No Smurfing Allowed
You won’t see this kind of sign displayed in any bank or financial institution. You may be smurfing without knowing it or even knowing what it is but smurfing is something to become aware of and avoid at all costs. “Smurfing” or “structuring” involves a series of cash deposits made in one day or a short period of time in which the individual deposits are less than $10,000 but add up to $10,000 or more. Pursuant to the Bank Secrecy Act of 1970, financial institutions are required to report “smurfing” and/or “structuring” banking activity to the U.S. Government by preparing and submitting specific forms. The act also requires financial institutions to cooperate with the U.S. Government by flagging accounts reflecting this type of activity.
Under Chapter 31 United States Code, Section 5324, if a person’s “transaction could have been conducted as a single transaction and that person took actions to break it up to avoid a currency transaction report,” he or she is considered to be in violation of the law. According to the Bank Secrecy Act of 1970, “any person or persons, who receive more than $10,000 in one transaction or a series of related transactions, while conducting their trade or business, must file a Form 8300.”
Smurfing is Illegal and Could Subject You to IRS Civil Asset Forfeiture.
A one-time occurrence isn’t going to raise any red flags. If you break up your cash banking transactions with any regularity, however, you could become an IRS target. This practice is referred to as “structuring” or “smurfing” and is often done in an attempt to evade reporting requirements.
Originally created as a way to track the cash of criminals such as drug traffickers and terrorists, the IRS has recently turned their sights to average business owners. Once an account is targeted, the IRS can seize bank accounts and other assets in a process referred to as “civil asset forfeiture”.
Once the IRS seizes an account in this process, they can take the money without filing a criminal complaint. The burden is on the business owner or individual whose assets have been taken to prove that they are innocent. Small business owners across the country have been targeted even though they have no history of criminal behavior or intent. And, even if the person or business owner proves their innocence, the IRS never returns the funds.
The bank is sworn to secrecy and cannot alert the depositor that their account is being flagged. Talk to your tax resolution specialist about smurfing or structuring to make certain your actions don’t alert the IRS to activity that they could consider illegal.