With the IRS, It’s Guilty until Proven Innocent
By Rep. Kristi Noem
February 20, 2015
Innocent until proven guilty: It’s the basis for legal proceedings in the U.S. – except when the IRS is involved. Under their rules, the IRS sentences first; asks questions later. It’s an unacceptable practice and something I’m committed to holding them accountable for as a member of the House Ways and Means Oversight Subcommittee.
During an Oversight Subcommittee hearing earlier this month, I heard testimony from a small-business-owning veteran. Andrew Clyde started “Clyde Armory” – a gun and ammunition retailer in Athens, Georgia – in 1991. Over the next 17 years, he grew the business from a “home business” to a storefront shop, sustaining it even through three deployments to Iraq and Afghanistan.
On April 12, 2013, he got a visit that he’ll never forget. Two federal agents stopped by his store, questioned him about his business, and notified him that nearly one million dollars had already been taken from his company’s bank account at the local credit union.
He testified: “I was never so afraid in my life, not even in combat, so much so that I trembled when they left…. I was just depositing my own hard earned and legally earned cash in the bank. How can that be a felony? I pay my taxes, I try to do everything correct.”
No one ever claimed the money was earned through illegal activities. Instead, the IRS argued Mr. Clyde had deposited the money illegally. They cited a law, which was intended to stop terrorists and drug dealers, that requires banks to report any cash transaction over $10,000 and makes it illegal for account holders to split up the deposit in order to avoid having the bank file a report.
Mr. Clyde admitted that he had a number of deposits for just under $10,000, but not because he was trying to skirt the law. Rather, he had a standard insurance policy that would only insure deposits up to $10,000.
Within a matter of days, his annual taxes were due and the next employee payroll had to be made. By the time those bills were paid, he had no more working capital left. He said he immediately had to cancel every product order he could and take out an $80,000 loan to cover regular business expenses.
It took more than three months for his case to get in front of a judge. And when he finally did, the federal government offered to settle – so long as they could keep a half-million dollars of his cash. He didn’t accept their offer. They came back later and offered to settle for just $109,000. Again, he didn’t accept because to his knowledge he did nothing wrong.
In the end, he agreed to forfeit $50,000 to settle the case. This was after he’d already spent nearly $150,000 on his legal defense.
What the IRS did here was absurd. At the hearing, IRS Commissioner John Koskinen offered an apology to any business owner who was wrongly impacted. And while that’s more than they’ve received in the past, it hardly makes up for the business they lost.
It’s hard to know where to start with this IRS. The agency’s targeting of conservative groups has made many question the agency’s political independence and whether one’s use of free speech could be held against them. Its lavish taxpayer-funded conferences have raised even more questions.
Hard working taxpayers deserve answers. What the IRS is doing – how they are conducting themselves – is ridiculous. It is completely unacceptable. They must be held accountable and I’m committed to doing that.