An­other IRS over­reach

Northwest Arkansas Democrat-Gazette - - EDITORIAL PAGE -

TPITTSBURGH POST-GAZETTE he In­ter­nal Rev­enue Ser­vice has seized mil­lions of dol­lars from peo­ple who came by their money legally, just be­cause of how they de­posited it in banks. That’s not the worst find­ing of a re­cent gov­ern­ment re­port on how the IRS used a struc­tur­ing law to seize money.

That law is part of a sys­tem Congress set up to catch il­le­gal en­ter­prises, such as drug gangs, by mon­i­tor­ing large cash trans­ac­tions. Banks must file re­ports on cash de­posits of more than $10,000, and it’s il­le­gal for their cus­tomers to di­vide— or “struc­ture”—de­posits in or­der to avoid trig­ger­ing that re­quire­ment. The law says peo­ple who struc­ture their de­posits can be fined and im­pris­oned and may have to for­feit their money even if they’ve com­mit­ted no other crime.

In at least 252 of the 306 cases ran­domly se­lected for study by the Trea­sury in­spec­tor gen­eral for tax ad­min­is­tra­tion, the cash ac­tu­ally did come from le­gal sources, not from crimes. Some­times, the in­spec­tor gen­eral found, the gov­ern­ment didn’t even con­sider the tar­gets’ rea­son­able ex­pla­na­tions for their de­posit­ing prac­tices. For ex­am­ple, some busi­nesses de­posit less than $10,000 at a time be­cause their in­sur­ance would not cover any more cash.

The IRS says it mended its ways in 2014 and won’t pur­sue the for­fei­ture of legally ob­tained money ex­cept in “ex­cep­tional” cases. But that shouldn’t be the IRS’ de­ci­sion. Money Amer­i­cans worked hard to earn should never be taken just be­cause of how they de­posit it. If law­mak­ers don’t want to re­peal the struc­tur­ing law al­to­gether, they should at least mod­ify it to pro­tect in­no­cent Amer­i­cans.

A struc­tur­ing law should be a tool for fight­ing money laun­der­ing, not a trap for hard­work­ing peo­ple who hap­pen to be cap­i­tal­ists.

Be­yond that, we need to be wary when pre­sump­tive gov­ern­ment rears its head. When the gov­ern­ment pre­sumes to re­de­fine per­fectly le­gal ac­tion as il­le­gal, that is Big Brotherism at its worst. And when the IRS is left to po­lice it­self, es­pe­cially af­ter an abuse like this one, it means Congress is not do­ing qual­ity over­sight.

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