$534,544 Is Greater Than $10,000

I don’t think any of you have trouble with realizing that the title of this post is true. Yet for Terry Davis, formerly of New Haven, Connecticut and now a resident of Las Vegas, that simple statement posed a problem.

Mr. Davis wanted to lower his 2007 income taxes. He had earned $784,537 and that means a lot of tax. Did Mr. Davis seek out a tax professional to find some deductions he may have missed? Or did he use a SEP IRA to shelter $44,000 of income?

Mr. Davis had an additional issue: structuring. It’s illegal to deliberately structure transactions to avoid currency reporting requirements. On one day Mr. Davis withdrew $534,544 in cash from various banks, all in amounts under $10,000. That was not a good idea.

Sure, Mr. Davis avoided filling out a Currency Transaction Report (CTR). CTRs are issued whenever you withdraw $10,000 or more in cash. Additionally, if you receive a payment of $10,000 or more in cash you must complete a CTR. But I digress….

No CTR, no problem, right? Definitely not. Banks have automated programs to detect such financial shenanigans; when a bank becomes suspicious a Suspicious Activity Report (SAR) is generated. The IRS receives far fewer SARs than CTRs; they also investigate far more SARs than CTRs.

The news report doesn’t indicate what led the IRS and Department of Justice to Mr. Davis, but I’d bet it was a SAR (or multiple SARs). Mr. Davis pleaded guilty to structuring and filing a false tax return. The 2007 tax return he filed only showed $133,804 of his $784,537 of tax. He’ll be sentenced in February and is looking at a stay at ClubFed, restitution, and a probable fine.


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