If your business receives large amounts of cash or cash equivalents, you may be required to report these transactions to the IRS.
Each person who, in the course of operating a trade or business, receives more than $10,000 in cash in one transaction (or two or more related transactions), must file Form 8300. What is considered a “related transaction?” Any transactions conducted in a 24-hour period. Transactions can also be considered related even if they occur over a period of more than 24 hours if the recipient knows, or has reason to know, that each transaction is one of a series of connected transactions.
To complete a Form 8300, you’ll need personal information about the person making the cash payment. This includes a Social Security or taxpayer identification number.
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.”
Per IRS cash reporting guidelines: keep a copy of each Form 8300 for five years from the date you file it.
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 are defined as cash for Form 8300 reporting purposes. This applies specifically, to cashiers checks used in combination with other forms of cash for a single transaction that exceeds $10,000.
Under a separate reporting requirement, banks and other financial institutions report any of the following with a face value of more than $10,000 by filing currency transaction report:
– Cash purchases of cashier’s checks.
– Treasurer’s checks.
– Bank checks.
– Bank drafts.
– Traveler’s checks.
– Money orders.
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.
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 the BSA E-Filing System. Interested businesses can also call the BSA E-Filing Help Desk at 866-346-9478. They are open Monday through Friday from 8 am to 6 pm EST. Contact our accounting firm with any questions or for assistance.