Reporting Requirements When Your Business Receives a Lot of Cash
If you are a business that handles cash, you may be overlooking a very important legal obligation: the requirement to report large sums of cash that you deposit into banks, or even if you don’t actually deposit the money into a financial institution.
Who and What Must Report or be Reported
If you have a cash transaction of more than $10,000 (which may be one large transaction or the total of multiple transactions that exceed this amount), you or your business is required to fill out IRS Form 8300, disclosing your receipt of the funds and the source of the funds.
Cash doesn’t just meet actual hard cash—it also includes money orders or cashier’s checks as well as currency from another country (but not personal checks). Everybody in business needs to report the cash, including not for profit organizations and trusts.
Any Cash Counts
The cash also doesn’t have to come from your primary source of business. For example, if you have a bakery but you also own the building you bake from, and you sell that building, if you were to receive more than $10,000 in cash, that would have to be reported. Repayment of loans, renting out property, or selling services, often can yield large amounts of cash that people may not think about reporting.
Penalties for Noncompliance
Thinking of ignoring the rule? That’s a bad idea; the government can fine you up to $100,000, but worse, failing to report the information is also a criminal felony.
The penalties can be individual; that is, you aren’t protected by the corporate veil for violating the rule.
And anybody who tries to help you subvert the rule—for example, by timing or structuring payments in a way that it hides the total amount you are depositing—can be fined and imprisoned as well.
Compliance Procedures
In larger businesses, compliance can be easy to forget. With multiple employees who may be handling cash transactions, employees may not even realize how much cash is being deposited at any one time.
That’s why internal compliance is key. One thing to do is to make sure that your business has a form, or some type of documentation, describing when and how much cash is being deposited at any one time into a bank account.
If someone other than you is doing the actual deposits, you may be best served designating one specific employee to handle all cash deposits, so that employee can track how much is being deposited.
When you do fill out the IRS form 8300, keep those forms, as documentation that you did in fact comply with the law. The form must be filled out within fifteen days of receiving the cash, so make sure that you are enforcing these time deadlines on whomever is designated to fill out the forms.
Regulatory compliance with government regulations can be difficult. We can help. Contact the West Palm Beach commercial litigation attorneys at Pike & Lustig for more information.
Source:
taxgroupcenter.com/what-is-irs-form-8300/
