To combat money laundering and terrorism, the Financial Crimes Enforcement Network (FIN-CEN) is now requiring businesses report (within 15 days of receiving the cash), the receipt of $10,000 in cash from customers in the conduct of Trade or Business. This regulation took effect on January 1, 2024.
What is the definition of Cash? Cash includes coins and currency of the US and a foreign country. It also includes cashier’s checks, bank drafts, traveler’s checks and money orders with a face value of $10,000 or less. Cash does not include personal checks drawn on the account of the writer, digital currency or any EFT (i.e., ACH, Venmo, Paypal). It also does not include cashier’s checks, bank drafts, traveler’s checks and money orders over $10,000 as these are already reported by the issuing financial institution.
Who needs to report? Entities include individuals, companies, corporations, partnerships, associations, trusts or estates offering a trade or business. Tax-exempt organizations are also included, but they do not need to report charitable cash contributions received.
How to report? The entity would document on Form 8300 customer information for those who utilized cash exceeding the threshold. The business is required to obtain the customer’s name, address, tax ID or copy of another official document (i.e., driver’s license) for non-resident aliens, etc. The Form must be e-filed to FIN-CEN if the business is required to file at least 10 other information returns. Paper forms must be sent to the IRS. A copy of the form must also be retained by the taxpayer along with supporting documentation for five years from the date of the e-filing.
When to report? Form 8300 must be filed within 15 days after receiving the reportable cash from a customer. If multiple payments are received that exceed $10,000, the report is made after the $10,000 threshold is exceeded. In addition, each time payments aggregate more than $10,000, the business must file another Form 8300.
In addition, taxpayers will need to provide a written statement to each party whose name appears on the Form 8300 by January 31st of the year following the reportable transaction. The statement must include the name, address, contact person and telephone number of your business and the aggregate amount of reportable cash. The statement must also indicate that the taxpayer provided this information to the IRS.
Penalties: There are significant penalties ranging from failure to file to intentional disregard and willfulness. They apply to both the transaction (Form 8300) as well as the January 31st annual filing. Penalties are substantial and can range from a minimum of $10,000 up to $1 million.
To view full IRS publication with more detailed information and examples, please click here.
Please let our office know if you have questions concerning your specific situation. We will do our best to assist you in navigating this new filing requirement.
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