The road to Hell is paved with good intentions. Oftentimes people will discuss the intent of a law versus the letter of a law. This discussion usually happens when it comes to light that a law that was passed with good intentions ends up being abused by enforcers following the letter.
In an effort to thwart tax evaders (which qualifies as good intentions to statists although I’m not sure why), a law was passed that required individuals and businesses to report all bank deposits greater than $10,000. It’s a little known law, which means many small business have been running afoul with it. Since the intention of the law was to catch tax evaders you would think that these accidental violations would result in little more than a notice being sent to the offending businesses alerting them of the law’s existence so they wouldn’t violate it in the future. But the Internal Revenue Service (IRS), not surprisingly, has been following the letter of the law, not the intent:
While structuring is technically a crime, it’s something of a secondary one. The reporting requirements were enacted to detect serious criminal activity, such as drug dealing and terrorism. They “were not put in place just so that the Government could enforce the reporting requirements,” as the IG’s report puts it.
But according to the report, that’s exactly what happened at the IRS in recent years. The IRS pursued hundreds of cases from 2012 to 2015 on suspicion of structuring, but with no indications of connections to any criminal activity. Simply depositing cash in sums of less than $10,000 was all that it took to arouse agents’ suspicions, leading to the eventual seizure and forfeiture of millions of dollars in cash from people not otherwise suspected of criminal activity.
The IG took a random sample of 278 IRS forfeiture actions in cases where structuring was the primary basis for seizure. The report found that in 91 percent of those cases, the individuals and business had obtained their money legally.
Structuring is the crime of breaking up bank deposits over $10,000 into multiple deposits under $10,000. That’s right, breaking up larger deposits is a crime in the United States because of the “good intentions” of a few politicians.
But the IRS doesn’t care what the intention of the law was, it only cares about the letter of the law. Instead of using the Bank Secrecy Act to pursue individuals and organizations trying to conceal illegal activities by breaking up larger bank deposits, the IRS has been pursuing individuals and organizations who have been performing perfectly legal activities. By doing this the IRS has managed to seize millions of dollars from innocent people.
Is there any reason why the IRS is despised by basically everybody? Is there any reason why libertarians flip out whenever a seemingly innocent law is passed?
I doubt the IRS will suffer any punishment for this since it was technically doing its job by enforcing the law. But this story should serve as a warning to people who often let the intention of a law cloud their judgement. When it comes to enforcement the intention of a law doesn’t matter, only the letter.