IRS to Limit Bank Asset Seizures, But Questions Remain – Los Angeles Income Tax Planning & Income Tax Litigation Attorney Bruce Givner

by Bruce Givner on November 4, 2014

In a recent statement, the Internal Revenue Service (IRS) Chief of Criminal Investigations Richard Weber said that the IRS plans to limit its use of a controversial anti-money laundering law to seize assets in bank accounts that receive regular, large cash deposits.

“IRS-CI will no longer pursue the seizure and forfeiture of funds associated solely with ‘legal source’ structuring cases unless there are exceptional circumstances justifying the seizure and forfeiture and the case has been approved at the Director of Field Operations (DFO) level,” Weber said.

However, critics of this particular practice say that Weber’s statement remains too ambiguous and potentially leaves too much room for the IRS to continue seizures in cases involving small businesses. Robert E. Johnson, an attorney for the Institute of Justice who has represented clients in cases involving this practice, said of Weber’s statement “That’s incredibly vague and ambiguous and doesn’t provide any assurance to people who might be subject to the law.”

Under the federal “structuring law”, the IRS is allowed to seize suspicious bank accounts that receive regular cash deposits of less than $10,000. The law is intended to help the IRS stop money launderers trying to skirt the $10,000 threshold at which a bank must report a deposit to the federal government. However, some small businesses that deal mainly in cash say they have been unfairly penalized by the law.

Johnson added that the IRS policy change will not be retroactive, meaning that any small businesses currently in litigation to get their assets returned will not be helped by the change. “If the IRS agrees that it shouldn’t pursue these kinds of cases in the future, there’s no reason why they should continue to pursue cases that are already pending,” Johnson said.

Although legislators on Capitol Hill are focused on the higher-profile IRS cases, for example the 501(c)(4) targeting scandal, Senator Charles E. Grassley (R-Iowa) has stated his intentions to examine the issue. “The IRS plays a role in fighting money laundering and other criminal activity, but it has to treat business owners fairly,” Grassley said on October 27. He added, “If the pendulum has swung too far in favor of the government and against fairness for innocent people, then it’s time to reform civil asset forfeiture laws and procedures.”

Givner & Kaye focuses on sophisticated income tax planning and compliance, tax litigation and procedure, estate planning, and asset protection plans for individuals and businesses in Beverly Hills, Calabasas, West Los Angeles, Hollywood, and other areas of Los Angeles, Orange, Ventura, San Bernardino, Riverside and Santa Barbara Counties. Call Los Angeles Estate Planning and Asset Protection Plan Attorneys Givner & Kaye at (310) 207-8008 today.


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