weapon for the connected and a means for petty bureaucrats to make snoby citizens that don’t know their place they need to respect their A-THO-RE-TAY!

  5. Are we having a “structuring conversation” right now?

    1. Yes.

      Hands up against the wall, feet back, and spread ’em.

      1. Also, drop pants & bend over.

  6. I can’t see how they can justify the asset forfeiture in this case. Isn’t civil forfeiture supposed to be for money that is supposedly the proceeds of crime (or which can’t be proven not to be the proceeds of crime)?
    How can the supposed crime of structuring bank deposits yield any proceeds?

    1. I can’t see how they can justify the asset forfeiture in this case.


      Fuck you, that’s why.

      1. I can see how they do it. But they usually try to come up with some plausible sounding justification. “FYTW” is not yet an argument that has been tried in court.

        1. I can see how they do it. But they usually try to come up with some plausible sounding justification. “FYTW” is not yet an argument that has been tried in court.

          Um, if you’re the employee, are you going to do something that might make it harder to let your boss get the money to hand you a paycheck?

        2. That’s the graft. They don’t have to go to court to do it. YOU, the little person, have to go to court to undo it.

          1. That’s why this shit is so broken…

    2. I’m not saying their argument makes any sense at all, but their argument is that if you’re structuring, you’re obviously trying to hide illicit proceeds from the reporting requirements.

      Also, FYTW.

    3. It’s not just for proceeds of crime. It just has to be (suspected to be) related to the crime. That, and, of course, FYTW.

    4. It can be proceeds of a crime, or an instrument of a crime. In this case it’s an instrument.

  7. You can’t deposit over $10,000 without having your money taken.
    You can’t deposit under $10,000 without having your money taken.
    You can’t warn people about the danger of having their money taken without having your money taken.

    Heller would be impressed with this.

  8. What about putting cash into a safe deposit box? It’s not like banks really pay interest anymore anyway.

  9. Also, we can thank the left for gutting property rights under the takings clause in the first place. Any time someone says “takings” in a room full of liberals they put their earplugs on. Waaa! The government should be able to take whatever it wants whenever it wants it, for the good of The People!

  10. Compensation for takings is evil, because anyone who has any money obviously stole it! property is theft! Waaaa! That greedy small business owner doesn’t care about the disabled children that money could educate! She didn’t build that!

  11. Abolish the IRS, institute some type of national consumption tax, shit-can a hundred thousand IRS employees so they can go do something productive and that problem will disappear.

    Then repeat with:
    Etc, etc

  12. I had the IRS keep 15% of a Treasury Bill (T-Bill) that I bought last year. They still have not told me the reason why they kept 15%. It’s robbery. I owe them.

  13. It is nice that the IRS has announced it will curtail the practice of taking money from innocent people. Now what do people do to ensure the IRS keeps its word? You know they are lying; there is no downside for lies told by a government agency.
    Elimination of the IRS would of course solve that problem as well as a number of others, such as misuse of the IRS by the Executive branch. Unfortunately neither of the major political parties would give up that much power, and there are simply too many people who do not agree with taking it away from the central government.
    Further, elimination of the IRS would require repeal of the 16th Amendment. Any such proposal would be doomed to lies and misrepresentations by the media ably supported by government representatives and agencies that currently depend on confiscatory taxation for their survival.
    Maybe the RICO laws could be repealed though I suspect even that would be thwarted. I see no workable solution today. The situation will have to get much much worse.

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