DETROIT (AP) — The federal government missed a key deadline and is returning more than $200,000 to three Michigan businesses accused of trying to fool the Internal Revenue Service by making bank deposits of less than $10,000.
The business owners deny any wrongdoing, and no charges have been filed. The owners aggressively challenged each seizure, which is a powerful tool for federal authorities and one that has been widely criticized as unfair to the accused.
"My clients are going to get their money back," said attorney Stephen Dunn, who worked the cases with the Virginia-based Institute for Justice.
In three separate cases, the IRS seized money from the bank accounts of a Chinese restaurant near Port Huron and a grocery and gas station in Macomb County. The government claimed the owners were intentionally making deposits of less than $10,000 to avoid mandatory reports to the IRS by the banks.
The owners denied the allegation, known as structuring, and said the deposits simply were how they conducted business. Attorneys hired to try to get the money back discovered a possible mistake by the government: A 90-day deadline to file the complaints in court was missed.
U.S. District Judge Sean Cox recently ordered the IRS to return about $136,000 to China Lite restaurant in Marysville. Citing that decision, the U.S. Attorney's Office chose to close the other cases where the deadline was missed and will return $33,000 to Metro Marathon, a gas station in Sterling Heights, and $35,000 to Schott's Supermarket in Fraser.
Assistant U.S. Attorney Jonathan J.C. Grey argued that the 90-day clock shouldn't start until a claim lands on the desk of a person in authority. The judge, however, said it starts when an agency gets the claim in the mail room.
The government grabbed a "significant amount of money" for an extended period before China Lite got its day in court, Cox said on Nov. 4.