Federal prosecutors have dropped an attempt to seize $107,000 from a North Carolina small business owner using asset forfeiture laws following several weeks of media scrutiny.

According to the Institute for Justice, a public interest law firm, the Internal Revenue Service and Justice Department moved Wednesday to voluntarily dismiss their case against Lyndon McLellan.

Last summer, IRS agents seized $107,000 from McLellan, who owns a small convenience store in rural North Carolina, using civil asset forfeiture laws. McLellan had unknowingly violated so-called "structuring" rules that prohibit businesses from making deposits less than $10,000. He was not charged with a crime, but his entire bank account was seized.

Structuring rules are intended to stop businesses from using small deposits to avoid triggering federal reporting requirements by banks, but civil liberties advocates such as the Institute for Justice say the IRS has used the obscure rules to seize the bank accounts of small business owners without charging them with a crime.

The New York Times reported on McLellan’s case, as did many other news outlets.

"I'm relieved to be getting my money back," McLellan said in a press release from the Institute for Justice, which is representing him. "What’s wrong is wrong, and what the government did here is wrong. I just hope that by standing up for what’s right, it means this won’t happen to other people."

The Institute for Justice said the IRS was violating policies announced last November that were supposed to prevent the agency from pursuing structuring cases against small business owners except in cases where it has probable cause that other criminal activity is occurring.

However, the new guidelines did not appear to help McLellan. His case came up during a congressional hearing in February, where IRS Commissioner John Koskinen said, "If that case exists, then it’s not following the policy."

However, federal prosecutor Steve West was not deterred. After learning that the details of the case had been given to a congressional committee, West wrote to McLellan’s attorney in an email: "Whoever made [the document] public may serve their own interest but will not help this particular case. Your client needs to resolve this or litigate it. But publicity about it doesn’t help. It just ratchets up feelings in the agency. My offer is to return 50 percent of the money. The offer is good until March 30th COB."

McLellan did not accept the offer, and as a result, he will get 100 percent of his money back. However, McLellan still had to pay for a lawyer, not to mention $19,000 to have his business audited. The government also refuses to pay for interest earned on money after it has been seized. The Institute for Justice said it will continue to litigate McLellan’s case.

McLellan’s case is the third high-profile structuring case that federal prosecutors have dropped in recent months.

"The government in this case had to have its arm twisted to follow its commitment to property owners like Lyndon," Institute for Justice attorney Scott Bullock said in a press release. "That shows reform of the civil forfeiture laws cannot be entrusted to voluntary policy changes from the government. What is truly needed is binding reform from Congress."

The IRS announced the new policy following news reports last year of several cases similar to McLellan’s, such as Carol Hinders, an Iowa woman who runs a small taco stand but nevertheless had her bank account seized by the IRS.

According to a report by the Institute for Justice, the IRS seized more than $242 million for suspected structuring violations in more than 2,500 cases from 2005 to 2012. In at least a third of those cases, there was no other suspected criminal activity other than small deposits.

According to the New York Times, the Justice Department said it would investigate two other prosecutors after two business owners said they were threatened with felony charges if they didn’t take deals and punished for bringing media attention to their cases.

The IRS and Justice Department did not immediately respond to requests for comment.