In an article published by the NY Times “Law Lets I.R.S. Seize Accounts on Suspicion, No Crime Required” written by Shaila Dewan on October 25, 2014, it reported how the IRS had targeted middle class taxpayers and would seize their bank accounts without warning if they made deposits that appeared to violate the banking rule that punished entities (businesses or people) who made a series of deposits to get around the requirement of reporting deposits of $10,000 or more. Furthermore, the IRS is allowed to keep some of the seized property. The law was designed to catch terrorists, drug dealers and mobsters. However, in 2005 before the IRS was allowed to keep part of the seizure, 114 of these seizures occurred. In 2012, the last year such information was available, the IRS made 639 seizures. So either we are awash in drug money and terrorist activities since 2005 or something sinister was being put upon taxpayers by the IRS. We will let you choose your conclusion. And just to emphasize, there is nothing illegal or wrong about making deposits for less than $10,000 so targeting individuals for doing something legal is pretty detestable.
As you can imagine, the combination of allowing the IRS to seize funds without warning combined with the ability to keep a third of the seizure has resulted in the IRS almost a fivefold increase in seizures. Furthermore, only 20% of the taxpayers whose funds were seized ever faced criminal charges. Worse, the median seizure is a mere $34,000 according to the Institute for Justice’s analysis. And the minimum cost to legally fight the IRS is about $20,000 so most small companies choose to settle. Which means the IRS receives about $14,000 per case. This amount hardly seems worth the effort except that the IRS got to keep about $7 million of the $21 million seized if the median and average are close to the same. So for $7 million dollars the IRS had this program operating and they can go to Congress to show how successful they are statistically which helps with the IRS funding when budgets are being negotiated in Washington.
It gets worse. On Thursday, October 23rd, 2014, “…in response to questions from The New York Times, the IRS announced that it would curtail the practice, focusing instead on cases where the money is believed to have been acquired illegally or seizure is deemed justified by “exceptional circumstances.”
The implication of this statement is that the IRS was shaking down small businesses and small taxpayers who could not afford to fight the IRS rather than go after large corporations or criminals. We have here, another example of an agency gone amuck.
Source:
Law Lets IRS Seize Accounts on Suspicion, No Crime Required
