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IRS
Cash Reporting
When
must a dealer prepare an IRS form 8300?
Generally,
any person in a trade or business who receives
more than $10,000 in cash in a single
transaction or related transactions must
complete a Form 8300, Report of Cash Payments
Over $10,000 Received in a Trade or Business.
Form 8300 is a joint form issued by the IRS
and the Financial Crimes Enforcement Network (FinCen)
and is used by the government to track
individuals that evade taxes and those who
profit from criminal activities. Although the
cash reporting requirements apply to many
types of businesses, auto dealerships
frequently receive cash in excess of $10,000
and are required to comply with the filing
requirements.
What
does “cash” mean for the purposes of Form
8300?
“Cash”
is money; currency and coins of the
United States
and any other country. “Cash” also includes certain monetary instruments - a cashier’s check, bank
draft, traveler’s check, or money order - if it
has a face amount of $10,000 or less and
the business receives it in either (1) A
designated reporting transaction (generally, a
retail sale of a consumer durable, a collectible,
a travel or entertainment activity) or
(2) Any transaction in which the
recipient knows the payer is trying to avoid the
reporting of the transaction on Form 8300.
“Cash”
does not include personal checks or wire
transfers.
A credit/debit card is not considered
“Cash”.
What
is a “related transaction” which would
require completion of a Form 8300?
Transactions
between a buyer and a seller that occur within a
24-hour period are related transactions. A
24-hour period is 24 hours, not necessarily a
calendar day or banking day.
Transactions
more than 24 hours apart are related transactions if
the recipient of the cash knows, or has reason to
know, that each transaction is one of a series of
connected transactions.
When
is the Form 8300 due?
-
Form
8300 is due within 15 days after the date the
cash was received.
-
If
there are subsequent payments that are made
with respect to a single transaction (or two
or more related transactions), the Form 8300
is due when the total exceeds $10,000.
-
Each
time the payments aggregate in excess of
$10,000 the business must file another form
8300 within 15 days of the payment that causes
the additional
payments to total more than $10,000.
Must
a business notify its customer that it has
filed a Form 8300 regarding the cash
transaction with the customer?
Yes.
A business must notify its customer, in
writing, by January 31 of the subsequent
calendar year.
If
the business is unable to obtain the Taxpayer
Identification Number of a customer making a
cash payment of over ten thousand dollars,
should the business file Form 8300 anyway?
Yes.
The
business should file Form 8300 with a
statement explaining why the Taxpayer
Identification Number is not included.
How
should a dealership handle a non resident
alien with no SSN?
-
Use
the IRS Individual taxpayer Identification
Number (ITIN) if the
nonresident has one. If there is no
ITIN enter (NON) for SSN on Form 8300.
-
The
ADDRESS must be that of the foreign address.
-
Item
14 of Form 8300 must be completed. The dealer
may use a PASSPORT, ALIEN REGISTRATION CARD,
or other official document
to complete the form.
What
exactly can be said to a customer who inquires
about IRS 8300 reporting?
A
customer can be told about the law requiring the
reporting of cash payments over $10,000 to the IRS
and FinCen. A
dealer who is filing Form 8300 voluntarily because
of suspicious activity cannot inform the customer
of the filing.
A
dealer cannot aid a customer in structuring a
transaction to prevent a Form 8300 from being
filed.
What
are the penalties if a dealership doesn’t
file a Form 8300?
There
are civil penalties for failure to file a
correct Form 8300 by its due date and for
failure to provide a statement as required. Additional
penalties apply for intentional disregard of
the filing requirements. Criminal
penalties may apply in the case of willful
filing of false or fraudulent Forms 8300.
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