The IRS Could Cease Your Smallbiz Bank Account

In their efforts to combat money laundering  congress included a stipulation in the Small Business Jobs and Credit Act of 2010 that required businesses to furnish Form 8300 beginning on or after January 1, 2011. 

Money laundering is a tool that assists many individuals who participate in various criminal activities, ranging from tax evasion to terrorist financing to drug dealing, to hide the proceeds from their illegal activities.

The law stiuplates that any person who receives more than $10,000 in cash in one transaction or two or more related transactions while conducting their trade or business must file a Form 8300. 

The law also requires the financial institution that receives a deposit of more than $10,000 to submit a Currency Transaction Report to the Treasury.

A wire transfer does not constitute cash for Form 8300 reporting.  A cashier’s check, bank draft, traveler’s check, or money order with a face amount of more than $10,000 is not treated as cash and a business does not have to file Form 8300 when it receives them

Weekly lease payments constitute payments on the same transaction (the leasing of the cab). Accordingly, the taxi company is required to file Form 8300 when the total amount exceeds $10,000. Each time the payments aggregate in excess of $10,000 the taxi company must file another Form 8300 within 15 days of the payment that causes the additional payments to total more than $10,000.

Exempt organizations do not need to report the receipt of cash donations over $10,000 because an exempt organization is not, in carrying out its exempt function, considered in the definition of a trade or business under IRC section 162.

Separate and unrelated payments does not warrant Form 8300.

Filing Timeframe:
A business must file Form 8300 within 15 days after the date the cash was received. If there are subsequent payments that are made with respect to a single transaction (or two or more related transactions), the business should file the form 8300 when the total amount paid exceeds $10,000. Each time the payments aggregate in excess of $10,000 the business must file another Form 8300 within 15 days of the payment that causes the additional payments to total more than $10,000.

Notification:
A business must notify its customer, in writing, by January 31 of the subsequent calendar year.

A business is only required to provide a statement to individuals if the filing of the Form 8300 is required. 

A business is prohibited from informing the buyer that the suspicious transaction box was checked.

Penalties:
There are penalties for not filing in a timely manner or for failing to furnish a statement to the persons whose names were required to be included in the form.

Penalties for not filing in a timely manner includes, fines of $100 per incident.  Businesses with gross receipts of $5,000,000 or less could pay up to $500,000 within a 12 month period.  Businesses with gross receipts exceeding $5,000,000 could pay $1,500,000 within a 12 month period.  For intentionally disregarding the requirement to file in a timely manner businesses could pay the greater of $25,000 or the amount of cash ereceived in such transaction not to exceed $100,000.

If you fail to furnish a statement to the persons whose names were required to be included in the form the penalty is $100 per violation. The aggregate annual limitation has been raised from $1,500,000. In the case of a business having gross receipts not more than $5 million, the aggregate annual limitation is $500,000.

You can file Form 8300 at the IRS Electronic Filing (E-Filing) System site.

See the IRS video on this subject.

Learn more by visiting the IRS Form 8300 FAQ page.

Sources:
Form 8300 and Reporting Cash Payments
The IRS Form 8300 FAQ page
The IRS Form 8300 Penalties page

By Jack Rivers