Small Business Taxes & ManagementTM--Copyright 2019, A/N Group, Inc.
The IRS is urging businesses (IR-2019-20) to comply with the requirement of filing reports on large cash transactions. If you receive over $10,000 in cash payments from a customer in the course of your business you're required to report the transaction. The information on Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business helps law enforcement combat money laundering, tax evasion, drug dealing, terrorist financing and other criminal activities. By law, a “person” is an individual, company, corporation, partnership, association, trust or estate. For example, dealers in jewelry, furniture, boats, aircraft or automobiles; pawnbrokers; attorneys; real estate brokers; insurance companies and travel agencies are among those who typically need to file Form 8300. Tax-exempt organizations are also “persons” and may need to report certain transactions.
What's cash? For Form 8300 reporting, cash includes coins and currency of the United States or any foreign country. It's also a cashier's check (sometimes called a treasurer's check or bank check), bank draft, traveler's check or money order with a face amount of $10,000 or less that a person receives for:
Cash does not include:
Note that under a separate reporting requirement, banks and other financial institutions report cash purchases of cashier's checks, treasurer's checks and/or bank checks, bank drafts, traveler's checks and money orders with a face value of more than $10,000 by filing currency transaction reports.
A designated reporting transaction is the retail sale of tangible personal property that's generally suited for personal use, expected to last at least one year and has a sales price of more than $10,000. Examples are sales of automobiles, jewelry, mobile homes and furniture. A designated reporting transaction is also the sale of a collectible, such as a work of art, rug, antique, metal, stamp or coin. It is also the sale of travel and entertainment, if the total price of all items for the same trip or entertainment event is more than $10,000.
Reporting payments. A person must file Form 8300 if they receive cash of more than $10,000 from the same payer or agent:
A business must file Form 8300 within 15 days after the date the business received the cash. If a business receives later payments toward a single transaction or two or more related transactions, the business should file Form 8300 when the total amount paid exceeds $10,000. Each time payments aggregate more than $10,000, the business must file another Form 8300.
Form 8300 requires the taxpayer identification number (TIN) of the person paying with cash. If they refuse to provide it, the business should inform the person that the IRS may assess a penalty. If the business is unable to obtain the customer's TIN, the business should file Form 8300 anyway. The business needs to include a statement with Form 8300 that explains why the form doesn't have a TIN. The business should keep records showing it requested the customer's TIN and give the records to the IRS upon request.
You must also give your customer written notice by January 31 of the year following the transaction that it filed Fom 8300 to report the transaction. There's no specific format for the statement but it must be a single statement aggregating all the transactions for the year, have the name, address and phone number of the person who needs to file the Form 8300 and inform the customer the business is reporting the payment to the IRS.
A business may voluntarily file Form 8300 to report a suspicious transaction below $10,000. In this situation, the business doesn't let the customer know about the report. The law prohibits a business from informing a customer that it marked the suspicious transaction box on the form.
A business must file Form 8300 within 15 days after the date the business received the cash. If the first cash payment is under the threshold, subsequent cash payments toward a single transaction or two or more related transactions that exceed $10,000 will trigger a Form 8300 each time the payments aggregate more than $10,000.
A person can file Form 8300 electronically using the Financial Crimes Enforcement Network's BSA E-Filing System. E-filing is free, quick and secure. Filers will receive an electronic acknowledgement of each submission. The IRS is urging electronic filing. Those who prefer to mail Form 8300 can send it to Internal Revenue Service, Federal Building, P.O. Box 32621, Detroit, MI 48232. Filers can confirm the IRS received the form by sending it via certified mail with return receipt requested or calling the Detroit Federal Building at 866-270-0733.
Other points. Automobile are probably the most frequent filers of Form 8300. But other filers include boat, jewelry, and furniture dealers, as well as attorneys, real estate brokers and travel agents.
Example--Fred goes to a local car dealer and presents $11,000 in cash as the downpayment on a new car. The dealer is required to report the transaction.Landlords need to file Form 8300 once they've received more than $10,000 in cash for a lease during the year. But a person not in the trade or business of managing or leasing real property, such as someone who leases their vacation home for part of the year, doesn't need to report a cash receipt of more than $10,000.Example--Fred gives the local car dealer a $7,000 cash deposit for a new car. On delivery of the car two weeks later Fred gives the dealer $8,000 cash plus the remainder of the price in a personal check. Because the payments are related and total more than $10,000, the dealer must report the transaction.
Example--Madison Inc. puts $5,000 on a new truck. The company pays the remainder with a company check. Two months later it puts $7,000 in cash down on another truck. It appears the dealer doesn't have to file a report since the transactions were unrelated.
Home builders and contractors need to file Form 8300 if they receive cash of more than $10,000 for building, renovating or remodeling.
Additional information
Publication 1544, Reporting Cash Payments of Over $10,000
Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business
IRS Form 8300 Reference Guide
Copyright 2019 by A/N Group, Inc. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is distributed with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional should be sought. The information is not necessarily a complete summary of all materials on the subject. Copyright is not claimed on material from U.S. Government sources.--ISSN 1089-1536
--Last Update 02/25/19