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An Iowa woman who did not cheat on her taxes or launder money has had her entire life savings confiscated by the Internal Revenue Service simply because she deposited less than $10,000 at a time into the bank.

“How can this happen?” restaurant owner Carole Hinders told the New York Times. “Who takes your money before they prove that you’ve done anything wrong with it?”

Hinders has been serving up Mexican dishes at her eatery in Arnolds Park, Iowa, for close to 40 years, all the while depositing her earnings in a small nearby bank.

But last year, two tax agents showed up to inform her they had seized her checking account, almost $33,000, as the IRS interpreted her small deposits as an attempt to avoid triggering a required government report.

The paper explains: “Using a law designed to catch drug traffickers, racketeers and terrorists by tracking their cash, the government has gone after run-of-the-mill business owners and wage earners without so much as an allegation that they have committed serious crimes. The government can take the money without ever filing a criminal complaint, and the owners are left to prove they are innocent. Many give up.”

“They’re going after people who are really not criminals,” David Smith, a former federal prosecutor who is now a forfeiture expert and lawyer in Virginia told the Times. “They’re middle-class citizens who have never had any trouble with the law.”

Just last Thursday, in response to inquiries from the Times, the IRS said it would curtail the practice, an instead examine cases where money is believed to have been acquired illegally or seizure is deemed justified by “exceptional circumstances.”

Richard Weber, the chief of Criminal Investigation at the IRS, said, “This policy update will ensure that C.I. continues to focus our limited investigative resources on identifying and investigating violations within our jurisdiction that closely align with C.I.’s mission and key priorities.”

Weber added that making deposits under $10,000 to evade reporting requirements, known as structuring, remains a criminal offense, whether the money is from legal or illegal sources. The new policy will not apply to past seizures.

Hinders said she was unaware of the reporting requirement and she actually thought she had been doing everyone a favor.

“My mom had told me if you keep your deposits under $10,000, the bank avoids paperwork,” she said. “I didn’t actually think it had anything to do with the IRS.”

It is not a crime to deposit less than $10,000 cash in a bank, unless its purpose is to evade the reporting requirement.

“But often a mere bank statement is enough for investigators to obtain a seizure warrant,” the Times noted.

“In one Long Island case, the police submitted almost a year’s worth of daily deposits by a business, ranging from $5,550 to $9,910. The officer wrote in his warrant affidavit that based on his training and experience, the pattern ‘is consistent with structuring.’ The government seized $447,000 from the business, a cash-intensive candy and cigarette distributor that has been run by one family for 27 years.”

Critics say a law-enforcement dragnet has now been created, with more than 100 multiagency task forces scouring bank reports, just looking for accounts to seize.

“Under the Bank Secrecy Act, banks and other financial institutions must report cash deposits greater than $10,000. But since many criminals are aware of that requirement, banks also are supposed to report any suspicious transactions, including deposit patterns below $10,000,” the Times reported.

“Last year, banks filed more than 700,000 suspicious activity reports. Owners who are caught up in structuring cases often cannot afford to fight. The median amount seized by the IRS was $34,000, according to the Institute for Justice analysis, while legal costs can easily mount to $20,000 or more.”

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