The IRS requires you to report all your income to them. But, they don’t take your word for it. This is especially true of large business cash transactions. Why? Because they are looking for criminal money laundering. Large cash transactions are one of the signs of money laundering.
Penalties for Failure to File IRS Form 8300
If you or your business have large cash transactions you need to report them on IRS Form 8300. If you fail to file IRS Form 8300, you could be fined up to $250,000 for individuals ($500,000 for Corporations) and/or sentenced up to 5 years in Federal prison.
Who Must File Form 8300?
In general, any person in a trade or business who receives more than $10,000 cash in a single or related transaction.
Reportable transactions relate to business only. Personal cash transactions such as the sale of your car do not need to be reported.
Transaction defined. A “transaction” occurs when your business sells goods, services or property. Also, when property is rented, cash exchanged for other cash, or a loan is made or repaid in cash.
The definition also includes cash contributions to trusts, escrow accounts and for-profit businesses.
Person defined. A “person” includes an individual, company, corporation, partnership, LLC, association or an estate.
Foreign transactions. If the entire cash transaction takes place outside the U.S., its territories or Puerto Rico you do not have to file Form 8300. Be sure that you don’t run afoul of the IRS requirement to report the existence of all foreign bank accounts.
When Must IRS Form 8300 be filed?
Many people think that Form 8300 must be filed by the end of the year in which the reportable transaction took place. This is not true.
Form 8300 must be filed within 15 days of the reportable transaction.
What Payments Must Be Reported?
The answer could be complex. In general, though, any business transaction made in cash over $10,000.
The cash could be one lump sum or in installments received within one year from the same buyer exceeding $10,000.
Related transactions must also be reported on IRS Form 8300. Related transactions are two or more transactions between the same Buyer and Seller within 24 hours, the total of which exceed $10,000.
What is Considered Cash?
Of course, currency and coins are cash. But so is a cashier’s check, bank draft, traveler’s check or money order with a face amount of $10,000 or less if you receive it in a designated reporting transaction or you know the payer is trying to avoid the reporting requirements of Form 8300.
There are many exceptions to these rules that are too numerous to delineate here.
Banking Rules
If you deposit more than $10,000 cash in a bank or involve a bank in a transaction with more than $10,000 cash in other ways, the bank must report it to the IRS.
The general rules set out here have many exceptions and sub-rules. It is best to get help from an experienced professional if you are unsure if you have a filing requirement.
What to Do If You Have Been Penalized But Can’t Pay the Fine.
Doing nothing and hoping the IRS won’t collect from you is a losing proposition. You must get Professional help immediately so the IRS does not take everything you own. We specialize in remediating these situations with the IRS. Contact the Lazarow Law Firm for a free consultation about your situation.
