Carole Hinders has operated a small cash-only restaurant in Iowa for the past 40 years. During that time, she has regularly made small cash deposits in a small bank nearby. Despite not being convicted, charged, or suspected of any crime, the IRS has seized her US$33,000 checking account and won’t give it back.
Through the process of civil asset forfeiture, the IRS has seized bank accounts of American individuals and small business owners who have made regular cash deposits of less than US$10,000, despite the fact that they have not committed a crime.
Depositing less than US$10,000 is not a crime, unless it is done to intentionally avoid federal reporting requirements. However, for Hinders, depositing less than US$10,000 was something she thought was doing her bankers a favor. “My mom had told me if you keep your deposits under US$10,000, the bank avoids paperwork,” she told The New York Times. “I didn’t actually think it had anything to do with the IRS.”
In accordance with the Bank Secrecy Act, banks and other financial institutions are required to report all cash deposits greater than US$10,000. They also have to report suspicious patterns of deposits below US$10,000, due to many criminals being aware of the above-US$10,000 reporting requirement.
Apparently anything above or below US$10,000 is suspicious to the IRS and needs to be reported. Unless you are depositing exactly US$10,000, the IRS thinks you could be laundering money.
According to the Institute for Justice, a Washington-based public interest law firm that is seeking to reform civil forfeiture practices, last year, more than 700,000 suspicious account activity claims were made by banks. Of those accounts that were then seized by the IRS, the average account was US$34,000—a questionably low amount given that these people are presumed to be big-time drug dealers and money launderers.
While civil asset forfeiture is intended to punish real criminals—the Bernie Madoff types, violent terrorists, and drug cartel leaders—it subsequently involves a large about of collateral damage as well. Of the 639 seizures by the IRS in 2012, only one in five involved prosecuted individuals.
To make matters worse, in order for wrongly accused individuals to regain seized property, the onus is on them to prove that the property is not related to a crime. The individuals are presumed guilty until proven innocent. This is the type of backward legal procedure expected from 17th-century witch trials, not 21st-century liberal democracies.
It’s not only the IRS getting in on the civil asset forfeiture fun. Many civil asset forfeitures take place during roadside traffic stops conducted by local and state police departments. According to the Washington Post, since Sept. 11, 2001, almost 62,000 seizures have been the result of roadside stops without a warrant or indictment, netting police agencies US$2.5 billion.
The agencies seizing these assets have absolutely no oversight in what they can do with the obtained funds. Forfeiture funds have covered cops’ and prosecutors’ lavish dinners and parties, questionable travel expenses, pension funds, and in two examples, a margarita making machine and a Zamboni. How a Zamboni is used in fighting crime is anyone’s best guess.
Given the loose rules and regulations regarding asset seizure and the nearly impossible process of reclaiming wrongly seized property, law enforcement agencies across the United States have become drunk with power, taking what they want with little regard for due process.