Many Americans don’t know about the practice of “structuring,” in which cash is deposited in amounts under $10,000 in order to avoid reporting by banks to the federal government. Anything over $10,000 is automatically reported. The practice is actually illegal, despite the fact that there should be absolutely no reason someone shouldn’t be able to deposit whatever amount of one’s own legally obtained money they would want at any time and at any regular interval.
A quick tutorial from our friends over at Wikipedia:
Title 31 of the United States Code, section 5324, provides (in part):
No person shall, for the purpose of evading the reporting requirements of section 5313 (a) or 5325 or any regulation prescribed under any such section, the reporting or record keeping requirements imposed by any order issued under section 5326, or the record keeping requirements imposed by any regulation prescribed under section 21 of the Federal Deposit Insurance Act or section 123 of Public Law 91–508—
(3) structure or assist in structuring, or attempt to structure or assist in structuring, any transaction with one or more domestic financial institutions.Section 5324 further provides that a violation of this provision may be punished by a fine or up to five years in prison, or both.
Sums of money resulting from deposits of less than $10,000 may be seized after a warrant is issued based on a suspicious activity report. Legal proceedings, which may cost in the vicinity of $20,000 or more, may be required for an innocent party to retrieve his or her money. Reports in October 2014 by The New York Times of arbitrary seizures resulted in modification of Internal Revenue Service (IRS) practice to focus on investigations that “closely align” with IRS “mission and key priorities.” Banks are not permitted to warn or advise customers unless the customer asks, but sometimes bank tellers will informally warn customers.
The reason structuring is at the top of my mind right now, rather than any of the other myriad of horrible liberty-infringing actions ongoing in the United States, is due to a North Carolina man’s life savings being seized by the IRS because he accidentally and unknowingly had been “structuring,” and at the suggestion of his banker of all people, because they didn’t want to do the extra paperwork to report transactions over $10K. Even though there was absolutely zero evidence of any wrongdoing, the feds emptied his bank accounts all the same (which goes against a stated adjustment by the IRS and Justice Department..more on that later). “Suspicion” was all it took to get a warrant, and all it took to ruin someone’s life for the foreseeable future.
How did we let this happen? Well, like so many of the atrocities against liberty and Constitutional rights committed by the U.S. government of late, this one also has strong roots in the War on Drugs. The illegality of “structuring” was pushed through in 1970. What else was declared by Nixon in 1971? You guessed it – the War on Drugs. These are tied hand in hand – the illegality of “structuring” was in large part to find and bust drug operations who may be using the practice to avoid federal scrutiny. However, just as with so many of the awful laws created to fight the War on Drugs, those targeted are rarely caught in the net, while thousands of innocent Americans are. According to the story in the Daily Signal, asset forfeiture stemming from structuring cases is also ripe with abuse (as anything forfeiture-related seems to always be).
…law enforcement agencies have been using civil asset forfeiture to seize property and money for profit.
In recent years, seizures executed because of structuring violations have increased dramatically. In 2005, the Internal Revenue Service made just 114 structuring seizures. By 2012, that number had risen to 639. During that same time period, the agency seized$242 million for structuring violations.
While banks must submit reports to the Department of the Treasury for cash deposits of more than $10,000, the government also receives “suspicious activity reports” on deposits below that threshold, Robert Johnson, a lawyer for the Institute for Justice and McLellan’s attorney, told The Daily Signal.
The Justice Dept and IRS both agreed to scale this insanity back, and to (gasp!) only seize people’s assets if they were actually charged with a crime. The recent case with the North Carolina based McLellan makes it obvious that the stated fixes to the practice were lies, posturing and nothing more.
During a February 2015 hearing on civil asset forfeiture, IRS Commissioner John Koskinen was asked broadly about McLellan’s case, in which there were no criminal charges pending or illegal activity conducted.
“If that case exists, then it’s not following the policy,” Koskinen told lawmakers on the House Ways and Means Oversight Subcommittee.
The policy change, though, didn’t stop the IRS from seizing McLellan’s money.
In theory, someone incredibly naive could buy into the IRS and Justice Department’s flawed logic. They see a pattern that potentially equals illegal action, so they prohibit that action. But again, that is making a broad policy, targeted at a minuscule minority that nets far more innocent members of the law-abiding majority. How is this any different from the NSA’s actions collecting bulk cell data in order to catch the very few actual criminal targets? How is this not unreasonable search and seizure?
The federal logic here is nonsensical and circuitous:
- To start, there is no reason to suspect a person is committing a crime – no evidence, no warrant.
- That person deposits money under $10,000 in cash.
- That depositing “pattern” – which can be as little as one deposit – triggers the sharing of their personal banking information with the federal government. (How can that be legal under the Constitution??)
- Now that the information is shared – despite there being no reason for suspicion – the information and transaction history having been shared is now cause for suspicion.
- A warrant is issued to seize those assets, despite there still being no actual evidence – just the “evidence” that the government itself created due to these laws!
It is utterly ridiculous. The illegality, civil forfeiture and penalties of structuring must be addressed.
I personally don’t really care if criminals evade federal taxes or launder money using these tactics. The actions of the very few should not dictate the way in which every American must live, and put the rest of us at risk of the government seizing our money. The federal position of “presumed guilt” is a narrative that must be unwritten for the good of liberty across this nation.
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