Is Your Business Filing the Proper Cash Transaction Forms? Published June 30, 2015
Has your business ever received a large cash payment and you weren’t quite sure what your reporting obligations were for that large payment? Or have you ever wondered what the rules are for your clients that receive cash payments?
The general IRS rule is that you must file Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business, if your business receives more than $10,000 in cash from one buyer as a result of a single transaction, or two or more related transactions.
The information provided by Form 8300 provides valuable information to the Internal Revenue Service and the Financial Crimes Enforcement Network (commonly called FinCEN) in their efforts to combat money laundering. This is an important effort because money laundering can be a tool that individuals use to hide the proceeds from their illegal activities, including various criminal activities ranging from tax evasion, terrorist financing or drug dealing.
Examples of businesses that may have to file Form 8300 include those that sell jewelry, furniture, boats, aircraft or automobiles, as well as those that are pawnbrokers, attorneys, real estate brokers, insurance companies and travel agencies. If you are a commercial lender that funds one of these types of businesses, it would be prudent to ensure your borrower understands these IRS rules.
Businesses, including individuals who are sole proprietors that receive more than $10,000 cash in a transaction or in two or more related transactions in any U.S. possession or territory, must also file Form 8300 with the IRS. Possessions and territories include: American Samoa, the Commonwealth of the Northern Mariana Islands, Guam, Puerto Rico and the U.S. Virgin Islands. This requirement is in addition to any filing obligation the business may also have with U.S. territory tax authorities under similar territory rules, including under a U.S. territorial mirror income tax code.
If you’re required to file Form 8300 for a transaction, you must do so by the 15th day after the date the cash transaction occurs. Meeting the proper filing requirements is important because there are potential civil and criminal penalties for failure to file Form 8300.
Make sure your business doesn’t fall victim to any of the false claims circulating in areas where an individual claims that they can exempt your business from the Form 8300 filing requirements. The law does not provide such an exemption.
The IRS developed the following educational products for your use in learning more about why, when and where to file Form 8300:
• IRS Form 8300 Reference Guide is available on IRS.gov. Its purpose is to educate and assist U.S. persons who have the obligation to file Form 8300; and for tax professionals who prepare and file Form 8300 on behalf of their clients.
• Publication 1544, Reporting Cash Payments of Over $10,000 (Received in a Trade or Business), explains key issues and terms related to Form 8300. Publication 1544 and can be downloaded in English or Spanish.
If you have any questions about these requirements, please feel free to Contact Tax Guard to discuss the IRS’s rules and regulations.