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What Happens If a Form 8300 is Filed On You

The IRS has ramped up efforts to combat money laundering and illegal activities in the last few decades. They’ve strongly emphasized recording whenever large amounts of cash change hands. 

If a business or individual receives more than $10,000 in cash, they must file Form 8300. Failing to file can result in civil and criminal penalties being assessed by the IRS. These penalties are adjusted annually for inflation and often come with interest charges. 

It doesn’t take long for the total penalty amount to compound and become insurmountable. If you have received a notice from the IRS that you failed to file Form 8300, you might want to talk with a tax lawyer. 

Tax Resolution Experts can review your financial records and offer advice on proceeding. They might be able to help you avoid severe penalties and provide options for quickly settling.  

What Is Form 8300?

Form 8300, officially known as Report of Cash Payments Over $10,000 In a Trade of Business, was written into law on December 20, 2001. Since the first implementation, there have been a few revisions, but the overall purpose has remained the same. 

The official title of the form perfectly explains its function. You must report any cash transactions of $10,000 or more to the IRS within 15 days of receiving the funds. 

Having the IRS keep official records of large cash transactions can help the government enforce certain laws more efficiently. The IRS works with the Financial Crimes Enforcement Network to catch criminals attempting to launder money. 

Form 8300 is one of their most effective tools for enforcing laws to prevent tax evasion, drug trafficking, and terrorist financing. The rise of cryptocurrency in recent years has somewhat hindered their abilities to prevent these crimes. However, plans are in place to include a Form 8300 for crypto transactions over $10,000

Who is Affected By Form 8300?

Form 8300 primarily affects businesses that deal with large sums of cash, such as car dealerships, bail bond agents, landlords, and home builders. However, every individual, company, corporation, association, trust, or estate that receives $10,000 or more in cash must file a Form 8300. 

The transaction must be reported if any part of it occurs within the 50 states, the District of Columbia, or any territory claimed by the United States. Wire transfers are not cash for Form 8300. But receiving a money order, bank draft, traveler’s check, or cashier’s check would all be classified as cash payments. 

What Transactions Are Reported?

There is often some confusion regarding what transactions are supposed to be reported. You must report any lump-sum payments of $10,000 or more within 15 days of receiving them

Some people try to work around this number and keep the transaction off the books. Instead of handing out $10,000 at one time, they might just give $9,995 one week and provide the remaining $5 the next. 

The IRS would still require this transaction to be reported. You must report any installment payments made within a year of each other that cause the total cash received to exceed $10,000 to the IRS. 

You may want to keep detailed records of any transactions that need to be reported. The IRS usually is very competent at keeping records, but something can get lost over time. 

It’s not uncommon for the IRS to investigate large cash transactions for up to five years after they take place. Having a record of the transactions and proof that you filed can prevent you from getting into trouble. 

How Do You File Form 8300?

After receiving the cash transaction, you have 15 days to file Form 8300 with the IRS. It shouldn’t take more than a few minutes to enter all the information on the form. 

For the first few years after being implemented, you could only file Form 8300 by mail. Within the last ten years, the IRS has encouraged filing electronically to ensure the security of information and help speed up the process. 

These are the two ways that you can file Form 8300:

  • Electronic filing. Using the electronic filing option is by far the more convenient option. The Bank Secrecy Act (BSA) E-filing system will directly upload the contents of Form 8300 to the Financial Crimes Enforcement Network. Information on this network is secured and free to use.  
  • Mail filing. It will take longer for the government to receive your information by mail. As long as it’s post-dated within 15 days of receiving your funds, you won’t be penalized. The mailing address is the Detroit Federal Building, P.O. Box 32621, Detroit, Michigan 48232. 

What Information is Required On Form 8300?

There isn’t much information required to file Form 8300 properly, but you will still need to fill it out correctly. It might be worth hiring a tax consultant to review the information before filing Form 8300. The penalties for including incorrect information on Form 8300 can still be applied even if the incorrect information was reported by accident. 

Some of the most crucial information required on Form 8300 includes:

  • The identity, Social Security number, address, and other contact information of the individual that made the payment
  • The identity of the person that handled the transaction — If the transaction is conducted by a person working for a business, their name and employee ID would be required. 
  • A description of the transaction and payment method- The exact amount and type of currency used and for what reason the exchange took place. 
  • The identity, Social Security number, address, and other contact information of the person who received the payment- For a business, this section would require the business’s name, address, nature, and employer information. 

What Are the Penalties for Failing To File Form 8300?

The IRS is very serious about enforcing the tax code. Failing to file Form 8300 can result in severe civil and criminal penalties. If the IRS has notified you about a suspected failure to report a large cash transaction, you should set up a meeting with a tax attorney. The tax attorney might be able to help you avoid getting into serious trouble.

The IRS adjusts the penalty amounts for failing to file Form 8300 to compensate for inflation. These are the most current civil penalties that can be applied:

  • A penalty of $280 per exchange if you file Form 8300 after 30 days. The total cannot exceed $3,392,000 in a calendar year. The cap is $1,130,500 for individuals or businesses with an average annual gross income of less than $5,000,000.
  • The penalty will be $50 per exchange if you file Form 8300 within 30 days. The total cannot exceed $565,000 in a calendar year. 
  • The penalty will be $110 if Form 8300 is filed after 30 days but on or before August 1. 
  • Intentionally failing to file Form 8300 correctly or promptly could result in a $560 penalty per exchange or potentially 10% of the total amount of the initial transaction. 

The IRS might also pursue criminal charges in addition to these civil penalties. Willfully failing to file Form 8300 on time and withholding complete or correct information is a felony. If convicted, it could result in a fine of up to $25,000 for individuals and $100,000 for a corporation. A conviction also carries a maximum prison sentence of five years plus the costs of prosecution. 

Filing a false Form 8300 is considered perjury, which is a felony. A perjury sentence can include a $100,000 fine for an individual and $500,000 for a corporation, along with three years in prison.

The criminal charges can increase if the violation was committed with another federal crime. The fine can reach $500,00 for an individual and up to 10 years of imprisonment. 

The Takeaway

The IRS has always worked diligently to help prevent money laundering. Financial crimes often land high-profile criminals in jail, so the IRS seriously takes its responsibilities. 

In the last 20 years, they’ve created Form 8300 to help them track large transfers of cash. Failing to report details on cash transactions of more than $10,000 can come with severe civil and criminal penalties. Not only can you end up paying tens of thousands of dollars in fines, but you can also even wind up in prison. 

You should talk with a tax professional if you’re uncertain about filing a Form 8300 or received a notice from the IRS regarding a large cash transaction. The Coast One Tax Group team has decades of experience dealing with the IRS. They can advise you on quickly settling any issues with the IRS and limit the potential consequences. 

SOURCES:

Cash payment report helps government combat money laundering | Internal Revenue Service

Benefits of Using BSA E-Filing | Financial Crimes Enforcement Network

Form 8300 and Reporting Cash Payments of Over $10,000 | Internal Revenue Service

History of Anti-Money Laundering Laws | Financial Crimes Enforcement Network

4.26.10 Form 8300 History and Law | Internal Revenue Service

Form 8300 | Money Laundering Watch

IRS Form 8300 Reference Guide | Internal Revenue Service