Rethinking “structuring”

The tactic of breaking up financial transactions in an effort to evade certain reporting requirements, including the $10,000 CTR threshold, is back under the spotlight. Late last week, after a lengthy legal battle, the IRS returned the $150,000 life savings of a North Carolina convenience store owner. The owner had been making withdrawals of less than $10,000 on a regular basis. While he was never accused of nor tried for any crime, his funds were seized by the IRS due to alleged structuring activities. Recent cases highlight that such rules, originally designed to target criminals such as drug dealers, have had the unintended consequence of ensnaring small business owners who operate legitimate cash-based businesses.

The winds of change appear to be shifting. In October 2014, the IRS began restricting asset forfeiture to cases in which the subject was believed to be involved in criminal activity. In March 2015, the DOJ followed suit, limiting its asset forfeiture efforts to the “most serious illegal banking transactions.” At the state level, asset forfeiture reform continues to be a hot topic. In fact, several state legislatures are currently debating reform bills.