Imagine a convenience store owner's surprise when he tried to access his bank account and found the Internal Revenue Service had seized his savings.
The agency has ensnared innocent business owners across the country in its broad effort to stop drug trafficking, money laundering and terrorist activity. Since 2007, more than 600 people have had similar experiences across the country.
Owners of convenience stores, restaurants and bars that receive cash payments need to know about bank "structuring" laws.
What is structuring?
Banks must report all deposits of $10,000 or more in cash to federal authorities. The crime of structuring is purposefully keeping transactions below this threshold to avoid the reporting requirements. When the IRS detects this type of pattern, it can seize bank assets.
In July 2014, the IRS seized almost $154,000 from the convenience store owner's account after noting his pattern of cash transactions. The IRS did not accuse the owner of a crime or file charges. After years struggling to get answers, the man is finally on track to get his money back.
Change in policy
The IRS has since changed its policy. In October 2014, the IRS-Criminal Investigations changed how it handles "legal source" structuring cases. Exceptional circumstances and Director of Field Operations approval are now requirements for seizures and forfeitures.
A 2015 policy directive memorandum advised prosecutors they need the following to seize accounts:
- A pattern of purposeful transactions below the $10,000 threshold and
- Probable cause that funds came from an unlawful activity.
The policy change did not resolve the cases of innocent business owners left waiting to find out when they can again access frozen accounts.
Legal help to resolve a case
Whether related to an accusation of structuring or unpaid taxes, a levy of your bank account can upend your small business. Lack of cash flow over weeks or months can even put you out of business.
Learn what you need to do to get the IRS to release a levy. Speaking with a skilled tax attorney is the first step toward resolving the case as promptly as possible.
Source: CNN Money, "The IRS seized this guy's life savings, Now he's getting it back," Jeanne Sahadi, Feb. 19, 2016