Abstract: When businesses receive large amounts of cash or cash equivalents, they may
be required to report these transactions to the IRS. Specifically, a payment of
more than $10,000 cash in one or more related transactions must be reported on
a specific form. Although not all large cash payments are problematic, the goal
is to help thwart illegal activities by making the source of the cash
traceable.
Large
cash business transactions must be reported to the IRS
If
your business receives large amounts of cash or cash equivalents, you may be
required to report these transactions to the IRS. Here are some details.
The requirements
Each
person who, while operating a trade or business, receives more than $10,000 in
cash in one transaction (or at least two related transactions), must file Form
8300. What constitutes “related transactions?” Related transactions are conducted
in a 24-hour period. But transactions that occur in a greater than 24-hour
period may also be deemed related if the recipient knows, or has reason to
know, that the transactions are connected.
To
complete a Form 8300, you’ll need certain information about the person making
the payment. This includes a Social Security or taxpayer identification number.
Reasons
behind the reporting
Although
many cash transactions are legitimate, the IRS explains that “information
reported on (Form 8300) can help stop those who evade taxes, profit from the
drug trade, engage in terrorist financing and conduct other criminal
activities. The government can often trace money from these illegal activities
through the payments reported on Form 8300 and other cash reporting forms.”
It’s
important to keep a copy of each Form 8300 for five years from the date you
file it, according to the IRS. Contact us if you have questions related to form
retention.
“Cash” and “cash equivalents” defined
For
Form 8300 reporting purposes, cash includes U.S. currency and coins, as well as
foreign money. It also includes cash equivalents such as cashier’s checks
(sometimes called bank checks), bank drafts, traveler’s checks and money
orders. Money orders and cashier’s checks under $10,000, when used in
combination with other forms of cash for a single transaction that exceeds
$10,000, are defined as cash for Form 8300 reporting purposes.
Note:
Under a separate reporting requirement, banks and other financial institutions
report cash purchases of cashier’s checks, treasurer’s checks and/or bank
checks, bank drafts, traveler’s checks and money orders with a face value of
more than $10,000 by filing currency transaction reports.
Options
for filing
Businesses
required to file reports of large cash transactions on Form 8300 should know
that in addition to filing on paper, e-filing is an option. The form is due 15
days after a transaction and there’s no charge for the e-file option.
Businesses that file electronically get an automatic acknowledgment of receipt
when they file.
The
IRS also reminds businesses that they can “batch file” their reports. This is
especially helpful to those required to file many forms.
Setting up
an electronic account
To
file Form 8300 electronically, a business must set up an account with FinCEN’s
Bank Secrecy Act E-Filing System. For more information, visit: https://bsaefiling.fincen.treas.gov/AboutBsa.html. Interested businesses
can also call the BSA E-Filing Help Desk at 866-346-9478 (Monday through Friday
from 8 am to 6 pm EST). Contact us with any questions or for assistance.
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