Filing Requirements for Business Cash Receipts Over $10,000
Many businesses are not aware that if they receive cash payments of over $10,000, they are required to report such payments to the IRS using Form 8300, Report of Cash Payments Over $10,000. This applies to a single transaction, as well as to a series of related transactions exceeding that amount.
Further, you don’t have the luxury of waiting very long to meet the filing requirement. The form is required to be filed within 15 days after the cash transaction. This requirement applies to any trade or business conducted by an individual, company, corporation, partnership, association, trust or estate.
Some common examples of businesses that potentially receive such large amounts of cash include dealers in jewelry, furniture, boats, aircraft or automobiles, pawnbrokers, attorneys, real estate brokers, insurance companies and travel agencies.
If you are wondering the why behind this requirement, it is because many characters involved in unscrupulous activities use large cash transactions to "launder" their money and hide their activity. The government says that information reported on Form 8300 can help combat those who evade taxes, profit from the drug trade, engage in terrorist financing or conduct other criminal activities. According to the IRS, "The government can often trace money from these illegal activities through payments reported on Forms 8300 that are timely filed, complete and accurate."
Form 8300 has traditionally been filed on paper with the IRS, however, it was recently announced that many, if not most, such forms will, as of January 1, 2024, be required to be filed electronically (e-file) with FinCen, the Financial Crimes Enforcement Network.
Under new rules announced recently, businesses must e-file Forms 8300 if they are required to e-file certain other information returns electronically, such as Forms 1099 series and Forms W-2. Under the new information reporting rules, they must e-file Forms 8300 in a given calendar year if they are required to file at least 10 information returns of one or more types, other than Form 8300, beginning with the calendar year 2024.
For example, if a business files five Forms W-2 and five Forms 1099-INT in 2024, then they must e-file all information returns during the year, including any Forms 8300. But, if they file a total of less than 10 of one or more types of information returns other than Forms 8300, they do not have to e-file the information returns and are not required to e-file any Forms 8300.
Besides filing Form 8300, an affected business will also need to provide a written statement to each party whose name is included on the Form 8300 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 this information was provided to the IRS.
A business will need to create an account with FinCen's BSA E-Filing System to e-file Forms 8300. Also, a copy must be kept of every Form 8300 a business files, along with any supporting documentation and the required statement it sends to customers, for five years from the date filed. Merely retaining the email confirmation of the filing of a Form 8300 does not meet the record-keeping requirement. Filers also must save a copy of the form, either electronically or on paper, before they finalize the submission and should associate the confirmation number they receive with the copy.
As with most filing and notification requirements that are imposed, there are penalties associated with failure to comply, although a business can apply for a hardship waiver or religious exemption in limited circumstances.
