If the information wasn’t coming in from credible news sources, you might find it hard to believe. In the United States, your hard-earned savings can be confiscated by the government overnight without you being guilty of a single crime.
And when you challenge this theft, the government won’t apologize. It will haggle over how much of your money it can keep anyway.
Maybe when I tell you one of the government agencies doing this is the IRS, you won’t be
surprised. But I’m not sure. Opinion polls show people still trust the agency.
If that’s true in your case, you might want to ask yourself why.
First, let’s examine what is happening. A New York Times report last weekend highlighted the case of Carole Hinders, owner of a small Mexican restaurant in Iowa that accepts cash only. She has deposited her cash earning in the same local bank for almost 40 years.
Recently, the IRS swooped in and seized her checking account, taking almost $33,000. What did she do wrong? She made several deposits that were just below $10,000.
A deposit of $10,000 or more requires banks to file a report under the Bank Secrecy Act. As the Times said, many criminals are aware of this requirement, so they keep transactions just below that limit to avoid attracting attention. But the law also requires banks to report any suspicious pattern of deposits just below that threshold.
Using the Civil Asset Forfeiture Act of 2000, the government can then obtain a warrant and empty a suspicious bank account. The law was designed to put the bite on suspected criminals before they become suspicious. But because government agencies get to keep the cash they seize, several agencies, including the IRS, aggressively search bank accounts.
The Institute for Justice in Washington did a study that found the IRS made 639 such seizures in 2012, but only 20 percent of them ended up being prosecuted as criminal cases. The other 80 percent presumably involved innocent people, many of whom lacked the resources to fight back and ended up negotiating for whatever they could get.
That list includes, as the Times reported, dairy farmers in Maryland, an Army sergeant who lost the money he had been saving to help his daughter attend college, and brothers who owned a candy and cigarette distribution company and whose accountant had advised them to make smaller deposits.
The Institute for Justice said the number of such seizures has been increasing. In 2005 there were only 114. Who knows how many there will be this year?
Sixteen years ago, the IRS was under an intense national spotlight. Audits showed it had seized property improperly in more than 25 percent of cases studied. In one case, the agency had tried to force a dying man and his wife and two children to abandon their home.
Lawmakers fell over each other trying to denounce the agency. The Senate voted 96-2 on a series of reforms. President Bill Clinton took to the radio and promised changes.
One of those changes was to establish an IRS Oversight Board in an effort to make up for the agency’s lack of public accountability. That board still exists. It publishes reports that receive little attention. Its most recent annual report noted the agency had suffered from scandals that had hurt its public reputation (such as when it targeted conservative groups’ applications for tax-exempt status), which it offered to assist to restore.
Among the things the board published recently is a survey on taxpayer attitudes. It found that 78 percent of Americans were satisfied with how the IRS operates. My guess is few of them were aware of asset forfeitures, or that little seems to have changed since 1998.
Richard Weber, chief of the Criminal Investigation unit at the IRS, issued a statement after the Times report saying the agency no longer will seize assets unless “there are exceptional circumstances … and the case has been approved at the director of field operations level.”
There, now don’t you feel better?