An inspector general’s report shows that the Internal Revenue Service seized the bank accounts of innocent taxpayers who weren’t engaged in any criminal activity.
The IRS had the legal right “to disrupt and dismantle criminal enterprises,” by seizing funds in bank accounts. But the IG found more than 90% of actions taken against taxpayers who were supposedly involved in organized criminal activity were erroneously taken.
“Most people impacted by the program did not appear to be criminal enterprises engaged in other alleged illegal activity,” a TIGTA statement said. “The report also concludes that the rights of some individuals and businesses were compromised in these investigations.”
“When property owners were interviewed after the seizure, agents did not always identify themselves properly, did not explain the purpose of the interviews, did not advise property owners of any rights they might have, and told property owners they had committed a crime at the conclusion of the interviews,” the statement continued.
The money was seized for violations under the Bank Secrecy Act, which requires banks to report transactions greater than $10,000. This can be avoided by illegally splitting deposits into smaller amounts.
But IRS agents often didn’t investigate if the transactions were legal or if business owners had reasonable explanations until after the money was seized.
“In most instances, interviews with the property owners were conducted after the seizure to determine the reason for the pattern of banking transactions and if the property owner had knowledge of the banking law and had intent to structure,” the report said.
Business owners still violated the law if they avoided reporting large deposits, intentionally or not, even if it wasn’t to conceal illegal activity. But the law was created to catch criminals and was “not put in place just so that the government could enforce the reporting requirements,” the report said.
The IRS actions turn the concept of mens rea on its head. That concept defines criminal activity only if it is intentional. Ignorance of the law is indeed, an excuse, as is the notion that unintentional criminal activity is not prosecutable.
But many federal agencies refuse to acknowledge mens rea and prosecute innocent people anyway.