IRS apologizes after seizures hammer small businesses
Top IRS officials, under intense pressure from Congress, apologized on Wednesday to small business owners for seizing their bank accounts after they structured bank deposits that just barely avoided federal reporting requirements.
The seizures, actions that are usually aimed at stopping drug dealers from moving large amounts of cash out of the country, cost the business owners tens of thousands of dollars to undo.
“To anyone who is not treated fairly under the code, I apologize,” IRS Commissioner John Koskinen told a congressional panel.
The tax agency said it is changing its policy so that businesses that obtain their money legally would not have their accounts seized.
One person hurt by the seizure is Andrew Clyde, a Georgia gun shop owner, who told the House subcommittee he regularly made deposits at just less than $10,000 because that was the limit covered by his insurance policy.
By law, bank deposits and withdrawals over $10,000 must be reported to the IRS. It’s a felony to “structure” transactions to avoid that law.
Clyde, who owns the Clyde Armory gun shop in Athens, Ga., admitted to making more than 100 just-under-$10,000 bank transactions over 10 months — but said he did so because of the insurance policy.
In April 2013, Clyde, a former Marine, was approached by two IRS agents, he testified. The agents told him his account had been seized.
Clyde, who completed three tours in Iraq, testified that he “was never so afraid in my life.”
Then, without formally accusing the store owner of evading taxes or illegal activity, the IRS sued the business owner.
Three days before his trial was scheduled to begin, Clyde settled. He was forced to forfeit $50,000 and his legal bills swelled to $150,000.
Rep. Peter Roskam (R-Ill.), chair of the subcommittee, called Clyde’s case no isolated incident.
Structuring is “catching a lot of innocent people — a Mexican restaurant, a gas station, a dairy farmer,” he said in his opening statement.
“Many people can’t afford a long, drawn-out fight, so they settle, handing over thousands of fairly earned dollars to the IRS — all without having done anything wrong,” Roskam said.
The IRS seized 147 accounts last year, Koskinen testified.
Randy Sowers, a Maryland farmer, was also victimized by the IRS.
Sowers said he and his wife split a $12,000 deposit — proceeds from a festival — into two parts at the suggestion of a bank teller. That triggered an IRS seizure of his account containing $62,000.
Sowers was forced to pay $30,000 to get the seizure lifted, he said.
At Clyde’s gun shop on Wednesday, employees were not so certain the IRS nightmare had passed.
“We’re not convinced yet,” said Bret Jamieson, the shop’s head of law-enforcement sales. “It’s still sinking in.”
With Post Wires