Congress Calls Out IRS For Seizing Small Business Bank Accounts

| by Sean Kelly
article imagearticle image

The IRS apologized Wednesday, at the advice of Congress, for seizing the bank accounts of small business that structured deposits to barely avoid federal reporting requirements.

Small businesses affected by the seizure had been routinely making deposits of less than $10,000 to avoid reporting requirements that are meant to catch money launderers and drug dealers. Structuring deposits to avoid reporting is considered a felony.

“To anyone who is not treated fairly under the code, I apologize,” IRS commissioner John Koskinen said to a congressional panel. “Taxpayers have to be comfortable that they will be treated fairly."

Structuring, while at times being effective in terms of catching criminals, has hurt hundreds of small businesses. The seizures cost businesses tens of thousands of dollars to undo.

“Many people can’t afford a long, drawn-out fight, so they settle, handing over thousands of fairly earned dollars to the IRS — all without having done anything wrong,” Rep. Peter Roskam said. “The IRS doesn't have to give notice to the account-holder before seizing the assets. And the IRS doesn't have to prove that the person is actually guilty of anything — just that the account probably is involved in structuring.”

Georgia gun shop owner Andrew Clyde is just one of the many businesses affected by IRS seizures. Clyde said his account was seized after he made 109 transactions over the course of 10 months totaling $940,313. He kept his transactions below $10,000 because of his insurance policy's limit.

“I was never so afraid in my life,” Clyde, a former Marine who did three tours in Iraq, said. “I trembled when they left."

In August, Clyde was forced to pay $50,000 in order to get the rest of his money back – something that the many businesses affected by Structuring seizures have had to do. Clyde said that taking the hit was something he simply had to do out of necessity.

“This was my tactical retreat, so I could live to fight another day,” he said. “And that day is today."

Sources: AP News, New York Post / Photo Credit: AP, WikiCommons