How IRS can seize accounts on suspicion alone!

[phillipsjk]

Because is am in the process of trying to register a Money Service Business in Canada, specifically designed to avoid reporting requirements, I found this topic concerning enough to look into it a little more.

Apparently, Structuring is not illegal in Canada, and presumably many other countries. (That Wikipedia page mentions "parceling" is illegal in Australia). While browsing the web, I came across this damning quote:

P.S. The Supreme Court, in a majority opinion by Justice Ruth Ginsburg [Ratslaf v. U.S., 1994], admirably “interpreted the ‘willfully’ element for a currency structuring violation under 31 U.S.C. Sec. 5324 to require proof that the defendant knew the structuring was illegal. Congress responded rather promptly to the Court’s holding by dropping willfulness from the statute.” [White Collar Crime Prof, h/t Sam Bagenstos] (& welcome Prof. Bainbridge, Amy Alkon, Hans Bader readers; & see update.)

- “Structuring”: who can get away with it, and who can’t

So the US had a statute where ignorance of the law was actually a strong defense, and by decree: declared that ignorance of the law is no longer a defense. In Canada, I get the impression that structuring is not illegal, only suspicious. That is: if a reporting entity suspects structuring, they need only report all of the small transaction as one large one.

Sometimes there are legitimate business reasons for structuring. When I worked retail, I believe the store had a policy of keeping less than $10,000 in cash on hand. The purpose was to deter theft. Each cash register is supposed to have less then $250 (dropped in $100 increments (I hope this information is not too confidential)). During busy times, they would be making several deposits under $10,000 per day.

It can be argued that working and spending less than you earn (most people's paychecks will be less than $10,000) is also structuring. The Statue on structuring does not appear to be limited to cash transactions.

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[Satan666]

scary for USA people ... not for the rest of the world

every where else u just get a drone visit 

We have to pay for those drones somehow.  Janet's starting to run low on ink.

[Meuh6879]

scary for USA people ... not for the rest of the world

Eurozone have law since december 2013 to do this ... legally.

Eurozone have from decade, law to block and retrieve ticket (high speed by automated camera) from the bank account (cost of this for the client = 87 euros) without inform citizen from this if it is in vacancy (like 2 months).

Bitcoin ... can free people.
And that what it can append in short time, now.

[tvbcof]

scary for USA people ... not for the rest of the world

every where else u just get a drone visit 

We have to pay for those drones somehow.  Janet's starting to run low on ink.

The federal govt doesn't pay for stuff with taxes.  They pay for stuff with debt which can be conjured up at will.  Taxes at the federal level are mostly just a means of implementing social policy.  Specifically, re-distribution of wealth.

Public finance at the state and local levels are a whole different ballgame because these entities don't have a Federal Reserve.  They've got a poor second-cousin in raising bonds and such, but these are much less powerful since there is a higher expectation that they'll need to be paid back.  Nobody who is clued in has any expectation that the the Federal debt will be re-paid.

(My read of course.)

[traderman]

It seems cryptocurrency has arrived just at the right time!! The timing could not be better!

[Lauda]

It seems cryptocurrency has arrived just at the right time!! The timing could not be better!

Well the main problem is that most of the population either: a) doesn't care; b) is ignorant and not aware.
Crypto is the way forward. These stories become scarier and scarier.

[Meuh6879]

time overtake the old stuff.
Arthur C. Clarke.

 

http://www.brainyquote.com/quotes/authors/a/arthur_c_clarke.html

[opossum]

Because is am in the process of trying to register a Money Service Business in Canada, specifically designed to avoid reporting requirements, I found this topic concerning enough to look into it a little more.

Apparently, Structuring is not illegal in Canada, and presumably many other countries. (That Wikipedia page mentions "parceling" is illegal in Australia). While browsing the web, I came across this damning quote:

P.S. The Supreme Court, in a majority opinion by Justice Ruth Ginsburg [Ratslaf v. U.S., 1994], admirably “interpreted the ‘willfully’ element for a currency structuring violation under 31 U.S.C. Sec. 5324 to require proof that the defendant knew the structuring was illegal. Congress responded rather promptly to the Court’s holding by dropping willfulness from the statute.” [White Collar Crime Prof, h/t Sam Bagenstos] (& welcome Prof. Bainbridge, Amy Alkon, Hans Bader readers; & see update.)

- “Structuring”: who can get away with it, and who can’t

So the US had a statute where ignorance of the law was actually a strong defense, and by decree: declared that ignorance of the law is no longer a defense. In Canada, I get the impression that structuring is not illegal, only suspicious. That is: if a reporting entity suspects structuring, they need only report all of the small transaction as one large one.

Sometimes there are legitimate business reasons for structuring. When I worked retail, I believe the store had a policy of keeping less than $10,000 in cash on hand. The purpose was to deter theft. Each cash register is supposed to have less then $250 (dropped in $100 increments (I hope this information is not too confidential)). During busy times, they would be making several deposits under $10,000 per day.

It can be argued that working and spending less than you earn (most people's paychecks will be less than $10,000) is also structuring. The Statue on structuring does not appear to be limited to cash transactions.

If you make multiple deposits in one day, each under $10,000 but all with the same bank then a CTR should be filed by the bank (currency transaction report - what the 'victim' was suspected in avoiding).

It would be possible that the victim was suspected of depositing under $10,000 at multiple banks or was holding amounts in excess of $10,000 and then depositing the difference on following banking days.

[phillipsjk]

Sometimes there are legitimate business reasons for structuring. When I worked retail, I believe the store had a policy of keeping less than $10,000 in cash on hand. The purpose was to deter theft. Each cash register is supposed to have less then $250 (dropped in $100 increments (I hope this information is not too confidential)). During busy times, they would be making several deposits under $10,000 per day.

If you make multiple deposits in one day, each under $10,000 but all with the same bank then a CTR should be filed by the bank (currency transaction report - what the 'victim' was suspected in avoiding).

It would be possible that the victim was suspected of depositing under $10,000 at multiple banks or was holding amounts in excess of $10,000 and then depositing the difference on following banking days.

For any month other than December, the deposits would be less than $10,000/day. AFAIK, the farmer mentioned was only accused of limiting deposits to under $10,000 (to avoid paper-work), not doing anything silly with multiple branches or consecutive bank days.

[TonyT]

Because is am in the process of trying to register a Money Service Business in Canada, specifically designed to avoid reporting requirements, I found this topic concerning enough to look into it a little more.
 

You are correct about penalties for structuring, but a reader of this thread, unless they remembered your opening sentence above, might think that structuring applies to retail individuals.  It does not, it applies only to banks and other such financial institutions and the people that run them.  So if you are a US bank teller and fail to report on your customers, or even discuss this rule with your customers, you can run afoul of structuring laws.  (http://en.wikipedia.org/wiki/Bank_Secrecy_Act#Sanctions)   But customers don't have any liability other than they must report all transactions greater than 10K overseas, as I am painfully aware, every year.

Good luck with your business.  Moving money these days is so tough, I think it hurts commerce.

[kolloh]

It is pretty scary that the government can just seize your money like this which could cause a world of issues for the owners.

[phillipsjk]

Because is am in the process of trying to register a Money Service Business in Canada, specifically designed to avoid reporting requirements, I found this topic concerning enough to look into it a little more.
 

You are correct about penalties for structuring, but a reader of this thread, unless they remembered your opening sentence above, might think that structuring applies to retail individuals.  It does not, it applies only to banks and other such financial institutions and the people that run them.

Reporting requirements apply to financial institutions, while "structuring" applies to customers. As I understand it, "Structuring" is the act of making deposits designed to avoid reporting requirements. BTW the "paperwork" claim was mentioned here. It appears I may have miss-read it:

On the other hand, according to Smith’s summary of the federal complaint yesterday, Sowers is said to have told federal investigators during a February 29 interview “that ‘during the farmers’ market “season,” his weekly cash receipts were on the order of $12,000 to $14,000,’ yet ‘he kept his cash deposits under $10,000 intentionally so as not to “throw up red flags.”‘ He also told the agents that ‘he was advised by a teller at the bank that the deposit of more than $10,000 in cash would lead to the filing of a form, and that he decided from that point forward not to make deposits in excess of $10,000,’ according to the complaint.”

I interpreted that to mean the bank wanted him to file a form explaining where the money came from (since disclosing a FinCEN filing is largely illegal (I am more familiar with the Canadian rules: only illegal* if it is likely to impede an investigation).)

I don't recall going into the specific penalties.

*I am not a lawyer. I found something in one of the laws or regulations that may make it illegal to disclose anyway (something to do with privacy Act exemptions), but did not have time to thoroughly parse it. (Should have noted the section in question )

[theskillzdatklls]

at the end of the day i never know if keeping most of my wealth in btc is actually safer or less safe than fiat/bank. the govt is a pretty scary entity.

[Oscilson]

I find it extremely disturbing that Google and many other giant corps still pay tinniest tax (some even 1% of income) yet ordinary ppl got their live saving taken away.

Is this what we called Democracy?

The way Google and other giants to pay tax is permitted by the laws in many countries. You have to change law to prevent that.

[The00Dustin]

Because is am in the process of trying to register a Money Service Business in Canada, specifically designed to avoid reporting requirements, I found this topic concerning enough to look into it a little more.
 

You are correct about penalties for structuring, but a reader of this thread, unless they remembered your opening sentence above, might think that structuring applies to retail individuals.  It does not, it applies only to banks and other such financial institutions and the people that run them.  So if you are a US bank teller and fail to report on your customers, or even discuss this rule with your customers, you can run afoul of structuring laws.  (http://en.wikipedia.org/wiki/Bank_Secrecy_Act#Sanctions)   But customers don't have any liability other than they must report all transactions greater than 10K overseas, as I am painfully aware, every year.

Good luck with your business.  Moving money these days is so tough, I think it hurts commerce.

The following headline is media extremisim, but the quoted article says you are wrong about structuring:
IRS seizes woman's entire savings because she deposits less than $10,000 at a time

An Iowa woman named Carole Hinders saw her bank balance go from $33,000 to zero thanks to IRS confiscation. Hinders, who owns a small, cash-only Mexican restaurant, has not been charged with any crime and is not suspected of tax fraud. The IRS says they took her money solely because she deposited too little of it at a time, and the agency claims she did so to avoid the required reporting of any bank transaction over $10,000. She says she just thought it was helpful to save the bank paperwork.

Though the $10,000 rule is ostensibly designed to help catch terrorists and drug dealers, it is far more often used on regular citizens who are unlikely to ever see their money returned. "I don't think [the IRS is] really interested in anything," said a lawyer representing another seizure case. "They just want the money."
To keep her restaurant afloat following the confiscation of her savings, Hinders has had to take out a second mortgage and max out her credit cards. "How can this happen?" she asks. "Who takes your money before they prove that you've done anything wrong with it?"
 - - Bonnie Kristian

That having been said, to be clear, I saw phillipsjk's on topic post that responded to the same post above just a few posts back, but it looked difficult to quote with a follow-up response without potentially taking something out of context.

[rockyrotcoin]

I know a man that was a victim of the IRS. I think the story is he wrote the bank account number wrong. His entire retirement money gone.

[funtotry]

On the other hand, according to Smith’s summary of the federal complaint yesterday, Sowers is said to have told federal investigators during a February 29 interview “that ‘during the farmers’ market “season,” his weekly cash receipts were on the order of $12,000 to $14,000,’ yet ‘he kept his cash deposits under $10,000 intentionally so as not to “throw up red flags.”‘ He also told the agents that ‘he was advised by a teller at the bank that the deposit of more than $10,000 in cash would lead to the filing of a form, and that he decided from that point forward not to make deposits in excess of $10,000,’ according to the complaint.”

I interpreted that to mean the bank wanted him to file a form explaining where the money came from (since disclosing a FinCEN filing is largely illegal (I am more familiar with the Canadian rules: only illegal* if it is likely to impede an investigation).)

I don't recall going into the specific penalties.

*I am not a lawyer. I found something in one of the laws or regulations that may make it illegal to disclose anyway (something to do with privacy Act exemptions), but did not have time to thoroughly parse it. (Should have noted the section in question )

It is not a problem to disclose to a customer that you are filing a CTR (currency transaction report) or a similar form for amounts greater then $3,000 but less then $10,000 (that is also required to be filed) as it is very clear cut that this needs to be submitted to the government as the criteria is only that transaction amounts exceed certain amounts.

It is not okay to disclose that a SAR (suspicious activity report) will be filed. This is filed when (I bet you can't guess) a bank sees some kind of suspicious activity from one of it's customers. Examples of why a SAR would be submitted is when a bank thinks that a customer is trying to structure their deposits so they do not transact in amounts greater then $10,000 in a single day, or that a customer is trying to use questionable identification documents to open an account.

[bornil267645]

Why should IRS are the only organization to have this kind of authority. Why cant we, the bitcoin community make our own lawsuit to fight against government.

[traderman]

Yep, crypto is gonna change the way things are done for sure! The times are changin!

Why should IRS are the only organization to have this kind of authority. Why cant we, the bitcoin community make our own lawsuit to fight against government.

[Aswan]

Why should IRS are the only organization to have this kind of authority. Why cant we, the bitcoin community make our own lawsuit to fight against government.

Because we don't rob people by force.