The Internal Revenue Service has seized millions of dollars in cash from individuals and businesses who obtained the money legally, according to a new Treasury Inspector General's report.

The report covers IRS cash seizures against businesses and individuals suspected of deliberately trying to avoid federal reporting requirements for large bank deposits.

In order to combat criminal activity, individuals and businesses are required to report all bank deposits greater than $10,000 to federal authorities. Intentionally splitting up large sums of cash into sub-$10,000 amounts to avoid that reporting requirement is known as "structuring," and is illegal under the federal Bank Secrecy Act.

But many business owners engaged in perfectly legal activities may be unaware of the law. Others are covered by insurance policies that don't cover cash losses greater than $10,000. Still others simply want to avoid extra paperwork, and keep their deposits less than $10,000 on the advice of bank employees or colleagues.

While structuring is technically a crime, it's something of a secondary one. The reporting requirements were enacted in order to detect serious criminal activity, such as drug dealing and terrorism. They "were not put in place just so that the Government could enforce the reporting requirements," as the Inspector General's report puts it.

But according to the report, that's exactly what happened at the IRS in recent years. The IRS pursued hundreds of cases from 2012 to 2015 on suspicion of structuring, but with no indication that it was related to any criminal activity. Simply depositing cash in sums of less than $10,000 was all that it took to arouse agents' suspicion, and the eventual seizure and forfeiture of millions of dollars in cash from people not otherwise suspected of criminal activity.

The Inspector General took a random sample of 278 IRS forfeiture actions in cases where structuring was the primary basis for seizure. The report found that in 91 percent of those cases, the individuals and business had obtained their money legally.

"Most people impacted by the program did not appear to be criminal enterprises engaged in other alleged illegal activity," according to the Inspector General's press release. "Rather, they were legal businesses such as jewelry stores, restaurant owners, gas station owners, scrap metal dealers, and others."

More troubling, the report found that the pattern of seizures -- targeting businesses that obtained their money legally -- was deliberate.

"One of the reasons why legal source cases were pursued was that the Department of Justice had encouraged task forces to engage in 'quick hits,' where property was more quickly seized and more quickly resolved through negotiation, rather than pursuing cases with other criminal activity (such as drug trafficking and money laundering), which are more time-consuming," according to the press release.

In most cases, the report found, agents followed a protocol of "seize first, ask questions later." Agents only questioned individuals and business owners after they had already seized their money.

In many cases, the property owners provided plausible explanations for their pattern of deposits. But these explanations appeared to have been disregarded or ignored.

"In most instances, we found no evidence that [agents] attempted to verify the property owners' explanations," according to the report.

It is unclear whether structuring forfeiture cases make up a small or large percentage of all IRS forfeitures, because the IRS does not publish that information and denied FOIA requests to make it public.

"Today's report confirms that the IRS used civil forfeiture to seize millions of dollars from innocent business owners," said attorney Robert Everett Johnson of the Institute for Justice, a legal firm fighting for forfeiture reform, in a statement. "The IRS's own internal watchdog found that the IRS had a practice of seizing entire bank accounts based on nothing more than a pattern of under-$10,000 cash deposits."

The Treasury report comes on the heels of a separate Department of Justice report finding that the DEA has seized billions of cash from individuals never charged with criminal wrongdoing.

"When seizure and administrative forfeitures do not ultimately advance an investigation or prosecution," that report concluded, "law enforcement creates the appearance, and risks the reality, that it is more interested in seizing and forfeiting cash than advancing an investigation or prosecution."

In a response appended to the new inspector general report, the IRS noted that in recent years it has implemented policies to address some of the concerns raised, and said it had been "proactive in revising the way in which structuring statutes are enforced to seek uniformity across the country."

The IRS said also that the "Quick Hits" encouraged by the Justice Department are no longer authorized.

After public outcry, in 2014 the IRS announced it would no longer pursue forfeiture cases when structuring was the primary suspected offense. But the Inspector General's report found that those new guidelines aren't always being followed. For at least eight cases initiated after the new guidelines, the report found that "the actions taken by the Government were inconsistent with the new policy."

The details of those cases were redacted in the report.