Over the past four years I have seen an increasing number of reports regarding small businesses that have had banks accounts seized by one or more federal government agencies. Why? Because they deposited unequal amounts of cash.
What kinds of businesses were these? Used car dealers, small grocery stores, farmers who sold goods at farmer’s markets, gas stations, bartenders and other cash businesses.
Talk about a catch – 22, these people deposited cash to bank accounts, reported their income and paid their taxes. The government acknowledged the money was earned legitimately. So, what’s the deal?
Apparently, making unequal deposits is a sign of money laundering, cheating on taxes and other illegal activity. Mind you, it’s not illegal to earn money and deposit it, but now it is a red flag and the red flag means the agencies can automatically seize the assets. No proof required, no criminal activity required. In fact, good business practices may trigger problems.
The public interest law firm, The Institute for Justice, helped a small grocery store owner and his daughter in 2013 with this very issue. Apparently, their insurance company only covered cash losses less than $10,000. In order to meet the insurance policy guidelines and not wanting to keep too much cash on hand, the store owners deposited cash in various amounts to their bank account. That was enough for the IRS to seize the account. No charges of criminal activity were brought against them, only the fact that they made frequent deposits of less than $10,000.
The way the Bank Secrecy Act and other updated legislation is written, it behooves government agencies to seize assets, and team up to do it, since they get to keep what is seized. This is a problem for due process and general fairness. With all the risks small business owners take, this may be one risk too many. Who wants to work long hours and risk everything only to have an overzealous government agency take everything? Or threaten to take everything?
If Congress and the President are really serious about putting American back on a prosperous trajectory, they will revisit these laws and reign in the agencies that see law abiding business owners as easy pickings’.