Form 8300 ~ The IRS Encourages Businesses to take Advantage of the “Speed and Convenience” of E-Filing Cash Transaction Reports by Sandra R. Brown
While many people are familiar with the phrase “Cash is King,” dealing in cash can, and often does, take on new meaning when it comes to the IRS. There is, of course, the obvious obligation to ensure that any, and all, cash received as income is properly reported annually on the appropriate tax return. However, that annual filing is not all that is required for some individuals and businesses who deal in large sums of cash. Specifically, for those who, in the course of a trade or business, receive more than $10,000 in cash in one transaction or in two or more related transactions, there are also obligations to file a Form 8300 Report of Cash Payments Over $10,000 Received in a Trade or Business.
In light of the IRS’s not one, but two, recent announcements regarding Forms 8300, now is a really good time to focus on understanding and ensuring that such obligations are being met.
On February 21, 2019, the IRS issued IR-2019-20, urging businesses with obligations to file reports of cash transactions to take advantage of the speed and convenience of filing Forms 8300 electronically. Once the account is set up with the Financial Crimes Enforcement Network’s (“FINCEN”) BSA E-filing System, a business’s e-filing is not only faster and more convenient, but a free way to meet reporting obligations with the added benefit of receiving an automated acknowledgement of the receipt of your filing, which can come in handy should the IRS ever question your timely compliance with this obligation. Of course, businesses also have the option to file the Form 8300 on paper by mailing the form to the IRS at: Detroit Computing Center, P.O. Box 32621, Detroit, Michigan 48232.
Also, on February 21, 2019, the IRS released a fact sheet, FS-2019-1, to assist individuals and businesses to better decipher, among other things relevant to cash transactions, exactly who is covered, as well as what is considered a reportable cash transaction, for purposes of the Form 8300 reporting requirements.
For the purposes of Form 8300, the “who” is defined as an individual, company, corporation, partnership, association, trust or estate. Tax-exempt organizations which receive cash solely for the purposes of a charitable cash contribution need not file a Form 8300. The “what” is reportable as cash is actually a bit broader than just dollar bills. Reportable transactions include coins, currency (U.S. or foreign), cashier’s checks, bank drafts, traveler’s checks, and money orders with a face value of $10,000 or less. However, a transaction which involves a personal check drawn on an account of the payor or cashier’s checks, bank drafts, traveler’s checks or money orders with a face value of more than $10,000, is not considered a cash transaction. It is also important to understand that not only is the receipt of a lump sum payment of cash in excess of $10,000 a reportable transaction, the receipt of cash in excess of $10,000 which is received in what is viewed by the IRS as a “related” transaction, e.g., amounts in excess of $10,000 which are broken down into smaller payments, but are part of the same business transaction, is also required to be reported. As such, cash payments, albeit not received in one lump sum, but which are received within a 24-hour time period and total in excess of $10,000, are related transactions and reportable on a Form 8300. But that’s not all. Even if cash, received in a trade or business, is paid over a time period which exceeds 24-hours but where the recipient either knows, or has reason to know, that each cash transaction is part of a series of connected transactions whereas if paid all at once would exceed $10,000, then the series of connected payments are considered by the IRS to be related transactions and thus, are also reportable on a Form 8300. In all such circumstances, the recipient of the funds is required to file, by the 15th day after the date the cash transaction, or related transactions, occurred.
Lastly, it is of note that the IRS’s Form 8300 fact sheet ends with both a reminder and a cautionary note. The IRS is reminding businesses that they must give a customer written notice by January 31 of the year following the transaction that it filed Form 8300 to report the customer’s cash transaction, which also means that it is a good practice to keep a copy of every Form 8300 filed, whether done electronically or in paper form. Additionally, businesses are being warned that, while they may voluntarily file a Form 8300 to report a suspicious transaction below $10,000 which they suspect is being done in such amount to cause the business to avoid filing a Form 8300, the law prohibits the business from informing a customer that it marked the suspicious transaction box on the Form 8300.
For more information regarding the filing of Form 8300, including potential civil and criminal penalties for failure to properly comply with these cash reporting obligations, the IRS has also published a Form 8300 Reference Guide.
Sandra R. Brown ~ is a principal at Hochman Salkin, Toscher & Perez P.C., and specializes in representing individuals and organizations who are involved in criminal tax investigations, including related grand jury matters, court litigation and appeals, as well as representing and advising taxpayers involved in complex and sophisticated civil tax controversies, including representing and advising taxpayers in sensitive-issue audits and administrative appeals, as well as civil litigation in federal, state and tax court. Prior to joining the firm, she served as the Acting United States Attorney, the First Assistant United States Attorney and the Chief of the Tax Division of the Office of the U.S. Attorney (C.D. Cal). Ms. Brown may be reached at firstname.lastname@example.org or 310.281.3200.
 Donors should consult Publication 526, Charitable Contributions regarding instructions on requirements for obtaining a written acknowledgement of cash contributions from tax-exempt organizations. The latest version of Publication 526 can be found at: https://www.irs.gov/publications/p526.