In 2011, the IRS destroyed Oh Suk Kwon’s life. Kwon, a South Korean immigrant and U.S. Army veteran, and his wife had purchased a gas station in Maryland and were trying to carve out a good life for themselves.
Then the IRS showed up on the Kwons’ doorstep and seized $59,000 from them. The ensuing investigation ruined their gas station, and the Kwons moved out of their home in embarrassment after the IRS interviewed their neighbors. Kwon’s wife died during the process, and he blames her death partly on the stress of the investigation.
The agency never found any evidence of criminal activity, but they’re still refusing to give the money back.
They never should have taken it in the first place.
Renegade Investigators With No Results
Under federal law, banks must report deposits of more than $10,000. The reporting requirements mean the hassle of paperwork small business owners don’t have the time to fill out. So banks often advise owners of small, cash-heavy businesses (like Kwon’s gas station) to make deposits under the $10,000 limit.
Kwon followed their advice, and that’s what caught the IRS’s attention. The agency looks into repeated deposits under $10,000 in hopes of catching criminals trying to stash ill-gotten gains without alerting the feds.
Structuring laws were designed to nab money launderers working for drug rings and thieves. But the IRS’s anti-structuring investigations were less Batman bringing down organized crime in Gotham and more Barney Fife ineptly rounding up law-abiding citizens in Mayberry.
A report from the Treasury Inspector General for Tax Administration released earlier this year highlights just how pointless these investigations were. In more than 90 percent of the cases the inspector general reviewed, the money was totally legal.
The report also found the IRS had a bad habit of ignoring pesky things like constitutional rights and agency policies. Investigators didn’t go by the book, they played by their own set of rules—and they didn’t get an epic criminal takedown.
What they did get was more than $17 million, seized from innocent business owners like Kwon.
Busting Dairy Farmers and Gas Station Owners
The IRS swooped into Maryland in 2011 and harassed dozens of small businesses, from family farms to Kwon’s gas station. The agency confiscated tens of thousands of dollars from companies—often the entire operating budget—all because the owners were operating in a way businesses typically operate.
Seizing a business’s cash doesn’t just steal hard-earned money from law-abiding entrepreneurs just trying to make a living, it destroys their business. With no cash flow, many of them were in danger of shutting down, like the Kwons had to.
Gone, but Still Hurting
In 2014, the IRS finally put a stop to this harmful, abusive practice. But despite changing their policies, the agency is reluctant to pay back the law-abiding citizens whose lives they ruined.
After a year of paperwork and waiting, a few business owners got their money back. Yet, the IRS still has not repaid Kwon.
Kwon pleaded guilty to structuring during the initial investigation—after all, he had technically intentionally made deposits less than $10,000. But his only crime was avoiding paperwork. He paid taxes on the income, and it was all legally obtained.
The IRS sees it differently. They refused Kwon’s last request, but he and his lawyer say they will continue to fight.
The IRS targeted Kwon’s business and destroyed his life looking for crimes that didn’t happen. They should return his money. It’s the least they can do.
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