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Saturday, November 01, 2014

IRS to Ease Up on Civil Forfeitures for Structured Deposits

Depositors to banks who intentionally limit cash deposits to under $10,000 to avoid triggering information reporting requirements by the bank (currency transaction reports) can be committing a crime, even though they are unaware that such “structuring” is illegal. Such activities can lead to forfeitures of the funds involved.

A lot of publicity has been given to the unfairness of these forfeitures when the deposited proceeds are from legal sources and/or the depositors were not knowledgeable of the illegality of structuring. See this story, for example. This is part of larger concerns about general abuse of civil forfeiture laws by government entities in general, where such seizures occur without regard to whether the persons involved are charged or convicted of a crime.

The Chief of IRS Criminal Investigation, presumably in response to this adverse publicity, has now indicated that it will scale back such forfeitures for structuring. The following is the statement given by Richard Weber to the New York Times:

After a thorough review of our structuring cases over the last year and in order to provide consistency throughout the country (between our field offices and the U.S. attorney offices) regarding our policies, I.R.S.-C.I. will no longer pursue the seizure and forfeiture of funds associated solely with “legal source” structuring cases unless there are exceptional circumstances justifying the seizure and forfeiture and the case has been approved at the director of field operations (D.F.O.) level. While the act of structuring — whether the funds are from a legal or illegal source — is against the law, I.R.S.-C.I. special agents will use this act as an indicator that further illegal activity may be occurring. This policy update will ensure that C.I. continues to focus our limited investigative resources on identifying and investigating violations within our jurisdiction that closely align with C.I.'s mission and key priorities. The policy involving seizure and forfeiture in “illegal source” structuring cases will remain the same.

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