IRS Apologizes for Seizing Accounts of Small Businesses

Pressured by Congress, the IRS has apologized for seizing banks accounts from otherwise law-abiding business owners simply because those owners structured bank transactions to avoid federal reporting requirements.

The alleged crime was that they routinely made bank deposits of less than $10,000. That allowed the business owners to avoid reporting requirements designed to catch drug dealers and money launderers.

Continue Reading Below

IRS Commissioner John Koskinen told Congress Wednesday that the IRS is changing policies to prevent the seizures, as long as the money came from legal means.

By law, bank transactions above $10,000 must be reported to the IRS. It's a felony to structure deposits to avoid the reporting requirement, even if the money is legally earned.

In some cases, the IRS seized and held bank accounts for years without bringing charges.