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8 December 2015

How Cash Payments Over $10,000 Get Noticed

How Cash Payments Over $10,000 Get Noticed

In business, not all cash is considered equal in the eyes of the IRS. Business owners must report any cash payments of more than $10,000 by completing a Form 8300. Why? These types of payments to businesses are a red flag for money laundering and criminal activity. It’s serious business for the IRS, since the activity can be an indication of terrorist financing and drug dealing. For the rest of us, it’s better to be safe than sorry—and simply report it. Here’s what you should know:

  • Under this requirement, cash includes the coins and currency of the United States as well as foreign currency, cashier’s checks, bank drafts, traveler’s checks and money orders. 
  • If the transaction falls under the requirements for Form 8300, you must submit the form and furnish a written statement to each person named on the form within 15 days.
  • Potential civil and criminal penalties for failure to file Form 8300 increased dramatically in 2011. For an overview of penalty amounts and aggregate annual limitations, see this IRS statement.According to the IRS, false claims have been circulating in which an individual will claim to be able to exempt your business from the Form 8300 filing requirements. Don’t be fooled. Such an exemption does not exist.
  • Since auto dealerships frequently receive cash payments over this amount, the IRS offers special guidance in this area. See their FAQs for dealerships here.
  • Under the Federal Bank Secrecy Act, your bank or financial institution is required to report any business transactions over $10,000 as well. So if you neglect to report the transaction, it’s likely the IRS will be notified another way.
  • Businesses that sell jewelry, furniture, boats, aircraft, or automobiles, as well as pawnbrokers, attorneys, real estate brokers, insurance companies and travel agencies must all report $10,000 transactions. Other institutions including casinos are also required to report certain currency transactions. It’s best to consult your tax advisor when conducting any sort of high-currency transaction at all.

While you may not be involved in dubious activity, this particular law may land you in hot water if you don’t follow the filing rules. For additional information, feel free to contact us.

Image Copyright:  kritchanut / 123RF Stock Photo
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