Treasury report details extent of asset seizures

Associate Editor

WASHINGTON (April 11, 2017) — The Internal Revenue Service seized millions of dollars in cash from individuals and business owners, including two Maryland farmers, even though they earned the money legally, the Treasury Department said in a report released last week.
Using a law enforcement tool called civil asset forfeiture, the IRS and other agencies were able to seize cash from the bank accounts of individuals and businesses when they suspected the deposits were structured to avoid federal reporting requirements.
The forfeiture law is designed to catch criminals who deal primarily in cash such as drug runners, money launderers and terrorists, but in practice, the IRS may have mostly targeted largely innocent individuals and businesses, the Treasury Report said.
Of 278 investigations into the controversial seizure practice, the department’s inspector general found 91 percent targeted individuals and businesses where the money was obtained legally.
Randy Sowers, owner of South Mountain Creamery in Middletown, and Calvin Taylor, owner of a family farm in Preston on the Eastern Shore, both forfeited money to federal officials over the last several years.
They were targeted after repeatedly depositing cash into bank accounts in amounts beneath $10,000, a federal threshold that requires banks to report the deposits to the government.
“It was completely unconstitutional, and it was wrong,” said Robert Everett Johnson, an attorney at the Institute for Justice, a nonprofit advocacy group that assisted Sowers in his successful fight to have his money returned. “The kinds of behaviors that the report describes are not surprising.
“They’re the kinds of behaviors that we’ve seen again and again, including in Randy Sowers’ case. … (The report) confirms these cases weren’t outliers.”
In 54 cases the Treasury investigated, property owners offered what the Treasury said were “reasonable explanations” for why they deposited money beneath the $10,000 threshold.
Those explanations weren’t investigated and the money was taken anyway, the report said.
“One of the reasons why legal source cases were pursued was that the Department of Justice had encouraged task forces to engage in ‘quick hits,’ where property was more quickly seized and more quickly resolved through negotiation, rather than pursuing cases with other criminal activity (such as drug trafficking and money laundering), which are more time-consuming,” the Treasury Department said in a statement about the report.
The Treasury Department has made recommendations to the IRS to protect largely innocent people from civil asset forfeiture in the future.
More than 600 individuals and families were forced to forfeit assets even though they were never charged with a crime or found guilty of one, congressional officials have said.
More than $43 million were seized in those cases.
Taylor said he ultimately forfeited nearly $42,000 to the government because he said a prosecutor told him he could face criminal charges if he didn’t surrender it.
He admitted he deposited income from 2008 to 2011 into a bank account in increments just below $10,000 because a bank employee once told him deposits more than $10,000 were reported to the IRS.
Taylor said he didn’t know structuring his deposits that way would seem suspicious, and he wanted to avoid federal scrutiny.
Sowers’ money was seized after he told investigators his wife deposited, in total, roughly $300,000 in increments just beneath $10,000 from April to December 2011.
But he said she structured the deposits that way at the request of a teller who said the bank wanted to avoid the paperwork-heavy process of reporting the cash deposits to the IRS.
Taylor and Sowers could not be reached for comment.