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IRS Seizes $35,000 From Law-Abiding Businessman Simply Because He Made Cash Deposits

Terry Dehko

Image source: Detroit Free-Press

The owner of a small grocery store in Michigan had all of the cash in his bank account seized by the IRS – simply because he had made frequent cash deposits of less than $10,000 at a local bank.

“I’ve always paid my taxes and have never been arrested or charged with any crime in my life,” Terry Dehko wrote in a Washington Times editorial. “But in January of this year, I woke up to find that my business’s entire bank account – more than $35,000— had been wrongly seized.”

Dehko, an immigrant from Iraq, owns Schott’s Market, a small grocery store in Fraser, Michigan. He didn’t realize he allegedly had done anything wrong until an IRS agent walked into his family business and told him that her agency was seizing all of his cash.

Dehko was given no chance to appeal or contest the forfeiture, and the money was simply taken from his account by the IRS using a civil forfeiture law. The grocer didn’t even have a chance to explain his situation.

When he asked the agent how he was supposed to pay his bills, the IRS agent reportedly told Dehko, “I don’t care.”

American Nightmare

“The IRS has turned my American Dream into a nightmare,” Dehko wrote. Dehko has run Schott’s Market for 35 years but he never had any trouble paying his bills until the IRS took his money. “I have never had to pay a vendor late – until that week in January.”

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Terry Dehko believes that the IRS targeted his funds for forfeiture because his employees were making frequent deposits of less than $10,000 at the bank across the street from his market. Making such deposits is not illegal unless it is done to hide cash from the IRS, and Dehko said he wasn’t trying to hide cash.

He noted that he had been making the deposits because his insurance policy doesn’t let him keep more than $10,000 in cash in his store. By following the rules, Dehko became a target for forfeiture.

The grocer who fled Saddam Hussein’s Iraq for the United States is not accepting his treatment. Dehko and his daughter have appealed the IRS’s action with the help of the Institute for Justice, a national civil rights organization. Their appeal in United States v. $35,651.11 was filed Sept. 25.

Lack of Due Process

The Institute’s description of civil forfeiture laws is frightening and disturbing. It describes a vicious system in which the federal government can literally seize any citizen’s money without first talking to the individual. Here’s how an Institute press release describes forfeiture:

“Federal civil forfeiture law features an appalling lack of due process. It empowers the government to seize private property from Americans without ever, charging let alone convicting them, of a crime. Perversely the government then pockets the proceeds while providing no prompt a to get a court to review the seizure.”

The first court date will be Dec. 4.

“We’re pleased that Terry and Sandy will finally get their day in court to challenge the seizure of their store’s entire bank account,” said Clark Neily, an attorney with the Institite for Justice. “But the fact that it took nearly a year for them to get that hearing highlights the due process problems with civil forfeiture law. No American should have to wait so long without an opportunity to challenge the seizure of their property.”

Dehko’s loss of money should be a wakeup call for all small businesspeople and self-employed people. If you operate any sort of business and you make frequent small cash deposits, you could be a target for such forfeiture by the IRS.

It sounds as if the IRS has decided to label any individual that makes frequent cash deposits a tax evader and target them for forfeiture.

This case is particularly disturbing because it indicates a pattern of punishing those who follow the rules. Had Dehko simply pocketed the cash and evaded taxes he wouldn’t have faced forfeiture. Instead, the grocer was targeted because he and his daughter, Sandy (his partner in the grocery store), tried to comply with their insurance policy and the law.

Hopefully, the courts will rule in Dehko’s favor and ban such forfeiture efforts. If the courts don’t act, perhaps Congress should pass a law banning civil forfeiture once and for all. This practice is a threat to the livelihood of all Americans.

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