IRS Seizes Assets of Legimate Business Owners without Judicial Review

 

Sen. Charles E. Grassley, R-Iowa, has expressed concerns about media reports of the IRS’s practice of prematurely seizing assets using civil asset forfeiture laws without suspicion of a crime. The Service indicated it would focus instead on areas where the funds are believed to have been acquired illegally or seizure is deemed justified by "exceptional circumstances." Grassley, ranking member of the Senate Judiciary Committee, acknowledged that, while the IRS plays a role in fighting money laundering and other criminal activity, "it has to treat business owners fairly."
 
Richard Weber, chief, IRS Criminal Investigation (IRS CI), said that, after a thorough review of the IRS’s structuring cases over the last year, "and in order to provide consistency throughout the country (between our Field Offices and the U.S. Attorney Offices) regarding our policies, IRS CI will no longer pursue the seizure and forfeiture of funds associated solely with "legal source" structuring cases unless there are exceptional circumstances justifying the seizure and forfeiture and the case has been approved at the director of Field Operations (DFO) level."
 
Weber said that, while the act of structuring, whether the funds are from a legal or illegal source, is against the law, "IRS CI special agents will use this act as an indicator that further illegal activity may be occurring." The policy update is intended to ensure that the CI continues to focus its limited investigative resources on identifying and investigating violations within its jurisdiction that closely align with CI’s mission and key priorities. "The policy involving seizure and forfeiture in "illegal source" structuring cases will remain the same," he said.
 
"When I hear about legitimate business owners’ having their money seized without judicial review, it reminds me of the taxpayer abuses that led Congress to create taxpayer bill of rights laws and the IRS restructuring commission," said Grassley in a statement. "If the pendulum has swung too far in favor of the government and against fairness for innocent people, then it’s time to reform civil asset forfeiture laws and procedures. I plan to look into the government’s use of civil forfeiture laws, including the IRS’ use, and develop potential reforms where necessary."
 
According to an IRS spokesperson, structuring is a felony under title 31 of the Bank Secrecy Act and the federal statute authorizes all law enforcement agencies to seize and forfeit—both criminally and civilly—money and property connected to the structuring activities. Seizure affidavits are reviewed by the U.S Attorney’s Office and then signed by an independent federal judge who determines that there is probable cause that the money is subject to forfeiture. Many times, the seizure of these assets will also lead to evidence of other financial crimes that were not present at the onset of the investigation.

IRS Seizes Assets of Legimate Business Owners without Judicial Review

 

Sen. Charles E. Grassley, R-Iowa, has expressed concerns about media reports of the IRS’s practice of prematurely seizing assets using civil asset forfeiture laws without suspicion of a crime. The Service indicated it would focus instead on areas where the funds are believed to have been acquired illegally or seizure is deemed justified by "exceptional circumstances." Grassley, ranking member of the Senate Judiciary Committee, acknowledged that, while the IRS plays a role in fighting money laundering and other criminal activity, "it has to treat business owners fairly."
 
Richard Weber, chief, IRS Criminal Investigation (IRS CI), said that, after a thorough review of the IRS’s structuring cases over the last year, "and in order to provide consistency throughout the country (between our Field Offices and the U.S. Attorney Offices) regarding our policies, IRS CI will no longer pursue the seizure and forfeiture of funds associated solely with "legal source" structuring cases unless there are exceptional circumstances justifying the seizure and forfeiture and the case has been approved at the director of Field Operations (DFO) level."
 
Weber said that, while the act of structuring, whether the funds are from a legal or illegal source, is against the law, "IRS CI special agents will use this act as an indicator that further illegal activity may be occurring." The policy update is intended to ensure that the CI continues to focus its limited investigative resources on identifying and investigating violations within its jurisdiction that closely align with CI’s mission and key priorities. "The policy involving seizure and forfeiture in "illegal source" structuring cases will remain the same," he said.
 
"When I hear about legitimate business owners’ having their money seized without judicial review, it reminds me of the taxpayer abuses that led Congress to create taxpayer bill of rights laws and the IRS restructuring commission," said Grassley in a statement. "If the pendulum has swung too far in favor of the government and against fairness for innocent people, then it’s time to reform civil asset forfeiture laws and procedures. I plan to look into the government’s use of civil forfeiture laws, including the IRS’ use, and develop potential reforms where necessary."
 
According to an IRS spokesperson, structuring is a felony under title 31 of the Bank Secrecy Act and the federal statute authorizes all law enforcement agencies to seize and forfeit—both criminally and civilly—money and property connected to the structuring activities. Seizure affidavits are reviewed by the U.S Attorney’s Office and then signed by an independent federal judge who determines that there is probable cause that the money is subject to forfeiture. Many times, the seizure of these assets will also lead to evidence of other financial crimes that were not present at the onset of the investigation.

"The Situation" Pleads "Not Guilty"

For those of you looking for an update on our prior post, Mike Sorrentino, star of reality show "The Jersey Shore," pleaded not guilty to all counts in a District Court in New Jersey earlier this week, on October 25.   He was released on a $250,000 bond.

The government has charged Mike Sorrentino and his brother with conspiracy to evade taxes.  In addition to allegedly filing false personal returns, Michael Sorrentino is alleged to have failed to file a return for 2011, when he allegedly received almost $2 million in income.

Daniel W. Layton, the author of this post*, is of counsel with the Wilson Tax Law Group.

*This post was previously posted on Daniel W. Layton's Tax-Attorney-OC blog and is reposted here with permission.

"The Situation" Pleads "Not Guilty"

For those of you looking for an update on our prior post, Mike Sorrentino, star of reality show "The Jersey Shore," pleaded not guilty to all counts in a District Court in New Jersey earlier this week, on October 25.   He was released on a $250,000 bond.

The government has charged Mike Sorrentino and his brother with conspiracy to evade taxes.  In addition to allegedly filing false personal returns, Michael Sorrentino is alleged to have failed to file a return for 2011, when he allegedly received almost $2 million in income.

Daniel W. Layton, the author of this post*, is of counsel with the Wilson Tax Law Group.

*This post was previously posted on Daniel W. Layton's Tax-Attorney-OC blog and is reposted here with permission.

“Jersey Shore’s” Mike ‘The Situation’ Sorrentino Indicted on Charges of Federal Tax Evasion. Pleads Not Guilty

For all those Jersey Shore fans, television personality Michael 'The Situation' Sorrentino and his brother Marc Sorrentino appeared in federal court in Newark to face an indictment alleging they did not properly pay taxes on $8.9 million in income 'The Situation' received from promotional activities, the U.S. Attorney announced. 'The Situation' and his brother, Marc, have been charged with one count of conspiracy to defraud the United States. Marc and 'The Situation' also are charged with three and two counts, respectively, of filing false tax returns for 2010 through 2012. 'The Situation' faces an additional count for allegedly failing to file a tax return for 2011, despite earning $1,995,757 that year.

According to the indictment, Michael and Marc Sorrentino filed false tax returns that incorrectly reported millions made from promotions and appearances,” said U.S. Attorney Paul J. Fishman. The brothers allegedly also claimed costly clothes and high-end cars and personal grooming as business expenses and allegedly funneled company money into personal accounts. As part of the conspiracy, the indictment alleges the brothers submitted or caused to be submitted to the IRS false documents which understated the gross receipts received by the brothers and their two companies. I suppose the IRS just does not watch enough reality TV and just doesn't understand 'The Situation' literally. Doesn't his reality TV personality require that he have high-end vehicles, silver chains and a waxed stomach at all times? Come on people.

At any rate, the conspiracy count carries a maximum potential penalty of five years in prison and a $250,000 fine; the filing false tax return counts each carry a maximum potential penalty of three years in prison and a $250,000 fine. The count charging 'The Situation' with failing to file a tax return carries a maximum potential penalty of one year in prison and a $100,000 fine.

Contact the Wilson Tax Law Group, if you should ever need assistance in a criminal tax matter at 714-463-4430. This is what we do.

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