IRS Seizes Every Penny of Man's Savings

May 15, 2015

 

 

 

 

Lyndon McLellan has owned a small convenience store in rural North Carolina for the past 13 years. His store, L&M Convenience Mart, is his life. He works seven days a week, 12 to 13 hours a day as a small business owner selling hot dogs and soft drinks.

 

Over the course of the last 13 years of owning the store, he managed to save $107,000. The $107,000 is every penny he’s worked so hard for. Spread out over 13 years, that’s about $8,200 a year he’s managed to put away in the bank, a bank he thought his money was safe in. Whenever he thought there was enough money to make a deposit, or too much money to leave in the store, he’d go to his bank and make a deposit. Because he had a small convenience store, the deposits he made were cash deposits.

 

Last week, he found the IRS had taken every last penny of his $107,000. The IRS seized all his life’s work - without any kind of notice or forewarning. Lyndon has not been charged with any kind of crime, yet the IRS swooped down and seized all his money. Lyndon’s money was seized because his business is a cash business and his deposits were under $10,000.

 

Under the law, if you deposit more than $10,000 in cash, your bank has to file a form with authorities reporting that transaction.  The IRS exercised their right to go after businesses and persons who make deposits less than $10,000. Under this controversial “civil asset forfeiture” rule, the IRS has assumed Lyndon was deliberately making deposits under $10,000 to avoid the reporting requirements, known as “structuring deposits”.

 

Although last October the IRS announced they were changing its civil forfeiture policy, that didn’t stop the IRS from going after people like Lyndon. The IRS prosecutor, Steve West wrote to Lyndon’s attorney “Your client needs to resolve this or litigate it”.

 

There are legitimate reasons businesses have for keeping their deposits under $10,000. Small businesses such as Lyndon’s don’t take in large amounts of cash. Some companies make deposits under $10,000 because most insurance companies only cover cash losses up to $10,000.

 

Lyndon was clearly making deposits of what he was earning, as he was earning it. The IRS has placed the burden of proof on Lyndon. Lyndon has to prove to the IRS he didn’t “structure” his deposits so they were under the $10,000.   It took years for Lyndon to accumulate his nest egg - the nest egg the IRS took away.

 

IRS Prosecutor Steve West said the publicity about this seizure wouldn’t help Lyndon’s case and concluded the IRS would, however, settle this case by keeping half of the $107,000! The IRS would keep $53,500 of Lyndon’s hard-earned money if Lyndon, who has never been charged with any kind of crime would just go away and not argue or litigate the seizure of the money he worked thousands of hours for. How generous.

 

If you need legal assistane regarding IRS tax seizures, or other tax issue, contact our tax lawyers in Denver at 303-618-2122, or visit our website for more information on our tax law practice areas

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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