IRS uses Civil Asset Forfeiture Reform Act of 2000 to steal from bank accounts

In addition to being the governmental agency responsible for establishing tax laws and collecting taxes, the Internal Revenue Service is also responsible in part for enforcing the laws and regulations it passes. The IRS' criminal enforcement division aims to discover and investigate possible financial criminal activity related to tax evasion, criminal tax fraud, money laundering and the narcotics trade.

In an effort to identify possible criminal activities and tax crime related to money laundering, the Bank Secrecy Act was passed by Congress in 1970. Under the terms of the BSA, businesses are required to file what's known as a form 8300 and report cash transactions totaling $10,000 or more from "one buyer as a result of a single transaction or two or more related transactions." 

Like nearly all IRS requirements, the filing of a form 8300 is burdensome and, to avoid the filing requirement, many individuals and businesses make deposits that are just shy of the $10,000 amount. This practice, however, drew the attention and suspicion of IRS officials who pushed for the Civil Asset Forfeiture Reform Act of 2000. Under these laws, banks are required to report deposit amounts that are just shy of the $10,000 to the IRS.

Under the protections afforded in the CAFRA, the IRS has been seizing the assets of businesses and individuals whom it believes are engaging in criminal activities and intentionally taking steps to avoid reporting deposits to the IRS. During 2012 alone, the IRS reported a total of 639 seizures; however, only 128 of these resulted in criminal tax charges being filed. 

That means the IRS stole hundreds of thousands of dollars from some 511 completely legitimate business and individual accounts. As if the IRS' actions in wrongly seizing the assets aren’t despicable enough, the agency has only offered a partial repayment to the account holders of those 511 accounts. Essentially, during the course of just one year, the IRS blatantly stole money from hundreds of hard-working and law-abiding businesses and individuals. 

While the IRS has since issued a statement that the agency will no longer engage in the "seizure and forfeiture of funds associated solely with 'legal source' structuring cases," the agency's actions with regard to past seizures and forfeitures is incredibly troublesome, not to mention illegal and serves to further diminish and tarnish the embattled agency's reputation.

Source: Forbes, A New IRS Horror Story That Makes Past Scandals Pale In Comparison, Rick Ungar, Oct. 27, 2014