The Internal Revenue Service has used a law that was designed to track cash to catch drug traffickers and terrorists to go after small business owners. The crime is structuring or depositing less than $10,000 cash in two or more deposits to avoid bank reporting requirements.
An allegation is often all it takes to seize a bank account. Criminal charges of tax fraud or money laundering are not always filed and the owner is left to prove his or her innocence. It can be a drawn out battle.
Overbroad bank account seizures
Last October, a convenience store owner received a visit from federal agents after he deposited $11,400 in two separate cash deposits within 24 hours. They accused him of trying to avoid reporting requirements. Later, they seized his entire business account. He has been fighting ever since to get his money back. He was never charged with a crime.
Between 2005 and 2012, the IRS aggressively went after structuring violations. An Institute of Justice study found these allegations lead to civil forfeitures of more than $242 million. In a large percentage of the cases, there were no criminal charges filed.
After congressional and media scrutiny of the practice, the Department of Justice changed its policy in March. Going forward it will only pursue structuring cases if there is a link between the money and the illegal activity.
Don’t give up
There is nothing inherently illegal about depositing cash below the $10,000 threshold unless specifically meant to evade the reporting requirement. While the practice will hopefully be applied more narrowly in the future, you might still face an investigation if your business takes in a lot of cash receipts and frequently makes cash deposits.
If federal agents ask questions about your cash deposits, you need to consult an experienced attorney right away. You need to take quick action to resolve a case and preserve your reputation in the community.
Source: Fox News.com,”‘Leaves you numb:’ Store owner still fighting IRS after feds seized his $107G account,” Barnini Chakraborty, May 12, 2015.