In a new report, watchdog group Treasury Inspector General for Tax Administration (TIGTA) has alleged that the IRS has been taking millions of dollars from businesses for no wrongdoing. The report says that the IRS has been using asset forfeiture to take the money legally without any charges.
The investigation was initiated in 2014, after numerous lawsuits were filed by libertarian-leaning law firm, Institute for Justice, over the IRS seizing savings of several business for the violation of anti-structuring policies.
According to Reason, an editorially independent publication of the Reason Foundation, structuring rules are implemented to stop money launderers from dodging federal banking policies by depositing under $10,000. The IRS took the actions of small deposits by small and medium businesses as crime, even though there was no evidence to support the theory that the anti-structuring rule was being violated.
The IRS ended up seizing around $17 million from bank accounts of business owners, who, in over 90 percent of the cases, had committed no crime. Furthermore, the report by TIGTA found that investigating authorities violated several internal policies, including the improper notification of rights to those being interviews, and inappropriately bargaining to resolve cases with threats.
Between fiscal years 2012 and 2014, the money seized and forfeited by the IRS was legally acquired in 91 percent of a sample of 278 structuring cases the TIGTA reviewed, the report found. The amount totaled $17.1 million and involved 231 cases.
“That is just a shocking, shocking statistic,” an attorney at the Institute for Justice, Robert Johnson, says. “It shows the cases we’ve been bringing are not isolated incidents by any stretch of the imagination. This is the bread and butter of what the IRS has been doing for years.”
TIGTA also learned that in 54 cases, property owners gave valid explanations for why their deposits did not exceed $10,000. However, in a majority of those cases, there was no proof that IRS had investigated their explanations.
Additionally, TIGTA learned “that in at least 37 cases the Government bargained nonprosecution in order to resolve the civil forfeiture.” In simple words, the IRS
In addition, the inspector general found evidence “that in at least 37 cases the Government bargained nonprosecution in order to resolve the civil forfeiture.” In other words, by threatening to file criminal charges, the IRS leveraged its civil forfeiture cases.
While the backlash was enough to get the IRS to make serious changes to its policies in 2014, the true extent of the damage before the deceit was uncovered by the media, was only just released.