The Internal Revenue Service has seized more than $17 million from individuals and businesses between 2012 and 2015, even though the money was legally obtained, according to a new report.
The Treasury Inspector General for Tax Administration (TIGTA) reviewed 278 cases in which complaints were filed by individuals and businesses after their money was confiscated. Those cases were initially reviewed by the IRS under the Bank Secrecy Act (BSA), which requires financial institutions to report currency transactions of more than $10,000, and ultimately led to some form of confiscation.
Of the 278 cases that were reviewed, 91 percent were found to have obtained the funds legally, according to the report.
"Most people impacted by the program did not appear to be criminal enterprises engaged in other alleged illegal activity; rather, they were legal businesses such as jewelry stores, restaurant owners, gas station owners, scrap metal dealers, and others," the report states. "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 report's revelations outraged IRS forfeiture reform advocates.
"The IRS’s own internal watchdog found that the IRS had a practice of seizing entire bank accounts based on nothing more than a pattern of under-$10,000 cash deposits," said Robert Everett Johnson, an attorney at the Institute for Justice, an organization fighting to overhaul the IRS' forfeiture system,according to CBS News.
Lyndon McLellan, owner of L&M Convenience Mart in Fairmont, North Carolina, said he came under IRS suspicion for making multiple deposits for slightly under $10,000, which he said a bank teller advised him to do to decrease paperwork.
The IRS then confiscated $107,000 from his account.
"It took me 13 years to save that much money and it took fewer than 13 seconds for the government to take it away," McLellan told CBS News.
The TIGTA report criticized the IRS for pursuing small-time cases that more often than not weren't based on criminal activity.
"When seizure and administrative forfeitures do not ultimately advance an investigation or prosecution, law enforcement creates the appearance, and risks the reality, that it is more interested in seizing and forfeiting cash than advancing an investigation or prosecution," the report stated.