New IRS Policy on Returning Money from “Structuring” Violations
The federal government recently changed its policy for seizing money for alleged “structuring violations” when that money was deposited by otherwise innocent individuals and business owners.
“Structuring” refers to the act of intentionally making cash deposits in an amount not more than $10,000 to avoid the federal currency reporting requirements. Our firm has represented several business owners who had their bank accounts seized under the old policy. None of our clients were making small deposits to try and hide any money nor was the money from any illegal activity. The cash being deposited was all obtained through their legitimate business operations.
The change in policy is long overdue and, while not perfect, is certainly a good development for business owners who have lost large amounts of money because they chose to make small cash deposits simply to avoid the paperwork of the currency reporting requirements.
Once the bank accounts had been frozen and the money had been seized, the government would send the person a notice offering them the opportunity to petition for remission or mitigation – asking the government to give all or some of the money back. Of course, the government would almost always deny the petitions and force the people, who just had most of their money seized, to hire a lawyer to try to get it back.
For our clients, we would usually file a claim for the money and force the DOJ to file a forfeiture complaint in federal court. After the complaint is filed, we would generally negotiate with the DOJ and get them to return most of the money they had taken. While getting half of the money back by settlement is a good result in a civil forfeiture claim, I always considered it to be very unfair since the government should not have been seizing my client’s money to begin with. Our clients did not intend to violate any laws, and all of the money they were depositing had been earned through legitimate work.
This week, I was pleased to learn that the IRS appears willing to now return some of the money the government took from individuals and business owners under the old policy. One of my clients who had a significant amount of money seized several years ago received a notice from the IRS suggesting that they submit another petition for remission or mitigation of the amount seized. Basically, the IRS is offering people another chance to request a return of money that may have been seized years ago under the old policy.
The client of mine who recently received this notice operates a small vinyl siding business in North Georgia. It was a true “mom and pop” business owned and operated by a married couple who lived in the area for many years. They had a growing business and many loyal customers. Because they generated a lot of cash through retail sales, their local bank customer service person suggested that they make smaller deposits to avoid the additional “paperwork” associated with deposits over $10,000. My clients never had any intention of trying to hide this money and they were depositing it all in a local bank. Of course, this was not “dirty money” and it was all lawfully earned through their vinyl siding business.
For cases like ours, the IRS said that it will receive these new petitions and make a recommendation to the DOJ about the money that should be returned. According to information I have received from a local Assistant United States Attorney, it appears that the DOJ is letting the IRS make the initial decision about returning money and then will follow through with its own procedures. In other words, regardless of whether there was an initial petition filed with the IRS or if the claim went to the DOJ, it appears that the process is the same for trying to get them to now return more of the money.
Our clients are going to pursue this and will file a new petition with the IRS very soon. We hope that the IRS will decide that our clients should receive the rest of their money back and will return it promptly. We also hope that the DOJ will go along with the IRS’s recommendation and expedite this matter, even though there was a settlement agreement several years ago when we reluctantly agreed to let them keep half the money.
While this is a great development for our clients and other people who had their money taken by the federal government under the old policy, I think that the process should be automatic and not discretionary with the IRS. It’s early in the process, so I will remain optimistic. Perhaps the government will be very generous in responding to these new petitions and will return most of the money it seized under the old policy. We shall see.
Anyone who has received a notice like this from the IRS should respond by immediately filing a new petition for remission or mitigation. While the IRS is giving basic instructions in their notice about how to do this, you are also welcome to call our firm if you need assistance in this process.
Page Pate is an accomplished trial lawyer with over 25 years of experience in criminal defense, civil litigation, and whistleblower representation. Page is listed in The Best Lawyers in America, Top 100 Lawyers by The National Trial Lawyers, and named to the list of Super Lawyers for the past 15 consecutive years. Page is a frequent expert legal analyst for local and national media and has served as an Adjunct Professor at the University of Georgia Law School. Read Page’s reviews on AVVO. Follow Page on Twitter @pagepate and on Linkedin.