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.
With nearly 35 years of experience and observations of the IRS, the past 4 to 6 years have been the most aggressive, taxpayer unfriendly and downright scary times to actually know what’s going on in the area.
I guess it’s time for me to stop fighting it, retire and bury my head in the sand with everyone else. Apparently, the electorate are happy with the suspension of due process (that was in the Constitution for those who remember we had one of those) through regulation and interpretation by Administrative Law Judges (these are employees of the Government Agency they are supposed to be keeping and eye on, no conflict of interest there.)