The IRS began notifying impacted taxpayers of special procedures permitting the return of seized assets. To be eligible for a return of the assets, taxpayers must show that the underlying funds came from a legal source.
Under the IRS’s former forfeiture procedures, the agency could seize funds from taxpayers allegedly structuring bank transactions, regardless of the intent or source of the funds. Structuring, as used in the Bank Secrecy Act, is identified as a series of transactions that individually total less than $10,000 that are made specifically for the purpose of avoiding reporting requirements for deposits amounting to $10,000 or more.
In May, IRS Commissioner John Koskinen told Congress that the agency would no longer pursue the seizure and forfeiture of funds associated solely with so-called legal source structuring cases barring the existence of exceptional circumstances to justify the seizure and forfeiture. The IRS is notifying taxpayers who may have an interest in assets that were forfeited because they were involved in structuring violations before the change outlined in May. In seeking a return of funds or property seized and forfeited, property owners must establish that the underlying funds came from a legal source and that they did not engage in structuring to conceal criminal activity.