Small Business Owner Sues IRS for Seizing Bank Account Without Evidence of Crime

Katherine Rodriguez | October 27, 2014 | 4:48pm EDT
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Imagine this: You open a local restaurant in a small town that only accepts cash.  You grow a tight-knit base of customers and your business is supported by regulars for years.

After years of being a law-abiding business, the government suddenly decides to seize your bank account.

Sadly, this is what happened to Carole Hinders' restaurant when the federal government seized her bank account worth $33,000.

Now, she's filing a lawsuit in federal court.

The Institute of Justice (IJ), a non-profit, public interest law firm that seeks to advance the rule of law, reports that the federal government used a little-known regulation called "civil forfeiture."

Civil forfeiture, IJ says, is a procedure that allows the federal government to seize property based on the suspicion of a crime.

According to the Bank Secrecy Act of 1970, financial institutions are required by law to report any transactions made exceeding $10,000 or any transactions that might be a result of criminal activity.

Hinders claims that each of her deposits were less than $10,000, even after she made multiple trips to the bank to avoid having too much money at her restaurant.

The government, on the other hand, claims that Carole made her deposits in a way that went around these reporting requirements.

IRS Chief of Criminal Investigations Richard Weber released a statement Thursday saying it would stop the practice - in the future - unless money is acquired "illegally or under exceptional circumstances."

Even though Weber says the IRS won't seize funds in these types of cases in the future, Hinders' lawyers are still have to go to court to get their client's money back.

Shira Rawlinson, a spokeswoman for IJ told MRCTV in an exclusive interview that because the case was filed within the past few weeks, "It's far from over."

"No damages are involved, we just want the money returned to Carol," Rawlinson said.

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