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North Carolina Businessman Seeking Recovery Of Over $100,000 Seized By IRS

A year after the Internal Revenue Service (IRS) seized his bank account, small business owner Lyndon McLellan is still attempting to recover over $107,000 from the federal agency.

The North Carolina man, who runs a gas station and restaurant in rural Fairmont, fell victim to the IRS practice of using laws meant for drug dealers and other criminals to confiscate finances where a criminal offence is suspected.

“It was like I was just slapped in the face with something. I didn’t know what was going on,” McLellan told the New York Times. “You work for something for 13, 14 years, and they take it in 13, 14 minutes.”

McLellan was suspected of structuring, the practice of intentionally depositing less than $10,000 cash into a bank account at one time. Deposits over $10,000 must be reported by the bank to the government, making structuring a way of avoiding that.

Civil forfeiture procedures enable the IRS to seize personal assets that they suspect have been involved in a criminal offence, including structuring. Once this has been done, the burden of proof shifts to the person accused of the crime rather than the agency.

As a growing number of people guilty of no other crime have been caught up in IRS forfeiture proceedings, calls for the practice to be stopped have increased. Last October, the IRS said that structuring cases would only be pursued in situations where the finances were involved in other criminal activity, and the justice department subsequently followed suit.

However, McLellan’s predicament remains unresolved, because the decision was not applied retroactively. His case has been taken up by the libertarian law firm Institute for Justice.

Attempts are also under way in Congress to alter legal provisions on civil forfeiture. Republican Sens. Rand Paul of Kentucky and Mike Lee of Utah have filed a bill in the House and Senate, and the Judiciary Committees of both houses are collaborating on a proposal.

But federal prosecutors have refused to concede ground in the McLellan case.

Responding to an email from McLellan’s lawyer, federal prosecutor Steve West wrote: “Your client needs to resolve this or litigate it. But publicity about it doesn’t help. It just ratchets up feelings in the agency.”

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Sources: New York Times, MyFox8 / Photo credit: MyFox8


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