Carole Hinders in her restaurant. Photo Courtesy Institute for Justice A year and a half after seizing $33,000 from a small-business owner who supposedly deposited the cash incorrectly, the Internal Revenue Service has reluctantly agreed to give the Iowa woman her money back.

The IRS seized Carole Hinders' cash through civil forfeiture, which lets the government take money it believes was illicitly obtained even if its owner hasn't been convicted of a crime or even charged with one.



Hinders, owner of an Iowa restaurant called Mrs. Lady's Mexican Food, caught the IRS' attention last year because she made frequent large deposits of less than $10,000 from her cash-only restaurant. Banks that get deposits of more than $10,000 have to report them to the federal government, and anybody who purposely tries to avoid those reporting requirements is guilty of a crime called structuring.

However, Hinders says she'd never heard of structuring before the cash seizure, and that she's just trying to run an honest cash business. With the help of a public-interest law firm called the Institute for Justice, Hinders has been fighting for over a year to get the money back. On Friday lawyers from the Justice Department finally submitted a motion to dismiss the lawsuit that it had filed in order to keep the money. (In civil forfeiture cases, the government must file lawsuits "against" property or cash in order to keep it. This one was called United States of America v. $32,820.56 in United States Currency.)



The government asked the court to dismiss the case "without prejudice" — meaning it can file another action in the future to get Hinders' money if the court grants its motion. The government also reiterated that it was justified in filing the case in the first place.

Hinders had shown a "clear pattern of manipulating bank deposits below $10,000 in order to avoid the reporting requirements," the government said in its motion to dismiss. However, the government added that "allocating its limited resources elsewhere would better serve justice in this case."

The Institute for Justice accused the IRS of making a "mean-spirited move" by leaving the door open for the agency to seize Hinders' cash again.

“I actually wanted a trial, which would have cleared my name and helped to protect others, but it is good to get the money back. My fight is far from over, though," Hinders said in a statement provided by her lawyers. "I am willing to tell my story to Congress to help change forfeiture laws so that no one else has to go through what I suffered."