After more than 30 years in business, Mii’s Bridal and Tuxedo in Garland, Texas, was shut down by the IRS, which then 'wiped out' the owners' inventory in less than two hours, selling their items for a fraction of their value. (2014 file photo/Jim Watson/AFP/Getty Images)
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When Tony, 68, and Somnuek Thangsongcharoen, 72, moved to Texas from Thailand, they never imagined the small mom-and-pop wedding dress store they started in 1983 would end like this.
After more than 30 years in business, Mii’s Bridal and Tuxedo, located in Garland, Texas, was shut down by the IRS, which alleged the Thangsongcharoens owed unpaid taxes totaling $31,400 for the 2005, 2008 and 2010 tax years, according to a report Saturday in the Dallas Morning News.
The Thangsongcharoens claim they didn’t owe the IRS any money and they haven’t been convicted of a crime, but that didn’t stop 20 armed IRS agents from shutting the business down in March 2015 and immediately seizing 1,600 designer gowns. The IRS demanded the Thangsongcharoens pay them $10,000 to stop the sale of the dresses, and when the couple refused to pay, the IRS agents, within two hours, sold the gowns and numerous other items in the store at an auction.
The Thangsongcharoens’ allege in a lawsuit filed in March in a federal district court in Dallas the dresses were worth $615,000. The IRS sold the entire store’s contents, including the gowns, for roughly $17,000, with the dresses’ value listed at $6,000 (which amounts to $3.75 per gown).
Ordinarily, the IRS is required to wait 10 days before selling seized goods, but in this case, the agents invoked a legal provision allowing the IRS to sell goods immediately because they could soon “perish” or become significantly less valuable before the 10-day window closes, the Dallas Morning News reported. Common sense suggests the dresses didn’t meet those criteria.
In the Thangsongcharoens’ $1.8 million lawsuit, they also accused the IRS agents of seizing items they shouldn’t have taken, including a hat belonging to a war veteran that was given to the Thangsongcharoens so they could make minor alterations. The couple also said the IRS agents brought children with them to watch the seizure. The kids allegedly sat on crates while eating pizza as the Thangsongcharoens’ business was dismantled piece by piece.
The IRS’ seizure and sale of the property “wiped out” virtually everything the Thangsongcharoens’ had, leaving them “destitute,” according to the elderly couple’s lawsuit.
“[E]verything that they had built since immigrating to the United States and beginning their business in 1983 wiped out before their eyes,” the lawsuit claims.
The Dallas Morning News reported the IRS said the Thangsongcharoens attempted to evade federal requirements by making multiple cash deposits under the $10,000 reporting limit, but the couple was never formally charged with breaking the law.
Critics of the IRS have said agents have acted carelessly in how they’ve handled these and other similar situations, often relying on obscure provisions of federal law to unjustly destroy the lives of people who haven’t been found guilty by a court.
In April, the Treasury Inspector General for Tax Administration issued a report that revealed from 2012 to 2014, the IRS seized more than $17 million from people because they engaged in “suspicious” bank depositing patterns.
According to the report, “It appears that the pattern of transactions in many of these cases was compelling and may indicate tax avoidance, which is discussed further below. However, tax violations associated with the structuring of banking transactions were established by [the Criminal Investigations unit] in only 21 of the 252 [8.3 percent] legal sources cases. In the remaining 231 legal source cases, there was no evidence that the property owner structured funds to hide income from illegal activity (other than structuring) or to underreport income on their tax return. Current law does not require that the funds have an illegal source.”
In 2015, the Institute for Justice, an organization that has actively fought against lenient IRS seizure policies, published a study showing from 2005 to 2012, the IRS took from people more than $43 million in 600 cases in which the people whose assets had been taken had not been suspected of any criminal activity except for having made deposits slightly below the $10,000 threshold.
In October 2014, the IRS announced it would no longer “pursue the seizure and forfeiture of funds related to legal source structuring,” but as the Thangsongcharoens’ case shows, it remains a strong factor in other seizure cases.
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Justin Haskins is the director of the Socialism Research Center at the Heartland Institute and the co-author of the New York Times best-seller "Dark Future: Uncovering the Great Reset’s Terrifying Next Phase."