IRS Money Laundering Scheme Exposed By Veteran

According to USC, Title 38, §5301 Veteran's disability benefits are exempt from all taxes and/or any other form of withholding. The IRS cannot touch this money and creditors cannot either. You are free to read the entire code if you would like but here is a brief excerpt which would seem fairly straight forward:

Payments of benefits due or to become due under any law administered by the Secretary shall not be assignable except to the extent specifically authorized by law, and such payments made to, or on account of, a beneficiary shall be exempt from taxation, shall be exempt from the claim of creditors, and shall not be liable to attachment, levy, or seizure by or under any legal or equitable process whatever, either before or after receipt by the beneficiary.

I am not an attorney but it sounds to me like these funds cannot be touched by creditors or the tax man. Well… that was the understanding of Kevin Lake as well but he found out that the IRS has found a way to ignore the law. This is from Kevin Lake's column on Freedom Outpost:

…the IRS is still figuring out ways to get to a veteran's disability money. How do I know? Recently, it happened to me.

A couple of months ago, when I logged into my online bank account to make sure that my VA disability check had been deposited (I am a 60% disabled veteran of the Iraq War) I saw red and a negative balance, beside which read the word "hold."

I called my bank and was informed that the IRS had sent a letter demanding that the bank take all of the available funds out of my account on the first day of the month and then wire them to them. The bank gave me a telephone number at which to call the IRS. After being placed on hold for a very long time- long as in a biblical age- I finally spoke with an agent.

Long story short; they claim I made $157,000 in 2010 and that I owe them tons of money, and that until I pay it, a lien will remain on my personal bank account.

At the beginning of 2010, I was still in the hospital recovering from injuries I'd sustained while serving in Iraq. I was released early in the year, but still did not find employment until October, and even then, it was only part time. I can assure you, as I did the IRS, that I did not earn $157,000.00. Actually, I earned less than $10,000.00 in 2010.

I kindly read the federal code mentioned above to the lady I spoke with at the IRS, reminding her that VA disability money is 100% exempt. She placed me on hold for another age (I could see a man coming- bearing water- over the horizon) and then she came back on the line and told me, "We do not take veterans' disability money. We wait until the funds are deposited from the VA and then we take all of the funds from your bank account."


Isn't this called laundering?

I find it ironic, now, that only weeks before the IRS put this hold on my bank account, I'd been asked to be a contributing writer for key Tea Party personality "Joe the Plumber." I'd been writing freelance articles on veterans affairs for some time, publishing and distributing them mostly through Facebook, and I viewed the personal call Joe made to me as one of the greatest compliments I'd been paid in regard to those articles. I jumped at the opportunity to join his team and give my work, such as this piece, a wider audience. I can't help but think that part of my decision to join Joe's team may have played a part in being singled out by the IRS at this specific time and having my VA disability money taken from me in complete breach of federal law.

The good news is that Kevin stood his ground and was able to get the IRS to refund 100% of his lost disability claims. But that is hardly the point.

This money was not taxable. This money was to be untouched by any sort of creditor. This is the letter of the law.

But by letting the money be deposited before it was touched the IRS found a way to break their own laws. I would have to agree with Kevin's assessment that this is a form of money laundering. It may not be what we think of typically with mob bosses and shyster accountants. But what is money laundering? It is basically taking money illegally and making it appear legal. What did the IRS do? They took money in violation of the law and acted like they had done nothing wrong.

Did the IRS target Kevin specifically because of his involvement with The Tea Party?

I was going to ask Lois Lerner that exact question but we all know how that turned out. For what it's worth I had a similar situation with my tax bill this year. I also wonder if my involvement with conservative issues might have caused them to "randomly" pick my name for audit.

The law is the law and government agencies are not allowed to bend or break laws any more than you or I.

We face an ever growing frustration in this country as more and more government agencies and officials are not willing to abide by the laws as they are written.

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18 thoughts on “IRS Money Laundering Scheme Exposed By Veteran

  1. hollygreen9 says:

    I am still waiting for the same thing. If and when it happens, I will then know that the country is lost to a muslim president that thinks he can do as he damn well pleases. It is about time for real Americans to stand up to this BS.

  2. Whats SAD. is that this admin has proven that we have weak links in our system. It seems as though EVERY Dept of gov't is out of control and ONLY b/c it is under this President and even worse, BIG DADDY HAS not FIRED ONE OF THOSE BREAKING THE LAWS WHICH MEANS HE ACCEPTS EVERY ILLEGALITY THEY'VE COMMITTED.

  3. Seeking_Truth says:

    If you are audited like this, use "freedom of information act requests" (FOIA) to demand copies of all documents that the IRS has that show that you have had such "income". They must give you copies of all the documents that apply to you, at no charge up to a large number of documents. Also ask for a copy of your "master file specific". It comes as a sheet of numbers and codes, but there are people around who can decode it. Lots of this information is available on line; like how to file FOIA, and IRS decoder information.

    You may find out some things that you won't believe, like the IRS has you coded as a citizen of one of the 7 possessions that belong to the United States. I am coded as a Virgin Island citizen (Don't I wish!). That's because the income tax does not apply to American Nationals; that is, to citizens of one of the the states. It only applies to US citizens. US citizens are citizens of Washington, D.C. or one of the possessions thereof.

    Here's an article about citizenship;

  4. Kevin, it is not called laundering, it is simply called "theft." IRS is very proficient at this practice with millions of Americans each year. Could this be a better time for Congress to move to a National Flat Tax on goods and services, shred the volumes of Federal Tax Codes and dissolve the Internal Revenue Service once and for all.

  5. Abolish the IRS!!! Reform the tax codes to do away with them and the complicated codes. Repeal Obamacare!!! I don't trust the government; I don't trust the IRS!!

  6. Sickening.

  7. The bank should have stopped the attachment. The law is that any money deposited from government disability, pensions, or special payrolls into checking accounts can't be attached up to the amount of the deposit. I have an ex-wife that tried that with me and the bank (BofA) wrote a letter back to the federal government that according to the regulations (they quoted the regs in the letter) that the money in my account couldn't be touched. It was confusing at first because they deposited the money into my account, then debited it for the attachment, and then deposited it back into my account all within the same day. I guess that is the way they made it legal. It had me going at first until I called the bank and they explained. It was also interesting to see two federal agencies fighting each other. If not for the bank stepping in and telling them "noway" I would have been in the same position. So say what you want about BofA but they have treated me very good and I have no complaints.

  8. Phillipe Violette says:

    Government agencies do not have follow the laws or so they believe. Abolish the irs and let's have a fair, flat tax for everyone.

  9. Absolute Power corrupts absolutely.


  11. It seems to me that you need to sue them for breaking the law and putting you and your family in distress.I would start at one hundred million and settle out of court.I think I read this awhile back and your living in the Philippines right?I hope it has changed from what I saw of it in the 70's when I rented a house there.

  12. The sad part is that the GOVERNMENT REQUIRES VA benefits be direct deposited. Probably in anticipation of events like this when they want to steal back from those that served. Do they take the money of welfare clowns?

  13. When a CRIMINAL sits in the White House expect criminal behavior of his lackeys.

  14. AmericaAwakens says:

    This is shameless and totally unacceptable! The IRS has gotten too big for their britches and must be abolished!

  15. The IRS likes going after disabled vets. It gets in their craw that we get benefits that are not taxable. Yes, I get audited every year since going on VA disability.