Imagine that you run a grocery store with your daughter, a store you have owned for thirty years. Imagine that just last year the IRS found no violations in an audit of your store. Now imagine that, despite continuing your sound business practices, you awake one day to find the IRS has seized your entire bank account. The IRS has used a technique called civil forfeiture against you and you find your Constitutional guarantee of innocence until proven guilty has been completely reversed. That is the nightmare that Terry Dehko and his daughter Sandy Thomas found themselves in on January 22, 2013.
Since he bought it in 1978, Terry Dehko has owned Schott’s Supermarket in Fraser, Michigan. His daughter, Sandy, began working at the store when she was 12 and now helps her father run it. The IRS has not argued before a court of law that Terry and Sandy have committed a crime, but that has not stopped it from seizing their entire bank account, worth over $35,000.
The IRS claims that Terry and Sandy violated federal anti-money laundering laws by making regular deposits of cash in amounts less than $10,000. Since banks are required to report deposits larger than $10,000 to the IRS, a firm that consistently makes deposits less than this minimum may draw the attention of the IRS.
Dehko and Thomas state that they have nothing to hide and have offered a simple explanation. Their insurance policy, aimed at small businesses like their grocery store, protects them from theft, but only up to $10,000. Since any dollar over 10,000 left in the store is liable to uninsurable theft, Terry and Sandy make sure their revenues are deposited in their bank account before accumulating above $10,000.
The IRS seized Terry’s and Sandy’s assets using a process called civil forfeiture, which is a power government bodies may use to seize property that is suspected to have been used in a crime. While the IRS has not proved in a court of law that Terry and Sandy committed fraud, it has been able to seize their assets because it suspects that they may have done so.
Worsening the situation is a lack of due process for victims of civil forfeiture. While Terry and Sandy have explained their sounds business practices since their property was seized in January, they have not been able to argue their case before a court of law. Property owners who have their assets seized do not have a clear path to a speedy trial before a judge. Instead, they are required to file a lawsuit intervening in the forfeiture case. Civil forfeiture has made the idea of “innocent until proven guilty” a complete joke.