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Reporting Cash Transactions

Internal Revenue Code Section 6050I requires anyone who receives more than $10,000 of cash during the course of his or her trade or business to file a Form 8300 with the IRS by the 15th day since the cash transaction. Failure to do so can result in steep civil penalties as well as criminal sanctions.

Cash

In addition to coin and currency of the United States and of foreign countries, cash includes cashier’s checks, traveler’s checks, and money orders of at most $10,000. (Note: Cashier’s checks with a face value of more than $10,000 are reported to the IRS by financial institutions.) Cashier’s checks and other similar instruments are only included as cash if they are received in a designated reporting transaction or if the recipient knows that the instrument is being used to avoid reporting the transaction. A designated reporting transaction is a retail sale of a consumer durable, collectible, or travel or entertainment activity.

Transaction(s)

The reporting requirement under Section 6050I cannot be avoided by breaking up a single transaction, because the requirement is triggered when there is a receipt of more than $10,000 in cash in a transaction or multiple related transactions. Related transactions include those conducted in a 24-hour period. Transactions occurring more than 24 hours apart may still be related transactions if the recipient knows or has reason to know that each transaction is connected to each other.

Form 8300

Form 8300 is intended to assist enforcement against illegal activities like money laundering, tax evasion, and drug dealing. It is relatively detailed and requires the payor’s taxpayer identification number, name, address, date of birth, and description of the transaction, among other things. In addition to Form 8300, recipients are required to provide payors with a written statement notifying the payor that the cash transaction is being reported to the IRS. If Form 8300 is used to voluntarily report a suspicious transaction that involves $10,000 or less of cash, no written statement is required to be provided to the payor.

Civil Penalties

A late or incomplete filing of Form 8300 can result in civil penalties. An unintentional failure to properly file Form 8300 can result in a penalty of $250 per return. The total amount imposed cannot exceed $3,000,000 per calendar year. The same penalty applies for a failure to furnish a written statement with details of the transaction to the payor.

The penalty for a late or incomplete filing due to intentional disregard is the greater of $25,000 or the amount of cash received in the transaction up to $100,000.

Criminal Penalties

Criminal penalties can also be severe. If a person willfully files a Form 8300 with false material information, he or she may be fined up to $100,000 and/or imprisoned up to three years pursuant to IRC Section 7206(1). A corporation that commits the same crime may be fined up to $500,000.

A willful failure to file, failure to timely file, or failure to make a complete and accurate filing is a felony under IRC Section 7203. A willful failure may result in a fine of up to $25,000 and/or imprisonment up to five years. A corporation that commits a willful failure may be fined $100,000. A willful failure can include structuring the transaction to avoid triggering the Section 6050I filing requirement. Structuring involves disguising a large transaction by breaking it up into multiple transactions of less than $10,000 and/or combining cash and non-cash payments.

If you have a potential criminal tax issue, contact the tax attorneys at the Ben-Cohen Law Firm. Based in Los Angeles, our dedicated criminal tax defense lawyers have the knowledge and experience to minimize the harm to you and your business. Attorney and CPA Pedram Ben-Cohen has extensive large-firm experience handling sophisticated tax matters and is also a Certified Taxation Law Specialist, certified by the State Bar of California Board of Legal Specialization.

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