IRS Form 8300 is the form that businesses use to report the receipt of cash payments over $10,000. It applies to the purchase of both goods and services.
Generally, businesses must file Form 8300 within 15 days after receiving cash payments over $10,000.
Businesses that typically accept large cash payments are on the IRS radar for Form 8300 audits. These include automobile dealerships, jewelry stores and cannabis suppliers.
Types of Payments to Report on Form 8300
Form 8300 is required if a business receives more than $10,000 in cash from a customer.
Form 8300 is also required if a customer pays more than $10,000 in cash installment payments in a 12-month period.
Related transactions may also trigger the Form 8300 requirement. These include separate purchases in cash from the same customer within a 24-hour period, where the total exceeds $10,000
Cash includes coins or currency of the US or a foreign country.
Cash also includes cashier’s checks, bank drafts, travelers checks and money orders with a face value of less than $10,000, where the total purchase is greater than $10,000. This rule applies to the sale of consumer durables (such as cars or boats), collectibles, and travel or entertainment.
Cash does not include personal checks for purposes of Form 8300.
Penalties for not filing Form 8300 vary by year. For 2021, the penalty for a non-intentional failure to file Form 8300 is $280, per Form 8300. If the business files the missing forms within 30 days, the penalty is reduced to $50 per form.
The penalties for intentional disregard of the rules are much more severe. In such case, the penalty for 2021 is the greater of $28,260, per Form 8300, or the amount of cash received in the transaction, not to exceed $113,000 per transaction.
A person who willfully fails to file Form 8300 may also be subject to criminal sanctions.
In addition to filing Form 8300, businesses must also send an annual statement to applicable customers, informing them that Form 8300, including their cash transactions, was reported to the IRS.
The penalty for not sending the statement to customers is the same as the penalties for failing to file Form 8300. Thus, the penalties may be double where both the Form 8300 and the customer statement are not submitted as required.
Intentionally trying to disregard the Form 8300 requirement is a criminal act called “structuring.”
Form 8300 contains a box for the business to indicate suspicions acts of structuring. The business should mark transactions as suspicious if it appears that the customer was intentionally trying to structure the transaction to avoid Form 8300 reporting.
The annual statement for the customer is not required in the case of suspicious transactions.
Form 8300 Audit
The IRS will talk with employees of the business and cash paying customers in the event of a Form 8300 audit.
The examiner will be looking for cash transactions over $10,000, as well as evidence of knowing or willful misconduct. The examiner will also look at the taxpayer’s Form 8300 history and how they behaved upon discovery of the failure to file Form 8300.
The IRS has a three 3-year statute of limitations to examine filed Forms 8300. In the event that the Forms were not filed, the statute of limitations does not apply and the IRS can start an examination at any time.
Best practices to avoid a Form 8300 audit include implementation of a plan or process to comply with the Form 8300 rules. This should include staff training and the maintenance of a Form 8300 training manual.
If you or someone you know has a tax issue relating to a business, please contact us at (678) 235-5460, or by email at Gary.Massey@masseyandcompanyCPA.com. We represent taxpayers before the IRS and the Georgia Department of Revenue. We make the tax nightmare go away.
Founded by Gary Massey, Massey and Company CPA is a boutique accounting firm located in Atlanta providing tax and accounting services to small businesses and individuals throughout Georgia. Our office is in Sandy Springs.
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