Has your business received cash or currency exceeding $10,000 in one transaction or related transactions within a year’s time from a client or customer? If so, the IRS requires you to file Form 8300 within 15 days of receiving the payment. If any additional payments are made during the course of a year, you must report those as well and file additional forms. Transactions that require Form 8300 include:
- Escrow arrangement contributions
- Pre-existing debt payments
- Negotiable instrument purchases
- Reimbursement of expenses
- Making or repaying a loan
- Sale of goods or services
- Sale of real property
- Sale of intangible property
- Rental of real or personal property
- Exchange of cash for other cash
- Custodial trust contributions
Be sure to verify the identity of the person making the payment by examining an acceptable identification, such as a driver’s license. If the funds are received from a third party on behalf of the client, then both must be identified.
Failure to file Form 8300 can result in civil and criminal penalties. Structuring currency transactions to avoid the reporting requirement is a felony. The penalty amount can be severe depending on the number of forms not filed in one year. The purpose behind the law is to provide information that assists law enforcement in its anti-money laundering efforts. When businesses comply with the reporting laws, they provide authorities with an audit trail to investigate possible tax evasion, drug dealing, terrorist financing, and other criminal activities.