IRS Steals Widow's Money Because Her Deposits Were Too Small
Last October, after The New York Times started asking questions about the Internal Revenue Service’s practice of taking legally earned money from innocent people based on allegations that they tried to evade bank reporting requirements, the IRS said it “will no longer pursue the seizure and forfeiture of funds associated solely with ‘legal source’ structuring cases unless there are exceptional circumstances.” A case highlighted by ABC News, involving money snatched from an Iowa widow, suggests how big that “exceptional circumstances” loophole might be.
In 2011 an IRS agent named Jeff McGuire paid a visit to Ronald Malone, an Iowa publishing executive who at the time was dying from cancer. McGuire told Malone that bank deposits he had made looked fishy: They totaled $35,000, but each was less than $10,000, the threshold for transactions that banks must report to the Treasury Department. Deliberate evasion of that requirement is a federal crime, even when the money comes from legitimate sources, as Malone’s did. McGuire explained that to Malone, who signed a form acknowledging the explanation. The IRS did not seize the money, and no charges were filed.
After Malone died, his widow, Janet, deposited another $19,000 of his savings in amounts below $10,000. This time the IRS seized the money and referred the case to the Justice Department for prosecution. The agency’s attitude: We warned you once.