When the IRS seized over $100,000 from a North Carolina small business owner, it underestimated the backlash on the civil asset forfeiture procedure. The IRS suspected the small business owner of illicit activity because of a pattern of deposits just under $10,000 based upon recommendations from a local banker.
The friends in a small North Carolina town were discussing the paperwork associated with deposits in the bank over $10,000 and the convenience store owner decided to modify his deposits to keep them under the $10,000 threshold. This aroused suspicions at the US Justice Department and the IRS who used the controversial civil asset forfeiture policy to take $107,000 from the small business man’s bank accounts. The IRS and the US Justice Department suspected him of money laundering and seized his assets.
The business man spent $3,000 for legal representation and over $19,000 in tax preparation and accounting work to respond to the IRS. While the return of the inappropriate seizure ($107k) was appropriate, what happens to the additional $22,000 invested after the fact in an attempt to prove his innocence and the inappropriate actions of the IRS?
These issues are currently being debated in Congress, and reform of the controversial civil asset forfeiture policy may shortly follow. However, the lesson here may simply be the awesome powers entrusted to the IRS and the genuine costs to taxpayers who attempt to manage their business’ financial affairs without the guidance and expertise of accounting, tax and legal professionals.
Appropriate business practices may have avoided this entire situation. If you have been contacted by the IRS regarding banking issues or in anticipation of an audit you do not want to ignore the problem. The IRS has incredible power to seize your assets and harm the viability of your business. Call us for a free consultation at 866-631-3470 today.
