Homer,
Structuring is a crime. It doesn't just lead to an IRS audit. It can and does culminate in prosecution which leads to fines and jail time.
Now does going in to a Vegas bank once and pulling out $9k and coming back the next day to pull out another $9k going to end up with you in jail? Probably not. Is it illegal, especially if its being done with the knowledge of the $10k BSA reporting threshold and the transactions are intentionally being structured to avoid that limit? Yes. Can committing that illegal act have repercussions? Certainly...
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"Structuring" is defined by the IRS as any effort to avoid reporting cash or other monetary transactions over $10,000 by breaking them down into smaller "related" transactions over any 12-month period (defined by USC 31, Sec. 5322-5324-Money Laundering Control Act of 1986, as amended). A structuring violation carries with it a criminal penalty with a mandatory prison term, heavy fines, and confiscation of structured funds and money "connected" to them. (A civil penalty of a $25,000 fine with confiscation of structured funds also exists.) Monetary instruments included in structuring are cash, cashier's checks, money orders, and traveler's checks.
"Structuring" is now defined as money laundering, and is a criminal offense. You can now go to jail for dealing in cash to protect your financial privacy, if the IRS thinks you're trying to hide or structure your transactions or monetary instruments. Furthermore, it's against the law for a bank or merchant to tell you that you might be violating the law. This can get him prosecuted as part of your structuring "conspiracy." If they think your behavior is suspicious, they may fill out a form on you without telling you and file it with the IRS, which will promptly audit you, or begin a criminal investigation. . . .
The average person might say, "Well, the government would never come after anyone who was totally innocent." But that's not true — he misses the point. The IRS admits that 85% of the people accused of "structuring" committed no other crime than seeking to protect their privacy. The courts have upheld numerous criminal structuring convictions for violations that concealed no criminal activity. If the government wins the conviction, the judge must sentence the criminal "to a mandatory prison sentence."
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http://www.fff.org/freedom/0394f.asp
Relevant IRS code if you're really curious:
http://www.irs.gov/irm/part4/ch26s17.html