Many are aware of the reporting requirement to the federal government for bank deposits of more than $10,000.00. A person who purposely tries to evade these reporting requirements is guilty of a crime known as “structuring” even if the money comes from a legal source. The IRS has had the power to use “civil forfeiture” and seize huge amounts of cash in such situations even if the individual has never been convicted of a crime. While financial crimes weaken the U.S. financial system and threaten the integrity of our tax system, enforcement of these rules via forfeiture of monies earned from a legal source has generated public outcry and received congressional attention.
As a result, the Internal Revenue Service has established a special procedure for people whose assets were involved in “legal source” structuring to request a return of their forfeited property or funds. As of June 2016, the IRS will begin mailing letters to potentially eligible property owners to participate in this initiative. Property owners who participate in this process must qualify by establishing that the underlying funds came from a legal source and there is no evidence the requesting party engaged in structuring to conceal other criminal activity.
In those “legal source” structuring cases which were “administrative” and did not involve a formal judicial proceeding, the IRS has authority in appropriate cases to remit funds directly to the affected property owner. In judicial cases, the IRS can make recommendations in appropriate cases to the Department of Justice who has final authority on any decision to be made.
By Dale F. Jensen, CPA