When any business receives $10,000 or more in cash (paper money) from a customer, the business has the obligation to complete a Form 8300. (you can also choose to file a form if you consider the business to be a “suspicious transaction”.) Cash payment of $10,000 or more can be a single payment or a series of multiple payments for the same transaction within a 12 month period (1 year), or related transactions. A related transaction is one occurring within 24 hours of another or, one in which a business knows or has reason to know is part of a series of transactions involving the same customer and/or an agent of the customer. Once the aggregate cash payments equal $10,000 or more, a business is required to file the form. It is important to understand that the $10,000 threshold involves cash only.

For items 2 through 5, businesses are only concerned with amounts less than $10,000 because banks also have cash reporting requirements. Items exceeding $10,000 will have already been reported by the bank drawing the financial instrument. Also, please note the one important exception, personal checks. These are never calculated for Form 8300 requirements because banks are required to monitor all bank activity and report the transactions accordingly. The only other exception to any of these instruments is if the customer provides documentation that they are proceeds from a loan. The business would have to verify a loan document or some other evidence before ruling it exempt.

We have included a copy of the actual Form 8300 and the corresponding instructions published by the IRS: https://www.irs.gov/pub/irs-pdf/f8300.pdf  Please read the documents carefully.

The form can be downloaded from the IRS website free of charge at www.irs.gov. The form is a 2 page document containing the flowing four sections: (1) Identity of individual presenting cash (2) Person on whose behalf transaction was conducted (3) Description of Transaction and method of payment (4) Information of business receiving cash. Lest break down the parts to the form:

Requires the customer information including a name, address, taxpayer id, occupation, and method of identification (i.e. driver’s license, passport). A person can be an individual, a corporation, partnership, trust, estate, or association. If cash was received by more than one person, please check the appropriate box and complete part 1 on the back of the form.

Should be completed when the money received by the business was paid on behalf of someone other than the original payer. An example would be an employee of a corporation making a payment on a company owned vehicle. This section should be completed in the same manner as part 1. If more than one person is applicable, then check the appropriate box and complete part 2 on the back of the form.

Requires a business to give a very detailed description of the instruments received and transaction conducted. The date entered should be the last date when cash was received. For multiple payments, this would be the date of the payment that triggered the Form 8300 requirement.

Example: A customer makes four separate payments for the same transaction. The first payment is made January 1st, the second on January 10th, and the third on January 20th. The dealer is then responsible to complete and file the form by February 15th.

 File Form 8300 by the 15th day after the date the cash was received. If that date falls on a Saturday, Sunday, or legal holiday, file the form on the next business day.

A business will need to provide the country issuing currency and coins as well as issuer name and serial numbers on any money orders, bank drafts, cashier’s checks, and traveler’s checks. Further, a description of the transaction including specific information documenting said transaction is required.

Will include all information related to the person receiving the funds including name, address, and nature of the business. For individuals, a social security number is required; for corporations, trusts, etcetera, a taxpayer id. The document must be signed by an authorized employee or principal. Last, a contact phone number should be included.

Scenarios to help you spot a reportable transaction.

   Example #1: A customer presents for payment a personal check for $7,000, $2,000 cash, $2,000 money order, and $2,000 Traveler’s check. The total payment amount is $13,000.

The dealer does not have to report this transaction. The reportable amount is only $7,000. Remember that personal checks are not used to calculate reportable amounts.

   Example #2: A customer purchases a vehicle and pays $12,000. He gives the dealer a $5,000 cashier’s check, $3,000 cash, and a $4,000 money order. Further, the cashier’s check stub says “loan proceeds”.

The dealer does not have to report this transaction. The reportable amount is $7,000. Remember that proceeds from a loan are not considered reportable as long as the nature of the proceeds can be verified.

   Example #3: A customer buys a vehicle for $9,500. He pays the dealer with $9,500 cash in small bills that he pulls out of a paper bag. Further, he introduces Form 8300 into the conversation.

The dealer should avoid discussing Form 8300 requirements with a customer. Advising a customer regarding the appropriate steps in avoiding a Form 8300 is called “Structuring a deal”. Dealers caught structuring a deal may be prosecuted. Further, the dealer can file a Form 8300 even though the amount does not meet or exceed $10,000. In this case, a dealer can file the form as a “suspicious transaction”.

Businesses can download a paper copy of the form, complete it, and mail it to the IRS at the following address: Detroit Computing Center, P.O. Box 32621, Detroit, MI 48232. They can also electronically file their Form 8300 using the Bank Secrecy Act (BSA) Electronic Filing (E-Filing) System: https://www.fincen.gov/forms/e-filing/. The filing is free and filers will receive an electronic acknowledgement of each submission. Regardless of how the form is completed, the requirement is that it be completed and submitted by the 15th day after the cash was received. It is recommended that you certify the mail in order to keep a record of the date of postmark.

Example: A customer gives you $10,000 in cash on January 1st. You must complete and mail the Form 8300 to the appropriate offices by January 15th.

A copy of the form should also be sent to the Florida Department of Revenue at the following address:

Further, a letter should be sent to customers informing them that a form has been filed in order to comply with IRS and Financial Crimes Enforcement Network (FinCEN) cash reporting requirements. This notice should be sent to the customer by January 31st of the following year when the cash was received. You do not, however, send customers a notification if you sent a Form 8300 reporting a “suspicious transaction”.

The regulation was designed to STOP money laundering. The aim is to uncover illegal activities as well as the individuals and organizations controlling the funds. The Financial Crimes Enforcement Network (FinCEN) is a bureau of the Department of Treasury appointed the task of safeguarding the national economic and financial system from illicit activity. The Internal Revenue Service (IRS), in conjunction with the FinCEN, analyses and monitors activity derived from the information furnished by dealers through the reporting of the Form 8300. The IRS does try to make a strong emphasis on uncovering and, when necessary, investigating possible income tax evasion.

IRS publication that gives a basic overview of the Form 8300 and Reporting Cash Payments: https://www.irs.gov/Businesses/Small-Businesses-%26-Self-Employed/Form-8300-and-Reporting-Cash-Payments-of-Over-10000

As per the  IRS website regarding penalty for non-compliance:

IRC 6721(a)(1), providing the penalty for failure to file a timely and correct Form 8300, is amended to raise the penalty from $50 to $100. The aggregate annual limitation (ceiling) has been raised in the case of businesses with gross receipts exceeding $5 million from $250,000 to $1,500,000. For businesses with gross receipts not exceeding $5 million the aggregate annual limitation has been raised from $100,000 to $500,000.

IRC 6721(b)(1), which applies when the failure is corrected on or before 30 days after the required filing date, is amended to raise the penalty from $15 to $30. The aggregate annual limitation has been raised in the case of businesses with gross receipts exceeding $5 million from $75,000 to $250,000. For businesses which correct the violation on or before 30 days after the required filing date and also have annual gross receipts not exceeding $5 million, the aggregate annual limitation is raised from $25,000 to $75,000.

IRC 6721(e)(2)(C), the intentional disregard penalty for failure to file a timely and correct Form 8300, provides a penalty of the greater of $25,000 or the amount of cash received in such transaction not to exceed $100,000. It has not been changed. There is still no aggregate annual limitation (ceiling) for intentional disregard of Form 8300.

IRC 6722, “Failure to Furnish” a statement to the persons whose names were required to be included in the Form 8300, was completely rewritten.

The “Failure to Furnish” penalty, 6722(a)(1), has been raised from $50 to $100 per violation. The aggregate annual limitation has been raised from $100,000 to $1,500,000. In the case of a business having gross receipts not more than $5 million, the aggregate annual limitation is $500,000.

If the violation is corrected on or before 30 days after the required furnishing date, 6722(b)(1), the penalty has been reduced from $50 to $30 and the aggregate annual limitation has been increased from $100,000 to $250,000. In the case of a business which corrects the failure on or before 30 days and has gross receipts not more than $5 million, the aggregate annual limitation is $200,000.