‘It leaves you numb. I was in a
state of shock’ (Fox News) – When federal agents stormed into Lyndon McLellan’s
North Carolina convenience store last October without warning and accused him
of trying to put one over on the government, the small business owner wasn’t
sure what was happening. “They asked me if I knew what ‘structuring’ was and
then they showed me some cash deposits I made in a 24-hour period,” he told
FoxNews.com. The IRS agents apparently were suspicious because of deposits
McLellan had made of just under $10,000. Banks are required to report
transactions over $10,000; making multiple deposits of less than $10,000 to
evade that requirement is known as “structuring.” Special Headline: Guess Who’s
About To Go Bankrupt in America [Learn More] Under this pretense, enforcement
agents accused McLellan of the con and seized all $107,000 from his bank
account. “It leaves you numb,” McLellan told FoxNews.com. “I was in a state of
shock.” McLellan is one of many business owners who have been caught up in a
controversial federal practice known as civil forfeiture. Under this policy,
federal agents have been able to seize the property and bank accounts of anyone
they suspect of having criminal ties. The burden of proof falls on the owner
even if no charges are filed. What’s unique in McLellan’s case is that he’s
still battling to get his money back, despite the IRS pledging late last year
to pull back on its use of civil forfeiture — and despite even the IRS
commissioner suggesting agents erred in locking down his money. Before the
federal seizure last year, McLellan had spent more than a decade running
L&M Convenience Mart, a gas station, restaurant and convenience store in
Fairmont, N.C. In an instant, his business account was gone. And then it got worse.
Rumors quickly spread in the tiny town that McLellan’s money was frozen because
of suspected ties to drugs, fraying the good reputation he’d spent years
building in the community. “Several people thought it was drug-related but when
I told them what really happened they said, ‘How in the world can they take
your money?’ That’s the answer I’ve been waiting on too,” he said. McLellan
claims he didn’t do anything wrong. The IRS has never alleged he committed a
crime nor has the agency brought any criminal charges against him. Instead,
McLellan, 50, was verbally accused of structuring cash deposits to avoid bank
reporting requirements, under a measure originally meant to target drug
dealers, terrorists and others trying to launder money through criminal activity.
From 2005 to 2012, the IRS seized more than $242 million from alleged
structuring violations in more than 2,500 cases, according to an Institute for
Justice study. In more than 830 of those cases, no other criminal activity was
alleged. In many civil forfeiture cases, the government will make a deal with
the owner where he or she will agree to turn over half their money seized in
order to get a lengthy and costly legal fight to go away. But the practice has
come under intense congressional and media scrutiny. Under pressure, the IRS
last October said it would no longer go after structuring cases unless the
money in question could be tied to some other illegal activity. The DOJ changed
its policy in March. The problem, though, is that the new policy isn’t retroactive,
meaning McLellan might still have to pay up. “It doesn’t seem right,” he said.
“I’m 50 years old. In 13 or 14 more years, are they going to be doing the same
thing to me?” Robert Johnson, a lawyer with the Institute for Justice which
represents McLellan, told FoxNews.com that the policy changes from the IRS are
a “positive development” but says what’s needed is binding reform from
Congress. “There have been a number of cases where the IRS has continued to
apply structuring laws despite the new policy,” Johnson said, adding that his
group has recently litigated two in Michigan and one in Iowa. At a February
2015 hearing before the U.S. House of Representatives Ways and Means Oversight
Subcommittee, Rep. George Holding, R-N.C., mentioned to IRS Commissioner John
Koskinen that he had reviewed McLellan’s case — though he did not specifically
name it. “If that case exists, then it’s not following in the policy I’ve been
advised,” Koskinen testified, adding that he had “lengthy meetings with the
senior leadership” of the IRS’s criminal investigation division and was assured
that employees were trained in and advised about the new policy. But that seems
to be news to small business owners who, like McLellan, say the government
still is holding their bank balances hostage. “If I’ve done wrong, penalize me,
but you don’t have to take everything a person’s got,” said McLellan, who still
has not seen a dime of the $107,000 the government seized. When contacted, an
IRS spokesman told FoxNews.com that “federal privacy laws prohibit the IRS from
commenting on any individual taxpayer or case.”
http://www.foxnews.com/politics/2015/05/12/nc-store-owner-on-hook-for-107000-with-irs-over-structuring-laws/
http://www.teaparty.org/irs-seizes-107000-mans-structured-cash-deposits-98604/
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