Reporting Cash Payments of Over $10,000

NOTICE:  The information below was obtained directly from the Internal Revenue Service (IRS) website. Links are provided so you may access the content on the IRS website.

FAST FACTS

A business must file Form 8300 to report cash paid to it if the cash payment is:

Over $10,000,
Received as:
1. One lump sum of over $10,000,
2. Two or more related payments that total in excess of $10,000, or
3. Payments received as part of a single transaction (or two or more related transactions) that cause the total cash received within a 12-month period to total more than $10,000.
Received in the course of trade or business,
Received from the same buyer (or agent), and
Received in a single transaction or in two or more related transactions.

Cash is money. It is currency and coins of the United States and any other country. Cash is also 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:

A “designated reporting transaction” as defined in Treas. Reg. section 1.6050I-1(c)(iii) (generally, a retail sale of a consumer durable, a collectible, a travel or entertainment activity) or
Any transaction in which the recipient knows the payer is trying to avoid the reporting of the transaction on Form 8300.

Personal checks are not considered cash.

A business must file Form 8300 within 15 days after the date the cash was received.

A business should mail Form 8300 to:

Internal Revenue Service
Detroit Computing Center
P.O. Box 32621
Detroit, MI 48232

Must a business notify its customer that the business 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.

Reference26 U.S.C. s. 6050I

If you are a Florida business, you must also file form 8300 with the Florida Department of Revenue no later than 15 days after the date the transaction is required to be reported to the IRS. Send the form to:

Florida Department of Revenue
P.O. Box 6609
Tallahassee, Florida 32314-6609

Reference: Section 896.102, Florida Statutes

For additional information from the IRS, please read below.


You are required to file IRS Form 8300 when you receive cash in an amount greater than $10,000 in a single transaction, or two or more related transactions. The form must be filed with the IRS within 15 days after receiving the cash. Click here for an introductory video (less than 2 minutes) from the IRS regarding Form 8300.

The following is a workbook provided by the IRS which can be found by clicking here:

Workbook on Reporting Cash Payments of Over $10,000


Introduction

The law requires that trades and businesses report cash payments of more than $10,000 to the federal government by filing IRS/FinCEN Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business (See Exhibit 1, Form 8300).
Transactions that require Form 8300 include, but are not limited to:

  • Escrow arrangement contributions
  • Pre-existing debt payments
  • Negotiable instrument purchases
  • Reimbursement of expenses
  • Making or repaying a loan
  • Sale of goods/services
  • Sale of real property
  • Sale of intangible property
  • Rental of real or personal property
  • Exchange of cash for other cash
  • Custodial trust contributions

The information contained in the form assists law enforcement in its anti-money laundering efforts. When businesses comply with the reporting laws they provide authorities with an audit trail to stop tax evasion, drug dealing, terrorist financing and other criminal activities.

Objectives

  • Determine what transactions a business must report
  • Define cash
  • Determine how and when businesses should report payments
  • Understand that civil and criminal penalties may be applicable for noncompliance

Type of Payments to Report

Trades and businesses must report cash payments received, if all of the following criteria are met:

  • The amount of cash is more than $10,000.
  • The business receives the cash as:
    • One lump sum of more than $10,000 or
    • Installment payments that cause the total cash received within one year of the initial payment to total more than $10,000 or
    • Previously unreported payments that cause the total cash received within a 12-month period to total more than $10,000.
  • The establishment receives the cash in the ordinary course of a trade or business.
  • The same agent or buyer provides the cash.
  • The business receives the cash in a single transaction or in related transactions.

Cash Includes

Cash includes the coins and currency of the United States and a foreign country.
Cash may also include cashier’s checks, bank drafts, traveler’s checks, and money orders with a face value of $10,000 or less, if the business receives the instrument in:

  • A designated reporting transaction, as defined below, or
  • Any transaction in which the business knows the customer is trying to avoid reporting of the transaction on Form 8300.

Example:  Tom Greenwood purchases a used car from XYZ Auto Dealership for a total of $12,000. He pays with a cashier’s check having a face value of $12,000. The cashier’s check is not treated as cash because its face value is more than $10,000. The business does not need to file Form 8300.

A designated reporting transaction is the retail sale of any of the following:

  • A consumer durable, such as an automobile, boat, or property other than land or buildings that:
    • Is suitable for personal use.
    • Can reasonably be expected to last at least one year under ordinary use
    • Has sales price of more than $10,000.
    • Can be seen or touched (tangible property).
  • A collectible (a work of art, rug, antique, metal, gem, stamp or coin).
  • Travel or entertainment, if the total sales price of all items sold for the same trip or entertainment event in one transaction or related transactions is more than $10,000. The total sales price of all items sold for a trip or entertainment event, includes the sales price of items such as airfare, hotel rooms and admission tickets.

Example: Ed Johnson asks a travel agent to charter a passenger airplane to take a group to a sports event in another city. He also asks the travel agent to book hotel rooms and admission tickets for the group. He pays with two money orders, each for $6,000. The travel agent has received more than $10,000 cash in the designated reporting transaction and must file Form 8300.

Cash Does Not Include

Cash does not include personal checks drawn on the account of the writer.

Cash does not include a cashier’s check, bank draft, traveler’s check or money order with a face value of more than $10,000. When a customer uses currency of more than $10,000 to purchase a monetary instrument, the financial institution issuing the cashier’s check, bank draft, traveler’s check or money order is required to report the transaction by filing FinCEN Form 104, Currency Transaction Report.

Example: Jim Roberts purchases an automobile from ABC Auto Dealers for $19,000. He pays with $4,000 in currency and a personal check in the amount of $15,000. Since a personal check is not considered to be cash, ABC Auto Dealers does not need to file a Form 8300.

Cash does not include a cashier’s check, bank draft, traveler’s check or money order that is received in payment on a promissory note or an installment sales contract (including a lease that is considered a sale for federal tax purposes). However, this exception applies only if:

  • The business uses similar notes or contracts in other sales to ultimate customers in the ordinary course of its trade or business and
  • The total payments for the sale that the business receives on or before the 60th day after the sale are 50 percent or less of the purchase price.

Cash does not include a cashier’s check, bank draft, traveler’s check, or money order that is received in payment for a consumer durable or collectible, and all three of the following statements are true:

  • The business receives it under a payment plan requiring:
    1. One or more down payments and
    2. Payment of the rest of the purchase price by the date of sale.
  • The business receives it more than 60 days before the date of the sale.
  • The business uses payment plans with the same or substantially similar terms when selling to ultimate customers in the ordinary course of its trade or business.

Cash does not include a cashier’s check, bank draft, traveler’s checks, or money order received for travel or entertainment if all three of the following statements are true:

  • The business receives it under a payment plan requiring:
    1. One or more down payments and
    2. Payment of the rest of the purchase price by the earliest date that any travel or entertainment item (such as airfare) is furnished for the trip or entertainment event.
  • The business receives it more than 60 days before the date on which the final payment is due.
  • The business uses payment plans with the same or substantially similar terms when selling to ultimate customers in the ordinary course of its trade or business.

Definition of a Related Transaction

The law requires that trades and businesses report transactions when customers use cash in a single transaction or a related transaction. Related transactions are transactions between a payer, or an agent of the payer, and a recipient of cash that occur within a 24-hour period. If the same payer makes two or more transactions totaling more than $10,000 in a 24-hour period, the business must treat the transactions as one transaction and report the payments. A 24-hour period is 24 hours, not necessarily a calendar day or banking day.

Example: A retail motorcycle dealer sells a motorcycle for $9,000 in cash to Gary Smith at 10:00 a.m. During the afternoon on the same day, Mr. Smith returns to buy another motorcycle for his son and pays $9,000 in cash. Since, both transactions occurred within a 24-hour period, they are related transactions, and the motorcycle dealer must file Form 8300.

Transactions are related even if they are more than 24 hours apart when a business knows, or has reason to know, that each is a series of connected transactions.

Example:  A client pays a travel agent $8,000 in cash for a trip. Two days later, the same client pays the travel agent $3,000 more in cash to include another person on the trip. These are related transactions, and the travel agent must file Form 8300.

Example:  A customer purchases a vehicle for $9,000 and then within the next 12 months pays the dealership additional cash of $1,500 for items such as a new transmission, accessories, customized paint job, etc. The dealership is not required to file a Form 8300, if the additional transactions are not part of the original sales contract and the customer has no additional legal obligation to make such additional transactions.

Reporting Suspicious Transactions

There may be situations where the business is suspicious about a transaction. A transaction is suspicious:

  • If it appears that a person is trying to prevent a business from filing Form 8300.
  • If it appears that a person is trying to cause a business to file a false or incomplete Form 8300, or
  • If there is a sign of possible illegal activity.

The business should report suspicious activity by checking the “suspicious transaction” box (box 1b) on the top line of Form 8300. Businesses are also encouraged to call the IRS Criminal Investigation Division Hotline at 800-800-2877 or the local IRS Criminal Investigation unit. If a business suspects that a transaction is related to terrorist activity, the business should call the Financial Institutions Hotline at 866-556-3974.

The business may voluntarily file a Form 8300 in those situations where the transaction is $10,000 or less and suspicious.

When to Report Payments

The amount of cash a customer uses for a transaction, and when the customer makes the transaction are the determining factors for when the business must file the Form 8300.

Generally, a business must file Form 8300 within fifteen days after the cash is received. If the fifteenth day falls on a Saturday, Sunday, or holiday, the business must file the report on the next business day.

Multiple Payments

In some situations, the payer may arrange to pay in cash installment payments. If the first payment is more than $10,000, a business must file Form 8300 within 15 days. If the first payment is not more than $10,000, the business adds the first payment and any later payments made within one year of the first payment. When the total cash payments exceed $10,000, the business must file Form 8300 within 15 days.

After a business files Form 8300, it must start a new count of cash payments received from that buyer. If a business receives more than $10,000 in additional cash payments from that buyer within a 12-month period, it must file another Form 8300 within 15 days of the payment that causes the additional payments to total more than $10,000.

If a business must file Form 8300 and the same customer makes additional payments within the 15 days before the business must file Form 8300, the business can report all the payments on one form.

Example: On January 10, a customer makes a cash payment of $11,000 to a business. The same customer makes additional payments on the same transaction of $4,000 on February 15, $5,000 on March 20, and $6,000 on May 12. By January 25, the business must file Form 8300 for the $11,000 payment. By May 27, the business must file another Form 8300 for the additional payments that total $15,000.

Where to File Form 8300

Form 8300 can be filed electronically using the Bank Secrecy Act (BSA) Electronic Filing (E-Filing) System. E-filing is free, and is a quick and secure way for individuals to file their Form 8300s. Businesses can also mail the Form 8300 to the IRS at:

IRS Detroit Computing Center
P.O. Box 32621
Detroit, MI 48232

Required Written Statement for Customers

When a business files a Form 8300, the law requires the business to provide a written statement to each person named on Form 8300 to notify them that the business has filed the form.

The statement must include the following information:

  • The name and address of the cash recipient’s business.
  • Name and telephone number of a contact person for the business.
  • The total amount of reportable cash received in a 12-month period and
  • A statement that the cash recipient’s is reporting the information to the IRS.

The code and regulations only specify the information that the business is required to include on a statement, not the format of the statement. A business may use its invoice for the statement of notification, as long as the invoice includes all required information. Providing a copy of Form 8300 to the payer(s), although not prohibited, is not advisable due to the sensitive information contained on the form, for example, Employer Identification Number or Social Security Number of the filer.

When to Provide a Statement to the Customer

The business must provide the written statement to its identified customers on or before January 31 of the year after the year in which the customer made the cash payment that caused the business to file Form 8300. A business that chooses to mail the statement must mail the statement timely to ensure the customer receives the statement by January 31.

Recordkeeping

A business should keep a copy of every Form 8300 it files and the required statement it sent to customers for at least five years from the date filed.

Penalties

Businesses may be subject to civil and criminal penalties for noncompliance with the law.

Civil Penalties

Civil penalties and applicable rules are:

  • The penalty for negligent failure to timely file, to include all required information or to include correct information is $100 per return, not to exceed $1,500,000 per calendar year, IRC Section 6721(a) (1): For persons with average annual gross receipts of not more than  $5,000,000, the ceiling is $500,000.,The penalty applies to each return IRC 6721(d)(1)(A).
  • If any failure to file under IRC Section 6721(a) is corrected on or before the 30th day after the required filing date, the penalty is reduced to $30 in lieu of $100 and the maximum amount imposed shall not exceed $250,000 per calendar year. IRC 6721(b)(1). The ceiling is $75,000 for persons with average annual gross receipts of not more than $5,000,000, IRC 6721(d)(1)(B).
  • The penalty for intentional disregard of the requirement to timely file or to include all required information, or to include correct information is the greater of: (1) $25,000, or (2) the amount of cash received in the transaction, not to exceed :$100,000 (with no calendar year limitation applicable). The penalty applies to each failure. IRC Section 6721(e) (2) (C).
  • The penalty for negligent failure to furnish a timely, complete and correct notice to the person(s) required to be identified on the Form 8300 is $100 per statement not to exceed $1,500,000  per calendar year, IRC 6722(a)(1). For persons with average annual gross receipts of not more than $5,000,000 the ceiling is $500,000,IRC 6722(d)(1)(A).
  • If any failure to furnish described in IRC 6722(a) is corrected within 30 days  the penalty is $30 in lieu of $100 and the ceiling is $250,000, IRC 6722(b). For persons with gross receipts of not more than $5,000,000 the ceiling is $75,000, IRC 6722(d)(1)(B).
  • Intentional disregard of the requirement to furnish timely, correct and complete notices is  , $250 per failure, or if greater, 10 percent of the aggregate amounts of the items required to be reported correctly (with no calendar year limitation applicable).  IRC Section 6722(e).

Criminal Penalties

 A person may be subject to criminal penalties for:

  • Willful failure to file
  • Willfully filing a false or fraudulent form
  • Stopping or trying to stop a form from being filed or
  • Setting up, helping to set up, or trying to set up a transaction in a way that would make it seem unnecessary to file Form 8300.

Any person required to file Form 8300 who willfully fails to file, fails to file timely, or fails to include complete and correct information is subject to criminal sanctions as a felony under IRC Section 7203. Sanctions include a fine up to $25,000 ($100,000 in the case of a corporation), and/or imprisonment up to five years, plus the costs of prosecution.

Any person who willfully files a Form 8300, which is false with regard to a material matter, may be fined up to $100,000 ($500,000 in the case of a corporation), and/or imprisoned up to three years, plus the costs of prosecution. (IRC Section 7206(1))

The penalties for failure to file may also apply to any person (including a payer) who attempts to interfere with or prevent the seller (or business) from filing a correct Form 8300. This includes any attempt to structure the transaction in a way that would make it seem unnecessary to file Form 8300. “Structuring” means breaking up a large cash transaction into small cash transactions.

Putting It All Together

In this lesson you learned:

  • Who must file Form 8300.
  • When a Form 8300 must be filed.
  • What constitutes cash.
  • How to identify designated reporting transactions.
  • What is a related transaction.
  • How to identify a potentially suspicious transaction.
  • What penalties may be assessed for noncompliance.

Exercises

1. ABC Retail Jewelers sells jewelry to John Smith for a total price of $12,500. Mr. Smith pays the total amount with a personal check. Is ABC Retail Jewelers required to file Form 8300?

a. Yes
b. No

2. Jim Jones purchases lumber and hardware for a home improvement project from Joe’s Lumber Company. The total price is $10,500 and Mr. Jones pays with a cashier’s check with a face value of $10,500. Does Joe’s Lumber Company need to file Form 8300?

a. Yes
b. No

3. If Jim Jones purchased $10,500 worth of lumber and hardware as in question 2, but paid with $500 in currency and a cashier’s check with a face value of $10,000, would Joe’s Lumber Company need to file Form 8300?

a. Yes
b. No

4. City Motors is a retail auto dealership who sells a car to Anita Robbins for a total price of $17,700. She pays with a personal check for $8,000 and says that she will be back later that afternoon with the balance of $9,700. She does, indeed, return that afternoon with $9,700 in currency. Does City Motors need to file Form 8300?

a. Yes
b. No

5. Same scenario as in question 4, except that Ms. Robins pays you with a cashier’s check for $8,000 and returns in the afternoon with $9,700 in currency. Does City Motors need to file Form 8300?

a. Yes
b. No

6. Thomas and Amanda Moore buy a boat from Marina Boating, valued at $16,000 and scheduled delivery in 10 days. They pay for the boat with currency. The following day Mr. Moore comes to Marina Boating Company and cancels the sale. Marina Boating Company refunds his $16,000 in the form of a company check. Does Marina Boating need to file Form 8300?

a. Yes
b. No

7. Otto’s Farming Equipment Leasing leases equipment to Marcus Jones, who signs a lease agreeing to pay $1,000 per month, not to exceed 24 months. Mr. Jones pays on the first day of every month starting Feb 1, 2012 through Jan 1, 2014, and he always pays you in currency. Does Otto’s Farming Equipment Leasing need to file Form 8300?

a. Yes
b. No

8. Referring to question 7, by which date(s) does Otto’s Farming Equipment Leasing need to file Form 8300?

a. November 16, 2012
b. December 16, 2012
c. November 16, 2013
d. December 16, 2012, and Nov 16, 2013

9. Referring to question 7, by which date(s) must Otto’s Farming Equipment Leasing provide a written statement to Marcus Jones?

a. December 31, 2012
b. January 31, 2013
c. January 31, 2014
d. January 31, 2013, and Jan 31, 2014

(See Exhibit 2 for answers to exercises.)

Exhibit 1

Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business (PDF)

Exhibit 2, Answers to Exercises

1) b. Personal checks are not considered cash.

2) b. A cashier’s check with a face value of more than $10,000 is not considered cash.

3) b. Since the transaction does not meet the definition of a retail sale of a consumer durable, the cashier’s check would not be treated as “cash” and Joe’s Lumber Company would not be required to file a Form 8300. A “consumer durable” is defined as an item of tangible personal property of a type that is suitable under ordinary usage for personal consumption or use, that can reasonably be expected to be useful for at least one year under ordinary usage, and that has a sales price of more than $10,000. There is no provision in the regulations that allow grouping two or more consumer durables for the purpose of the $10,000 threshold.

4) b. Personal checks are not cash.

5) a. Because the cashier’s check is $10,000 or less, it is considered cash.

6) a. The fact that there was a refund issued does not alter the fact that Marina Boating received a total of more than $10,000 in cash and therefore is required to file Form 8300.

7) a. Otto’s Farming Equipment Leasing must file Form 8300 once more than $10,000 in installment payments are received within a 12 month period.

8) d. When Otto’s Farming Equipment Leasing is paid in monthly (installment)payments, the business must add the first payment and any later payments made within one year of the first payment. When the total cash payments are more than $10,000 the business must file Form 8300. After filing Form 8300, the business must start a new count of cash payments. If the business receives more than $10,000 in additional cash payments within a 12-month period, it must file another Form 8300.

9) d. Notification statements must be provided to customers by January 31 of the year following the cash transaction. Otto’s Farming Equipment Leasing received more than $10,000 from Mr. Jones in 2012 and 2013, so notification statements to Mr. Jones are required by January 31, 2013, and January 31, 2014, respectively.

Report of Cash Payments Over $10,000 Received in a Trade or Business – Motor Vehicle Dealership Q&As

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 (PDF). 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.

The Motor Vehicle Technical Advisor Program in conjunction with IRS specialists on money laundering would like to assist dealers in their compliance with the filing requirements of Form 8300. In pursuit of that goal, we have compiled a list of dealership-specific questions and answers. As we receive additional questions that need to be addressed, we will update this document as appropriate.

The questions contained in this document are dealer specific and do not include basic questions dealing with the filing and notification requirements of Form 8300. Frequently asked questions dealing with filing requirements, written statement to customers and reportable transactions can be found in FAQs Regarding Reporting Cash Payment of Over $10,000 (Form 8300).

Dealership-Specific Questions

A customer purchased a vehicle for $9,000 cash. Within the next 12 months, the customer paid the dealership additional cash of $1,500 for a repair to the vehicle’s transmission, accessories and a customized paint job, etc. Should a Form 8300 be filed?

  • No, unless the dealer knew or had reason to know the sale of the vehicle and the subsequent transactions were a series of connected transactions (for example, if the dealer and the customer agreed, as a condition of the sale of the vehicle, that the customer would be obligated to buy an additional $1,500 of goods or services).
  • Transactions are related if they occur within a 24-hour period. Transactions are related even if they are more than 24 hours apart if you know, or have reason to know, that each is one of a series of connected transactions. For example, items or services negotiated during the original purchase are related to the original purchase.

A customer wired $7,000 from his bank account to the dealership’s bank account and also presented a $4,000 cashier’s check. Does the dealership complete Form 8300?

  • A wire transfer does not constitute cash for Form 8300 reporting. Since the remaining cash remitted was below $10,000, the dealer has no 8300 filing requirement.

A customer makes weekly payments in cash to a dealership as a lease payment or loan payment on a vehicle. During a 12-month period, these payments total more than $10,000. Are these payments considered related transactions and is the dealership required to file a Form 8300?

  • Yes, the weekly lease or loan payments constitute payments on the same transaction (the leasing or purchase of the vehicle).
  • Accordingly, the dealership is required to file Form 8300 when the total amount exceeds $10,000.
  • Each time the payments aggregate in excess of $10,000 the dealership must file another Form 8300 within 15 days of the payment that causes the previously unreportable payments to total more than $10,000

A husband and wife purchase two cars at one time from the same dealer and the total cash received is $10,200. How many Form 8300s should the car dealer file?

  • The transaction(s) can be viewed as either a single transaction or two related transactions. Either way, it warrants only one Form 8300.

If a customer purchased a cashier’s check at the bank for over $10,000, would the bank report the transaction? Does the seller of a vehicle need to report the transaction if the same cashier’s check is subsequently used to purchase a vehicle?

  • If the cashier’s check was purchased with cash exceeding $10,000, the bank would file a Currency Transaction Report (not a Form 8300).
  • The purchase of a vehicle with a cashier’s check, bank draft, traveler’s check or money order with a face amount of more than $10,000 is not treated as cash and a business does not have to file Form 8300 when it receives them.

How should a dealership handle a nonresident alien with no SSN?

  • Use the IRS Individual Taxpayer Identification Number (ITIN) if the nonresident has one. If there is no ITIN enter (NONE) on Item 6 of Form 8300. Pub 1544 provides a list of exceptions in which a filer is not required to provide a Taxpayer Identification Number of a person who is a nonresident alien individual or a foreign organization.
  • You must verify the individual’s name and address and insert this information on Item 14 of Form 8300. For nonresident aliens, acceptable documentation would include a passport, alien registration card or other official document.

Do payments in excess of $10,000 in cash paid to a body shop need to be reported? Do the 8300 filing requirements apply to services as well as goods?

  • Yes. Cash, in the form of currency, received in excess of $10,000 must be reported. However, a service is not a consumer durable so the expanded definition of cash does not apply to payments for services. The body shop would file an 8300.

A dealership sold cars on Jan. 31 and Feb. 6 to one customer and received $20,000 cash in two payments of $10,000 each on the same date for the two cars. Is a Form 8300 required?

  • Yes. The dealership received over $10,000 in cash within 24 hours.

Customer purchased five cars, each separately though the year totaling $15,000 and none of which individually exceeded $10,000. Is Form 8300 required?

  • If the dealer knows, or has reason to know, that each transaction is one of a series of connected transactions a Form 8300 would be required. If there is no reason to believe that they are connected, the five transactions would be viewed as separate transactions none of which exceed $10,000 in cash and a Form 8300 would not be required.

Are wire transfers considered cash?

  • Wire transfers are not considered to be cash and no Form 8300 is required to be filed.
  • The Money Services Business (MSB) or bank that handles the wire transfer must document these types of transactions by filing a CTR on amounts over $10,000.

A dealership receives greater than $10,000 in cash on day one for the sale of a vehicle. On day three, the deal is cancelled due to an inability to finance the deal. The dealership returns the cash. Is a Form 8300 required?

  • Yes. Once the dealership receives cash exceeding $10,000, a Form 8300 must be filed.
  • The deal not going through may in fact be an attempt to launder illegal funds.
  • If $10,000 or less was received by the dealer and the deal was cancelled, the dealer may voluntarily file a Form 8300 if the transaction appears suspicious.

If a dealership receives a bank check drawn on the funds of the bank (not a personal checking account check or a check drawn on a personal account of the customer) with the customer’s personal account number and customer name on it, is this considered cash or a cash equivalent?

  • Bank checks (drawn on the bank’s account, not the account of the customer) of $10,000 or less are cash under the expanded definition of cash, unless they are loan proceeds.
  • The fact that there are notations on the check or even that the check is made payable to the dealership does not negate this.

A customer purchases a vehicle for $15,000 and pays for it with $9,000 in cash and puts the remaining $6,000 on a personal credit card. Should a Form 8300 be filed? Instead of a personal credit card, the customer pays the remaining $6,000 with his ATM card. Is the ATM amount considered cash or a cash equivalent that makes the total amount received over $10,000 and thus reportable on Form 8300?

  • No Form 8300 is required.
  • Less than $10,000 in cash was received. A credit card is not cash.
  • The ATM card works the same as a credit card in this instance. The only difference is that the account will be charged with a debit against existing funds instead of charged for a debit to nonexisting funds, but a promise to repay later.
  • An ATM transaction is not given the consideration of cash; therefore, since the amount received in cash or cash equivalents is less than $10,000, the transaction is not reportable.

For wholesalers, where a purchasing retailer buys more than one vehicle in a single day, is that one transaction, a series of related transactions or a series of unrelated transactions given that there are multiple vehicles? What happens on separate purchases over the course of a week? What about a month?

  • Two or more transactions within a 24-hour period are related transactions. A trade or business that receives more than $10,000 in related transactions must file Form 8300.
  • If purchases are more than 24 hours apart and not connected in any way that the seller knows, or has reason to know, then the purchases are not related and a Form 8300 is not required.

What exactly can be said to a customer who inquires about IRS Form 8300 reporting? Some dealers are advised not to refer to IRS Form 8300 reporting in the presence of the customer. In particular, dealers are concerned that advising customers that they need information for an IRS 8300 report could degenerate into a structuring conversation. What if the customer asks what the information is for? Can the dealer volunteer that it is for IRS Form 8300 reporting?

  • A customer can be, but is not required to be, told at the time of the transaction about the law requiring the reporting of cash payments over $10,000 to the IRS and FinCEN.
  • What a dealer cannot do is aid a customer in structuring a transaction to prevent a Form 8300 from being filed.
  • A dealer who is filing Form 8300 voluntarily because of suspicious activity cannot inform the customer of the filing.

What are the penalties if a dealership does not 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.

Can Form 8300 be filed electronically?

  • Yes. On Sept 19, 2012, FinCEN announced that businesses are now able to electronically file their Form 8300 using the Bank Secrecy Act (BSA) Electronic Filing (E-Filing) System. E-filing is free, and is a quick and secure way for individuals to file their Form 8300s. Filers will receive an electronic acknowledgement of each submission. For more information about Form 8300 e-filing, read the FinCEN news release.

A dealership receives monthly ACH payments [automatic payments from a customer bank account]. If the payments total in excess of $10,000, should the payments be treated as cash?

  • ACH payments are not considered cash for the purpose of reporting on Form 8300.

A related finance company provides financing to customers of multiple related used vehicle dealerships. The finance company purchases contracts from the used car lot and a bank check is issued to the car lot for the amount of the car deal. Would the definition of cash to include cashier’s checks and money orders apply to the finance company?

  • As to the sale to the customer, the dealership’s sale of the vehicle constitutes a retail sale of a consumer durable requiring reporting of certain monetary instruments if the face amount was $10,000 or less and the total transaction exceeds $10,000.
  • When the finance company purchases the “finance contract,” they do not have a designated reporting transaction. The finance contract is not a consumer durable, collectible, or travel or entertainment activity. Thus monetary instruments with a face amount of $10,000 or less received from the finance company to pay off the finance contract would under normal situations not be reportable.

What type of records might an examiner request during an 8300 examination?

  • Records requested may vary by examiner but typically the following records are requested:
    • Checking, savings, and/or other financial account statements and deposit slips.
    • An electronic bank deposit reconciliation in Excel format extracted from the dealer’s Dealers Management System (DMS). The report generally requires all receipts of the business from any source including:
      • The amount, date received, method of payment (cash, check, credit card number, etc.),
      • Payer name, and
      • Receipt number.
    • Receipt sources should include new and used vehicle sales, leases, service, parts, body shops and any non-customer receipts.
    • Deal jackets for leases and sales during the examination period.
    • Sales journals, cash receipts journals, accounts/notes receivable, sales invoices.
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