The PJ Tatler

IRS: We're Sorry for Seizing Small Business Bank Accounts

The IRS has apologized for stealing, or rather seizing, the back accounts of small businesses that did nothing other than deposit an improper amount of cash into their accounts.

Pressured by Congress, the IRS has apologized for seizing banks accounts from otherwise law-abiding business owners simply because those owners structured bank transactions to avoid federal reporting requirements.

The Associated Press reports “IRS Commissioner John Koskinen told Congress Wednesday that the IRS is changing policies to prevent the seizures, as long as the money came from legal means.”

Civil asset forfeiture is a government racket where “suspicious” deposits at one’s banking institution trigger an investigation from the IRS, usually ending in the seizure of money in the account.  There does not need to be any criminal charge or standard met before the IRS moves in and freezes your accounts, merely the suspicion of illegal activity.

Large cash deposits might indicate there is illegal activity, according to IRS investigators. Although the AP describes this as something people do to avoid reporting requirements (in other words, paperwork), people do it for various reasons. Many of these businesses are obviously cash businesses. Many businesses are only insured to $10,000 should they keep their cash in their offices, so it is quite common for owners to head to the bank once their cash stash starts to approach the $10,000 mark. Many people have no idea the $10,000 “rule” exists…until the IRS contacts them.

Meanwhile, law-abiding citizens are left without their money, sometimes for years, and are never charged with a crime. They can fight the IRS but without any money, it’s an uphill battle.

Last month, Attorney General Eric Holder barred local and state police from making such seizures without a warrant or criminal charges. Let’s see how that works out.