This one came as enough of a surprise to me that it seemed worth sharing. I’ve long been aware that there are limits on cash transactions taking place at banks beyond which the deal has to be reported to the IRS. You run into the same thing at casinos, though I have never won anywhere near enough money to need to worry about reporting it. This is an annoying, but I will agree, necessary function which used to allow law enforcement to track down drug dealers and organized crime entities who were dealing in large, untraceable cash deals. But as this rather startling report from the New York Times shows, the IRS has moved this law enforcement tool into brave new worlds.

For almost 40 years, Carole Hinders has dished out Mexican specialties at her modest cash-only restaurant. For just as long, she deposited the earnings at a small bank branch a block away — until last year, when two tax agents knocked on her door and informed her that they had seized her checking account, almost $33,000.

The Internal Revenue Service agents did not accuse Ms. Hinders of money laundering or cheating on her taxes — in fact, she has not been charged with any crime. Instead, the money was seized solely because she had deposited less than $10,000 at a time, which they viewed as an attempt to avoid triggering a required government report.

According to their records, Ms. Hinders has still yet to be charged with any crime, but has gone into debt while attempting to get the money returned. And she’s not the only one they turned up. The IRS used this tactic 639 in 2012 alone, with only 20% of those cases ever being prosecuted.

Another interesting item of note show up here. When such funds are seized, law enforcement agencies get to keep a share of whatever is forfeited. If that doesn’t set off some red flags for you, nothing will.

In case you might still think that this is well intentioned, business as usual at the Internal Revenue Service, this part of the story is the real kicker.

On Thursday, in response to questions from The New York Times, the I.R.S. announced that it would curtail the practice, focusing instead on cases where the money is believed to have been acquired illegally or seizure is deemed justified by “exceptional circumstances.”

If the people in charge at the IRS honestly thought that this practice was ethical and in the interest of justice, why would they immediately announce that it was being curtailed as soon as the details were dragged out into the sunlight? And if they will now focus only on money that they think is acquired illegally, what sort of money were they focusing on before? Part of the problem may be that the law needs a fresh look in terms of what they are making the banks do. They are required to not only report transactions over the ten grand limit, but any suspicious patterns of transactions below the $10K threshold. The banks, not wanting to run afoul of the law and risk exposure themselves, wind up reporting all sorts of things. More than 700,000 such suspicious reports were filed last year alone.

Seizing all of the money from citizen’s checking or savings accounts and then holding it until they can hire a lawyer and prove they aren’t drug dealers? Pretty sweet work if you can get it.