The Bank Secrecy Act of 1970 (BSA) requires that cash transactions of more than $10,000, related to trade or business, be reported to the IRS via the filing of Form 8300. This includes both single transactions and also related transactions that total more than $10,000. The BSA was passed with a mind toward fighting money laundering and Form 8300 is intended to create a paper trail. Additional legislation since 1970, including The Patriot Act of 2001, have expanded and clarified the law’s requirements.
Failure to file Form 8300 can result in substantial penalties. Attempting to evade the filing requirement, for example by making several transactions below the $10,000 threshold rather than one lump payment, can actually incur penalties more severe than those for failing to file the form.
Transactions, for purposes of the filing requirement, include sale of goods, services and property, rental of property, exchanging cash for cash, payments to trust or escrow accounts, repayment of a loan, or the conversion of cash into a negotiable interest like a bond.
Certain organization or entities are exempt from the reporting requirement. If the transaction takes place entirely outside the United States or its territories, there is no reporting requirement. Transactions must be reported if they are connected to business or trade, but if it is an entirely personal transaction (for example, if you sell your personal car for cash) Form 8300 does not need to be filed.
Cash includes, as you might expect, coins of currency of the United States and any other country, but also cashier’s checks, bank drafts, traveler’s checks or a money orders.
In addition to single payments of more than $10,000, related transactions who together total above $10,000 must also be reported. Transactions are considered related if they occur within a 24-hour period. They are also considered related even if they are perceived over a longer period if you, the one receiving the cash, know or have reason to know that the payments are related or connected.
The general failure to file penalty for Form 8300 is the greater of $25,000 or the amount of cash you received and were required to report, up to $100,000. These are civil penalties. Criminal penalties are possible for willfully failing to file Form 8300 or filing a fraudulent Form 8300, for trying to stop the filing of Form 8300, and for setting up a transaction in such a way as to evade the filing requirement. These criminal penalties include fines up to $250,000 for individuals and $500,000 for corporations and up to five years in prison.
For more information on cash transaction reporting requirements, asisstnce with filing required forms, or help with other federal, Illinois or Chicago tax law concerns, you are welcome to contact us at (312) 787-5533 or email@example.com