If cash transactions are any part of your business - whether you run a bakery, family-owned dry cleaner, convenience store or small pet shop - you need to know what "structuring" is and understand red flags that can lead to a structuring investigation.
If you don't understand this important issue, you may not even know how it affects you until after the IRS has already seized your bank accounts and taken away your access to your hard-earned money.
This FAQ will help you understand this important issue, and show you where to get advice if you get caught up in an IRS structuring investigation.
What is 'structuring?'
Banks report to federal authorities all cash deposits above $10,000. "Structuring" is when taxpayers purposefully deposit amounts of less than $10,000 to stay under the threshold and avoid the reporting requirements. If the IRS detects a pattern in these deposits, which it is looking for as part of its broad efforts to stop money laundering by criminal organizations, it has the authority to seize assets in a checking or savings account even before securing a criminal conviction.
In essence, the IRS is trying to use structuring investigations as a tool to go after organized crime. Unfortunately, innocent business owners and their bank accounts get tied up along the way.
This can have a devastating effect on cash flow. Many small-business owners across the country have been locked in lengthy battles with the IRS to get their funds back after becoming ensnared in structuring investigations, and numerous businesses have had to close their doors as a result.
When can a legitimate business owner be accused of this crime?
The Huffington Post recently detailed the struggle of Connecticut brothers who run a bakery. Several years ago, armed IRS agents filed into the bakery, which had been in existence for nearly a century, asking questions about drug trafficking and prostitution rings. The brothers were shocked.
Hundreds of deposits ranging from $7,000 to $9,900 over a six-year period had caused red flags. At the time, they were mostly a cash business. They made frequent deposits so that their employee who was in charge of completing disclosure requirements had an easier task (because these were below the threshold), not for some nefarious purpose.
The most important thing to keep in mind during this stressful time is that it is possible to get your money back and survive an investigation. With the right guidance, you and your company can navigate through this difficult process and move forward with your business endeavors.
Has The IRS recognized that this is a problem for legitimate business owners? What steps are they taking?
The IRS recently announced that many small-business owners and individuals involved in structuring cases will have the opportunity to get their money back. This announcement was the result of two congressmen investigating the agency's seizure of assets in structuring cases. Their report found that the IRS had seized assets before allowing owners to explain why they made the deposits.
The IRS policy changed in 2014. Now, there must be evidence that structured deposits are tied directly to illegal activities before the IRS can seek an order to seize the assets. The IRS still is not required to secure a conviction before seizing the funds.
How can you get your money back?
Notices went out to individuals and businesses whose assets were seized between 2009 and 2014, the year of the policy change. If it can be shown that the deposits were from a legal source, they should get their money back.
One congressman stated in a press release that he was "glad to see the IRS finally recognize the need to return the money they stole from innocent Americans." He then commented that it took "two years, two hearings and letters from every Republican and Democratic member of the oversight subcommittee."
Despite Congressional oversight and the seemingly common sense nature of returning money to innocent taxpayers, the actual process of getting your money back can be daunting. A tax attorney who knows how to handle this process can significantly speed up the process and help you restore your cash flow/cash reserves as quickly as possible.
Do I really need a tax attorney for a structuring case? Will a 'tax resolution company' be able to help?
An accusation of structuring or even an unpaid tax bill can result in a seizure of your bank account assets. This can cause challenges in the short term and even put you out of business. With your livelihood and your business's well-being and reputation on the line, you need an experienced tax attorney to help you get through complex IRS processes as quickly as possible.
You need to know the difference between a tax resolution company and a tax attorney. The former are sprouting like weeds and offer tax relief. However, they cannot offer the services of an attorney, and they cannot offer you the confidentiality and protection of the attorney-client privilege.
How can I get help? What should I do if I'm the subject of a structuring investigation?
If you make routine cash deposits as part of your business, you should seek advice on how to avoid these issues in the first place. If you have been accused of structuring, act immediately to retain a tax attorney who can protect your rights and fight to get your money back. Contact Silver Law Group at 800-778-2741 to get a free case evaluation and learn about all of the options available to you.