IRS steals people’s life savings, illegally withholds records about seizures

IRS steals people’s life savings, illegally withholds records about seizures

The IRS stonewalled for more than six years when a non-profit law firm, the Institute for Justice, requested non-confidential information from the IRS’s forfeiture database. “Initially, the IRS wanted $750,000 in fees before it would accommodate the request—an unreasonable demand that would render the Freedom of Information Act useless for all but the wealthiest citizens,” notes an article in Reason Magazine:

Once in court, the IRS attempted a bait and switch. Rather than provide the actual data, it released a summary report that was 99 percent redacted. It then declared that it had gone above and beyond the legal requirements. The ruse worked at the district court level, but the U.S. Court of Appeals for the D.C. Circuit ruled against the agency in 2019. After a second trip to the district court, the IRS finally coughed up the full database in April 2022….

Institute for Justice client Lyndon McLellan saw the double standard firsthand when IRS agents reached into his bank account and took his life savings without warning or cause in 2014. McLellan had purchased a small convenience store on the side of the road in Fairmont, North Carolina, in 2001 and had worked for 13 years to build the business. Over time, he expanded it to include a restaurant and lunch counter.

McLellan worked long hours and rarely took vacations. More importantly, he ran an honest enterprise. Yet federal agents accused him of violating so-called structuring laws because his business frequently made bank deposits in amounts under $10,000.

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Structuring, a type of money laundering, occurs when a person divides cash for the specific purpose of evading bank reporting requirements. There is no reason to believe that McLellan ever did that, but the IRS seized more than $107,000 anyway.

“It took me 13 years to save that much money,” he says. “And it took fewer than 13 seconds for the government to take it away.”

McLellan was never charged with a crime, but the government tried to keep his money permanently using a law enforcement maneuver called civil forfeiture. This scheme does not require a conviction or arrest; vague allegations are good enough. And once the process ends, Congress allows federal agencies to keep 100 percent of the proceeds for themselves.

LU Staff

LU Staff

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