$12,000. The buyer pays $5,000 in a cash deposit and six months later, pays the other $7,000 in cash. You must report this transaction. If you sell two different products to the same person in a 24-hour period (each for $6,000), these are related transactions. Since they are more than $10,000, you must file Form 8300. In some transactions, the buyer may arrange to pay you in installments. You must file Form 8300 within 15 days after you recieve a payment that causes the total cash received within the year from the buyer to total over $10,000. After you file Form 8300, you must start a new count of cash payments received from that buyer. If you receive more than $10,000 in additional cash payments from that buyer within one year, you must file another Form 8300. You must file the form within 15 days of the payment that causes the additional payments to total more than $10,000. If you are already required to file Form 8300 and you receive additional payments within the 15 days before you must file, you can report all the payments on one form. You should know two things about this law. First, the transactions must be related to your business. If you ordinarily sell real estate, but sell your boat privately for more than $10,000 you don't need to report it. Financial institutions, like banks, don't file the 8300 form. They file a "Currency Transaction Report" (CTR). When and Where to File You have 15 days after the transaction to file the form. You can mail the form to the address on the back of the 8300. You should keep a copy of every Form 8300 you file for five years. You must give a written statement to every person named on the Form 8300 you filed. This is to notify them that you sent a Form 8300 to the Internal Revenue Service. The statements must be mailed by January 31 for Forms 8300 filed in the previous year. If you need copies of Form 8300, just call IRS toll free at 1-800-424-1040 (1-800-829-3676 after September 30, 1990). Notice 923 (August 1990) Introduction If, in one year, you receive more than $10,000 in cash from one buyer as a result of a transaction in your trade or business, you must report it to the Internal Revenue Service (IRS) on Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business. This publication explains why, when, and where to report these cash payments. It also discusses the substantial penalties for not reporting them. Some organizations do not have to file Form 8300, including financial institutions who must file Form 4789, Currency Transaction Report, and casinos who must file Form 8362, Currency Transaction Report by Casinos. They are not discussed in this publication. This publication explains key issues and terms related to Form 8300. However, you should also read the instructions on the back of the form. They explain what to enter on each line. Why Report These Payments? Congress passed the Tax Reform Act of 1984 and the AntiDrug Abuse Act of 1988. These Acts require you to report certain cash payments of over $10,000. Often smugglers and drug dealers use large cash payments to "launder" money from illegal activities. Laundering means converting "dirty" or illegally-gained money to "clean" money. The government can often trace this laundered money through the payments you report. Your compliance with the law provides valuable information that can stop those who evade taxes and those who profit from the drug trade and other criminal activities. Who Must File Form 8300? Generally, any person in a trade or business who receives more than $10,000 in cash in a single transaction or in related transactions must file Form 8300. For example, you may be required to file Form 8300 if you are a dealer in jewelry, furniture, boats, aircraft, or automobiles; a pawnbroker, an attorney, a real estate broker, an insurance company, or a travel agency. However, you do not have to file Form 8300 if the sale is not related to your trade or business. For example, if you own a jewelry store and sell your personal automobile for more than $10,000 in cash, you would not submit a Form 8300 for that transaction. A "person" includes an individual, a company, a corporation, a partnership, an association, a trust, or an estate. 2 What Payments Must Be Reported? You must file Form 8300 to report cash paid to you if it is: 1) Over $10,000, 2) Received in the course of your trade or business, 3) Received within one year in one lump sum or in separate payments, 4) Received from the same buyer (or agent), and 5) Received in a single transaction or in related transactions (defined later). What is cash? Only coins and currency (U.S. and foreign) are cash. Cash does not include bank checks, travelers checks, bank drafts, wire transfers, or any other instruments not usually accepted as money. What is a related transaction? Any transactions between a buyer (or an agent of the buyer) and a seller that occur within a 24-hour period are related transactions. If you receive over $10,000 in cash during two or more transactions with one buyer in a 24-hour period, you must treat the transactions as one transaction and report the payments on Form 8300. For example, if you sell two products for $6,000 each to the same customer in one day and the customer pays you in cash, these are related transactions. Because they total $12,000 (more than $10,000), you must file Form 8300. More than 24 hours between transactions. Transactions are related even if they are more than 24 hours apart if you know, or have reason to know, that each is one of a series of connected transactions. For example, you are a travel agent. A client pays you $8,000 in cash for a trip. Two days later, the same client pays you $3,000 more in cash to include another person on the trip. These are related transactions, and you must file Form 8300 to report them. What about suspicious transactions? • An indication of possible illegal activity, • An attempt by the buyer to convince the seller not to file Form 8300, • An attempt by the buyer to convince the seller to file a false or incomplete Form 8300, • The buyer's appearance, demeanor, and statements, or • Any other facts and circumstances that arouse the suspicion of the seller. If you are suspicious, you are encouraged to call the local IRS Criminal Investigation Division as soon as possible. Or, you can call toll free 1-800-272-2877. When, Where, and What to File The amount you receive and when you receive it determine when you must file. Generally, you must file Form 8300 within 15 days of a payment. More than one payment. In some transactions, the buyer may arrange to pay you in installments. You must file Form 8300 within 15 days after you receive a payment that causes the total cash received within the year from the buyer to total over $10,000. After you file Form 8300, you must start a new count of cash payments received from that buyer. If you receive more than $10,000 in additional cash payments from that buyer within one year, you must file another Form 8300. You must file the form within 15 days of the payment that causes the additional payments to total more than $10,000. If you are already required to file Form 8300 and you receive additional payments within the 15 days before you must file, you can report all the payments on one form. Where to file. You can mail the form to the address on the back of Form 8300 or to your local IRS office. Required statement to buyer. You must give a written statement to each person named on any Form 8300 you file. The statement must show the name and address of your business and the total amount of reportable cash you received from the person during the year. It must state that you are also reporting this information to the IRS. You must send this statement to the buyer by January 31 of the year after the year in which you received the cash that caused you to file the form. Recordkeeping. You must keep a copy of every Form 8300 you file for 5 years. Filing late. You may have received cash payments after 1984 (when the law went into effect) that meet Form 8300 filing requirements. If you realize that you did not file Form 8300 when you should have, you should file a form as soon as possible. Penalties There are civil penalties for failure to: • File a correct Form 8300, • Provide the required statement to those named in the Form 8300, or • Comply with other information reporting requirements. There are criminal penalties for. • Failure to file a report, Filing a false or fraudulent report, Stopping or trying to stop a report from being filed, and • Setting up or trying to set up a transaction in a way that would make it seem unnecessary to file a report. If you willfully fail to file Form 8300, you can be fined up to $25,000 ($100,000 for corporations) or sentenced to up to 5 years in prison, or both. The penalties for failure to file also apply to any buyer who attempts to interfere with or prevent the seller from filing a correct Form 8300. This includes any attempt by the buyer to set up the transaction in a way that would make it seem unnecessary to file a report. How to Get Form 8300 If you need copies of Form 8300, call the IRS toll free at 1-800-TAX-FORM (1-800-829-3676). Examples Example 1. Pat Brown is the sales manager for SMALL TOWN CARS. On June 1, 1990, Jane Smith purchased a new car from Pat and paid $18,000 in cash. Pat requested identification from Jane to get the necessary information to complete Form 8300. A filled-in form is shown in this publication. Pat must mail the form to the address shown in the form's instructions by June 16, 1990. He must also send a statement to Jane by January 31, 1991. Example 2. Using the same facts given in Example 1, suppose Jane had arranged to make cash payments of $6,000 each on June 1, July 1, and August 1. Pat would be required to file a Form 8300 by July 16 because he would have received two cash payments within one year (June and July) that total over $10,000. Pat would not have to report the remaining $6,000 cash payment because it is less than $10,000. However, he could report it if he felt it was a suspicious transaction. U.S.GPO: 1990-0-517-016/22435 5 4 First name Jane OMB No 1545-0892 b suspicious transaction. 5 Middle initial 6 Social security number 1006 59 10 State 11 ZIP code 12 Country (if not U.S.) 13 Date of birth (see instructions) a Part II Person (See Definitions) on Whose Behalf This Transaction Was Conducted If this transaction was conducted on behalf of more than one person, see instructions and check here Employer identification number 24 Occupation, profession, or business 15 26 State 27 ZIP code 28 Country (if not U.S.) 29 Date of birth (see instructions) Description of Transaction and Method of Payment Specific description of property or service purchased. Give serial or registration number of car, boat, airplane, etc., address of real estate, etc. Serial No. xx - A B C D E F G 1 2 3 4 5 6 7 8 9 Total price $ 18,000 00 33 Amount of cash received $ 18,000 .00 34 Amount in $100 bills or larger $ 18,000 .00 If part of an installment sale, give information below and check box 36 Date of transaction 06101 9:0 d Balloon payment (amount) $ 42 State 43 ZIP code 44 Nature of your business PA 10101 .00 00 39 Employer identification number 101234567 Social security number Car dealership Under penalties of perjury, I declare that to the best of my knowledge the information I have furnished above is true, correct, and complete. Paperwork Reduction Act Notice.-The requested information is useful in criminal, tax, and regulatory investigations, for instance by directing the Federal Government's attention to unusual or questionable transactions. Trades or businesses are required to provide the information under 26 U.S.C. 60501. The time needed to complete this form will vary depending on individual circumstances. The estimated average time is 18 minutes. If you have comments concerning the accuracy of this time estimate or suggestions for making this form more simple, you can write to the Internal Revenue Service, Washington, DC 20224, Attention: IRS Reports Clearance Officer T.FP; or the Office of Management and Budget, Paperwork Reduction Project (1545-0892), Washington, DC 20503. Form 8300 (Rev 1.90) Chairman PICKLE. Thank you, Mr. Murphy. Earlier, I had asked the Treasury Department their attitude about a proposal we might consider within this committee for an improvement on the enforcement of this program. I asked specifically should we increase the penalty from 10 to 100 percent. Would that be a level improvement? Mr. MURPHY. Mr. Chairman, as you pointed out to Mr. Nunez earlier, you have a high expectation that Treasury will work with. |