We previously posted on November 10, 2014, IRS Seizure of Assets Using Anti-Structuring Laws where we discussed thatthere were reported a series of cases in which the IRS has seized money from innocent Americans based on purported violations of so-called “anti-structuring” laws, which make it a crime to deposit less than $10,000 cash in the bank in order to evade bank reporting requirements.
Now the Internal Revenue Service has established a special procedure for people whose assets were involved in structuring to request a return of their forfeited property or funds. The new process follows a change of IRS policy on structuring cases in October 2014 and ongoing discussions with members of Congress.
The IRS will begin mailing letters this week to potentially eligible property owners to participate in this initiative. Since 2014, the IRS has already considered a number of petitions from property owners. The new mailing is being taken to ensure that eligible property owners in this category are aware of this option.
Background on Structuring
The special procedure to request a return of funds or property applies to a specific category of property owners whose assets were forfeited because they were involved in “legal source” structuring, in which their regular cash transactions fell below the $10,000 reporting threshold established under the Bank Secrecy Act.
The October 2014 policy change meant the IRS would no longer pursue the seizure and forfeiture of funds associated solely with “legal source” structuring, unless there are exceptional circumstances justifying the seizure and forfeiture. The 2014 policy change -- and the new special procedure -- does not affect funds involving "illegal source" structuring violations, including those cases where structuring activity is indicative of serious crimes ranging from tax and money laundering violations to drug dealing.
Details on Who May Be Eligible to Participate
The IRS will be mailing letters to those property owners it has identified as potentially having an interest in assets that were forfeited because they were involved in structuring violations prior to the change in the IRS policy. Property owners who participate in this process to seek a return of their funds or property must qualify by establishing that the underlying funds came from a legal source and there is no evidence the requesting party engaged in structuring to conceal other criminal activity.
In those "legal source" structuring cases which were “administrative” and did not involve a formal judicial proceeding, the IRS has authority in appropriate cases to remit funds directly to the affected property owner. In judicial cases involving "legal source" structuring, the IRS can make recommendations in appropriate cases to the Department of Justice, but the Department of Justice has final authority on any decision to be made.
The IRS is considering certain cases dating back to Oct. 1, 2009 and certain property owners should receive a letter from the IRS this month. If property owners are in this category and do not receive a letter, the IRS encourages them to contact the IRS at [email protected] to get more information.
“The IRS recognizes that seizure and forfeiture are powerful law enforcement tools, and must be administered in a fair and appropriate manner,” IRS Commissioner John Koskinen told the House Ways and Means Committee on May 25, 2016. “We understand we have a duty not only to uphold the law, but to protect the rights of individuals as well. We look forward to working with property owners who come forward, and we will continue working to ensure that we handle all cases with fairness and respect for taxpayer rights in every instance.”
Read more at: Tax Times blog