DEHKO: Bullied by the IRS

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I’ve always paid my taxes and have never been arrested or charged with any crime in my life. I am a successful small-business man. But in January of this year, I woke up to find that my business’ entire bank account — more than $35,000 — had been wrongly seized.

Later that same day, I was writing checks to my vendors. A federal agent strolls in. She tells me my hard-earned cash was taken by the Internal Revenue Service (IRS). I was shocked. I’ve broken no law, committed no crime and was never warned my store could be in trouble. I asked her how I can keep managing my business when my account has been seized. She responded, “I don’t care.”

How could this happen in America? To fight this injustice, I am filing a lawsuit in federal court.

I own Schott’s Market, a grocery store in Fraser, Mich. In 1970, I left Iraq for the United States so I could practice my Christian faith free from persecution and truly live the American Dream. I started a family, became an American citizen, and, eight years after coming here, I bought my market. For 35 years, I’ve run Schott’s with the help of my children and created dozens of jobs in our community. To this day, I still work seven days a week to provide for my family.

The IRS has turned my American Dream into a nightmare. With my $35,000 unjustly taken, cash flow is now very tight. In the three decades I’ve run my shop, I have never had to pay a vendor late — until that week in January. My daughter and I are doing everything we can to make sure our workers get paid and Schott’s stays afloat. I have been forced to dip into my own personal accounts to preserve my business.

The government falsely accused me of violating federal banking laws by making frequent cash deposits of less than $10,000. It is illegal to make deposits of less than $10,000 in cash if you are doing it to avoid regulations that require the banks to report larger deposits to the IRS. It’s not against the law, though, to make smaller deposits when there is a legitimate, legal business reason. That is exactly what I have been doing.

My clerks routinely deposited cash earned at Schott’s at a bank right across the street. It’s never a good idea to risk letting too much money accumulate on-site. Like many other small businesses, my store’s insurance policy specifically limits coverage for cash losses to $10,000.

The government would have learned that if it asked me, but it didn’t.

Just last year, we were audited by the IRS to make sure we complied with “anti-money-laundering” laws. The IRS gave us a clean bill of health. Our store has been making deposits this way for decades, and the IRS looked through our books during the audit. Yet no one said anything to me about violating any law. The IRS even sent me a letter about their audit saying, “No violations were identified.” Without any warning, officials just cleaned out my bank account.

Remarkably, the government doesn’t even have to charge me with any wrongdoing to keep my money. Many people know about criminal forfeiture, which allows police to seize the ill-gotten gains of convicted criminals. In my case, the government used civil forfeiture, which lets the government take money from people who have never been charged with any crime.

Adding insult to injury, federal civil forfeiture law does not even grant me a hearing before or soon after they snatched my account. They’ve had my money for 10 months. I’ve been forced to spend thousands of dollars on lawyers just to get a hearing before a judge. Even more bizarre, under civil forfeiture, the government’s case is not against me, but against my property. This is why the official case has the ridiculous name, United States of America v. $35,651.11 in U.S. Currency. This is not just absurd; it’s unconstitutional.

That is why I joined with the Institute for Justice, a public-interest law firm that defends property rights nationwide, to sue the government in federal court. I have done nothing wrong. I am a law-abiding American citizen who wants the IRS to respect the Constitution. The government should not use civil forfeiture to take property from people like me who have committed no crime.

We are fighting not just for my business, but for all Americans who could fall victim to civil forfeiture.

Terry Dehko is the owner of Schott’s Supermarket and is a client of the Institute for Justice.

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