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.  We recommend that Form 8300 be filed online, rather than through the mail, to avoid processing delays.

Form 8300:  What Is the Issue for Small Businesses?

Businesses that typically accept large cash payments are on the IRS radar for Form 8300 audits.

The purpose of Form 8300 is to help the government to identify tax evasion, illegal drug trades, terrorist activities and other criminal activities that often involve large sums of cash.  The IRS shares the data submitted on Form 8300 with the FinCEN (Financial Crimes Enforcement Network) database.

Cash over 10K: Form 8300 Reporting

 

A business is required to submit Form 8300 to the IRS if they received more than $10,000 in cash from a customer. Click here to see a sample of Form 8300.

Businesses must also submit Form 8300 to the IRS if they received from a customer more than $10,000 of cash in installment payments in a 12-month period.

Related transactions may also trigger the Form 8300 requirement for businesses.  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.

Be sure to obtain the customer’s taxpayer identification number at the time of the sale.  This could be a social security number (SSN) or Individual Taxpayer Identification Number (ITIN).  You will need it to report the transaction on both Form 8300 and the annual reporting statement which is sent to all applicable customers.  If the customer refuses to provide a taxpayer identification number, file Form 8300 anyway, with a statement explaining why the required information was omitted.

 

 

Form 8300 Reporting Penalties

The IRS imposes hefty penalties on business for not filing Form 8300.  The amount of the penalties varies by year.  

The penalties are particularly severe for intentional disregard of the rules.

Criminal disregard for the Form 8300 rules may result in imprisonment.

Cash Receipts over $10,000 and Annual Statements

In addition to filing the 8300 form for cash receipts over $10,000, 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 annual statement must be sent to applicable customers by January 31 of the year following the reportable transaction. This statement must include the name, address, contact person and telephone number of the business and the aggregate amount of reportable cash. The statement must also indicate that business provided this information to the IRS.

The penalty for not sending annual statement to customers for cash receipts over $10,000 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.

Suspicious Transactions and the 8300 Form

Intentionally trying to disregard the Form 8300 requirement by making multiple payments in an attempt to not pay more than $10,000 at one time is a criminal act called “structuring.”  If a person structures payments, they may be liable for both civil and criminal penalties, including up to 10 years imprisonment and severe monetary penalties.

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

A form 8300 audit will begin with a letter in the mail.  The letter will contain a document request which generally includes records of cash receipts, bank deposit slips, copies of accounting records and copies of form 8300.  The IRS may also want to talk with employees of the business and cash paying customers to determine if all the rules for Form 8300 were properly followed.

The IRS examiner in a Form 8300 audit 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 the 8300 form.

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 written plan or process to comply with the Form 8300 rules.  This should include staff training and the maintenance of a Form 8300 training manual.

 

State Rules for Large Cash Transactions

Some states also require submission of Form 8300.  For example, Florida requires businesses to send a copy of a completed Federal Form 8300 to the Florida Department of Revenue no later than 15 days after the date the transaction is required to be reported to the IRS.

Does Reporting of Large Cash Transactions Trigger an Audit?

The IRS is well aware that business that deal with a lot of cash have a tendency to underreport income on their tax returns.  This is particularly true when there are tips.  Examples of such businesses include car washes, restaurants and nail salons.   Also, the IRS seems to be focusing 8300 form audits on the cannabis industry and automobile  dealerships  These business are on the IRS radar and therefore are more likely to be audited.

Filing Form 8300 may make the IRS aware of your business and could trigger an 8300 audit.  Nevertheless, filing the form is your evidence that you are complying with the rules.  So be sure to keep careful records of cash transactions and file Form 8300 on time throughout the year.

And, don’t forget to file the annual statement with customers at the end of the year.  The annual statement can also be part of an 8300 audit.  So, be sure to put that on your calendar in December so you don’t miss the deadline.

 

Industries That Often Deal With the 8300 Form

Any business that deals with large sums of cash needs to be aware of their responsibility to know and comply with the IRS rules for Form 8300.

Here is a list of businesses that commonly encounter the rules for cash sales over $10,000:

• automobile dealerships
• boat or airplane dealers
• jewelry stores
• cannabis-related businesses
• pawnbrokers
• colleges and universities
• hospitals
• travel agencies
• attorneys
• landlords
• bail-bonding agents

 

Note that these rules are a particular problem for the cannabis industry for which traditional banking services are often unavailable due to regulatory restrictions.

How to Avoid Form 8300 Trouble

There are a few things you can to avoid Form 8300 trouble:

• Don’t pay for expensive items in cash.
• If you own a business, don’t accept cash payments for high ticket items.
• Don’t break up large cash payments into smaller, separate payments.  That does not help.
• File Form 8300 online, to avoid filing delays or discrepancies.

 

What if an Form 8300 if Filed on You?

If a merchant files IRS Form 8300 on a transaction to which you were a part, you should receive an annual statement to applicable customers by January 31 of the following year.  The annual statement will indicate that the 8300 form, including your cash transactions, was reported to the IRS.

This does not necessarily mean that you will be audited by the IRS.  But it does mean that your name and taxpayer identification number is on the government radar for possible illegal activities.

IRS Form 8300 Online – Updated for 2024

On August 30, 2023 the IRS announced that starting January 1, 2024, businesses are required to electronically file (e-file) Form 8300, Report of Cash Payments Over $10,000, instead of filing a paper return.

Beginning with calendar year 2024, businesses must e-file all Forms 8300 (and other certain types of information returns required to be filed in a given calendar year) if they’re required to file at least 10 information returns other than Form 8300.

A business may file a request for a waiver from electronically filing information returns due to undue hardship.  If the IRS grants a waiver from e-filing any information return, the waiver automatically applies to all Forms 8300 for the duration of the calendar year. A business may not request a waiver from filing only Forms 8300 electronically.

If you’re not required to e-file Form 8300, you can still choose to do so.

We generally prefer that our clients e-file their tax reporting documents online.  E-filing is faster and avoids errors.

 

 

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If you or someone you know has a tax issue, please contact us at (678) 235-5460 or (773) 828-0551.  Or, you may contact us by by email at gary.massey@masseyandcompanyCPA.com.

We represent taxpayers before the IRS and the state Department of Revenue.  We make the tax nightmare go away.

 

Massey and Company CPA is a boutique tax and accounting firm serving individuals and small businesses in Atlanta, Chicago and throughout the country.  Our services include tax return preparation, tax planning for businesses and individuals, IRS tax problem resolution, IRS audits, sales tax, and small business accounting and bookkeeping.  

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