New business owners may not understand what the IRS requires after receiving large cash transactions. Working with a professional tax consultant can make it easier to comply with IRS reporting requirements after a sudden influx of cash.
The IRS requires individuals or companies who receive business payments of $10,000 or more in a single cash transaction to file Form 8300 online or by mail. Businesses must complete and submit this form within 15 days of the transaction. The $10,000 threshold applies to both single transactions and multiple related transactions within a 12-month period.
For example, if a client pays $5,000 up front and then $5,000 three weeks later, you must still file Form 8300 within 15 days of receiving the final payment, which causes the total to reach $10,000. While a trade or business is more likely to need to fill out Form 8300, individuals who receive these payments outside of a business context must also submit the form.
Importantly, the IRS does not just count USD as cash for this form. Any currency receipt from around the world with a value of $10,000 or more is eligible. Bank drafts, cashier’s checks, traveler’s checks, and money orders also count.
However, personal checks do not count as cash in this context.
The value threshold may be lower if it appears that an individual is attempting to avoid detection by the IRS, for instance, by using cashier’s checks of high value under the $10,000 mark to make a total payment exceeding that value.
Individuals can submit the form online through the Financial Crimes Enforcement Network (or FinCEN) or by mailing a physical copy to the IRS. In addition to the form, one must include a written statement for every payer for whom they submit a form during the year. These statements must detail the following:
Those filing Form 8300 should still remember to file their annual tax returns as normal, as it is not a replacement form. This requirement applies to everyone, including self-employed individuals and small businesses.
Those who fail to file the 8300 form may face fines of $290 per missed return, with a maximum fine limit of $3,532,500 per calendar year. Willful violators will face stronger penalties, including criminal charges, prison sentences of up to five years, and fines of up to $25,000. Those who knowingly file incorrect information face fines of up to $100,000.
It is always best to stay on top of annual filings and to keep records of other forms in case of an audit. These include:
Working with a professional tax consultant can make keeping all filings above board easier.
Levy & Associates offers reliable tax consultancy and can help you navigate everything from Form 8300 to wage garnishment and tax levies. Whether you are a small business, individual, or major corporation, Levy & Associates can streamline your IRS compliance with personal support.
Our professional team can even provide comprehensive accounting services to keep your business’s finances in order and help you avoid penalties in the event of an audit. Contact our team online or call 313-447-1704 to schedule a consultation.
Levy & Associates is available for free initial consultations. We’re happy to answer any questions you have about the audit process or address any concerns about your specific situation.
There’s never a good time to be audited, and the time-consuming process will take away from your business or family if you try to face it alone. Let us handle and coordinate communication, so you can return to your daily life.