Does your business receive large amounts of cash or cash equivalents? You may be required to submit a cash transaction report to the IRS to report these transactions – and not just on your tax return.
Cash transaction report filing requirements
Each person who receives more than $10,000 in cash in a single transaction (or two or more related transactions) while engaging in trade or business is required to complete Form 8300. A “person” could be a person, group of people, business, corporation, partnership, group of people, trust, or estate. What are “related transactions”? Related transactions are any transactions conducted over the course of a day. If the recipient is aware of or has reason to believe that each transaction is part of a connected series, transactions can also be considered related even if they take place over a period of time longer than 24 hours.
In order to complete a Form 8300, you will need personal information about the person making the cash payment, including a Social Security or taxpayer identification number. And according to the IRS, you should keep a copy of each Form 8300 for five years from the date you file it.
Reasons for the reporting
Although many cash transactions are legitimate, the IRS explains that “information reported on (Form 8300) can help stop those who evade taxes, profit from the drug trade, engage in terrorist financing and conduct other criminal activities. The government can often trace money from these illegal activities through the payments reported on Form 8300 and other cash reporting forms.”
Fines and even jail time can be imposed for breaking the law. In one instance, a business owner from Niagara Falls, New York, who had received cash transactions totaling more than $10,000, was found guilty of deliberate failure to complete Form 8300. He entered a guilty plea in a U.S. District Court and was recently given a five-month home detention sentence, a $10,000 fine, and an agreement to pay restitution to the IRS. He had received cash rent payments in connection with a building in which he had an ownership interest.
What’s considered “cash”?
For Form 8300 reporting, cash includes U.S. currency and coins as well as foreign money. It also includes cash equivalents such as cashier’s checks (sometimes called bank checks), bank drafts, traveler’s checks and money orders. Money orders and cashier’s checks under $10,000, when used in combination with other forms of cash for a single transaction that exceeds $10,000, are defined as cash for Form 8300 reporting purposes.
Banks and other financial institutions must file currency transaction reports to disclose cash purchases of cashier’s checks, treasurer’s checks, bank checks, bank drafts, traveler’s checks, and money orders with a face value of more than $10,000.
E-filing and batch filing
Businesses required to file a cash transaction report on Form 8300 should know that in addition to filing on paper, e-filing is an option. The e-file option is free, and the form is due 15 days following a transaction. When filing electronically, businesses automatically receive a confirmation of receipt.
If you are required to electronically file other information returns, such as Forms 1099 and W-2, you may be required to electronically file Forms 8300 as of January 1, 2024. If you must file at least 10 information returns other than Form 8300 in a calendar year, you must e-file.
Additionally, the IRS advises companies that they can “batch file” their reports, which is useful for those that need to submit a lot of paperwork.
Setting up an account
To file Form 8300 electronically, a business must set up an account with FinCEN’s BSA E-Filing System.
Contact us with any questions or for assistance with cash transaction reports.
Want to know more about cash? Read our cash flow series starting with “Why Business Owners Need to Care About Cash Flow” here.
© 2020. Updated August 2023.