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Last week, the United States IRS Commissioner John Koskinen made a startling apology in Congress. He apologized for the IRS seizing the bank accounts of businesses merely because they deposited a lot of cash. In most of these cases legitimate small business owners were depositing say $8000 cash every other day. Most of these stores were small grocery stores or candy stores which did a lot of cash business. Sometimes they were restaurants which did not take credit cards. The IRS used a well-known, but slightly obscure, rule that actually allows the IRS to seize assets from US citizens it believes – get it, that the IRS believes – violated Federal Cash Transaction Reporting requirements. You have seen those signs at banks: If you deposit more than $10,000 cash you must fill out a Currency Transaction Report (CTR). Who wants the hassle? So business owners would deposit less than $10,000 every other day. Banks must snitch on their customers who deposit so much cash.
But if you deposit less than $10,000 where did go wrong? Ever heard of “structuring” deposits? That means you purposely divided your deposits below $10,000 to fly under the radar. The IRS was seizing bank accounts without ever bringing charges against the business owners. No due process.
