I represent taxpayers in Gainesville and the state of Florida who have tax issues with the IRS and Florida Department of Revenue. President Trump has signed into law the “Taxpayer First Act” (H.R.3151) which prevents the IRS from raiding a taxpayer’s bank accounts because of the suspicion that they were structuring their deposits to avoid the bank reporting requirements for transactions over $10,000.
The Bank Secrecy Act of 1970 required banks to report any cash transactions over $10,000. The obvious answer from those that did not want to explain these transactions to the IRS was to simply make a bunch of transactions under $10,000. To counter this, the IRS was authorized to seize any amounts of money that were part of a “structuring” scheme. Whether or not the money was illegally obtained or not was of no consequence.
How often was this occurring? One study shows that the IRS has seized more the $242 million from more than 2,500 cases from 2005 to 2012. The IRS tended to hold the money for over a year and in many cases simply put the money in limbo by never starting the steps to change the seizure into a formal forfeiture.
Seizures of this type were of course devastating to any small business that got caught up in the IRS’s attempts to enforce the Bank Secrecy Act. Even if the business owner was eventually able to prove that the money was not part of some money laundering scheme, they would be without the use of their funds for over a year and would have to pay out significant legal expenses.
Under the new law owners can request a hearing in federal court which must happen within 30 days of the request. A judge will then rule on whether there was probable cause for the IRS to have seized the money. If the judge agrees with the taxpayer, the money must be returned.
This is a step in the right direction, but it is still far to easy for the IRS to seize cash without due process.
If you or someone you know has received a Notice of Intent to Levy or some other federal or state tax issue, please feel free to contact me at either (352) 317-5692 or email email@example.com.
Cell (352) 317-5692
Office (352) 376-9401
Fax (352) 376-9440