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TIGTA says IRS not using currency reports from banks

| Oct 8, 2018 | audits

The Treasury Inspector General for Tax Administration has released a report indicating that the Internal Revenue Service makes little use of bank currency reports. Many Maryland residents are aware that if they deposit more than $10,000 in cash at any one time, their bank will send a report of the transaction to the IRS. Chances are that the IRS will never look at a particular currency report.

Some people might be tempted to break up deposits so that they don’t exceed the $10,000 threshold, but such an action might actually make IRS scrutiny more likely as it is a crime called structuring. Proving a charge of structuring does not require establishing willfulness, but tax evasion does. Structuring is generally easier to prove than tax evasion, and it can open people up to the possibility of civil forfeiture with regard to the structured deposits.

The IRS has said that it intends to put more effort toward reviewing currency reports and that it will take corrective action based on recommendations from TIGTA. Among TIGTA’s recommendations were that the IRS create procedures for processing referrals under the Bank Secrecy Act Program and clarify formal procedures to help examiners analyze currency report data. The IRS hopes the improvements will help it identify and audit individuals who are evading taxes. The organization didn’t change its currency report analysis after the previous TIGTA report in 2010, though, so it may be slow to make improvements this time too.

People who are being audited by the IRS might want to contact an attorney. An attorney with experience handling audits may be able to help the taxpayer by collecting evidence and building a file in support of the client’s position. An attorney might attempt to negotiate settlement with the IRS or argue during official proceedings on the client’s behalf.