The IRS does some f'd up shit. That said, I'd be wary of accepting the characterizations in the article. I've worked on some cases over the years that got some press coverage, and I can't think of a single one where there weren't some glaring errors or inaccuracies in the article.
I could be totally wrong, but I'm guessing the money was, in fact, subjected to a lien or temporary freeze rather than "confiscated" in the sense of being irrevocably appropriated. "Structuring" (deliberately breaking what in effect would be a large deposit into multiple sub-$10K deposits to avoid mandatory reporting by the bank is a federal offense. It's designed to help combat money laundering, among other things. I'm not an expert in the area, but the guv'mint has some preliminary, provisional remedies that allow it to freeze funds that appear to be related to such illegal activity so that the money doesn't disappear before the matter can be adjudicated. It sounds like this woman engaged in transactions that somebody thought constituted such conduct. Maybe that was a totally asinine judgment, or maybe she's a crook and is just BS'ing. No idea.
No idea if they acted reasonably or unreasonably here -- just providing some context, and noting that I would bet money (assuming the IRS hasn't already snatched it from my account) that they reporter's description contains at least three mischaracterizations or other inaccuracies.