Form 8300: Failure to Timely File Can Result in Harsh and Excessive Penalties. Do Not Get Caught in This IRS Trap.

Many businesses deal in transactions that involve large sums of cash. Car and boat dealerships, art galleries, antique and collectibles merchants are just a few examples. Because cannabis is a Schedule I narcotic all cannabis businesses are illegal under Federal law. The growing pains the industry is having by not having access to banking sources other business enjoy has resulted in the industry being dependent on cash transactions.  Form 8300 is designed to provide the Treasury Department about information pertaining to these large cash transactions. Since 2012, the IRS has made e-filing available for Form 8300 free of charge. See IRS Form 8300 Reference Guide for information on Form 8300. Form 8300 requires the entry of a lot of information. Click here for Form 8300 and Instruction. 

Businesses can file Form 8300 electronically using the Bank Secrecy Act (BSA) Electronic Filing (E-Filing) System. It is a quick and secure way for individuals to file their Form 8300s. Businesses can also mail the Form 8300 to the IRS at:

IRS Detroit Computing Center
P.O. Box 32621
Detroit, MI 48232

If you get audited by the IRS also expect the IRS will investigate whether you have properly filed Forms 8300 and Forms 1099. The Internal Revenue Service has begun probing the large cash transactions of dozens of Colorado marijuana companies, sparking uncertainty and unease among cannabis entrepreneurs. The audits – focusing on Form 8300 – have raised the specter of money laundering charges. But legal experts are divided over whether such fears are overblown. 

Penalties for Failure to File Form 8300

The penalty for failure to file Form 8300 in a timely fashion is $100 per occurrence. For businesses with annual gross receipts of $5 million or less, the annual aggregate limitation is $500,000. If the deficiency is corrected within 30 days, the annual aggregate limitation for businesses with annual gross receipts of $5 million or less is reduced to $75,000. The total annual limit for businesses with annual gross receipts of more than $5 million is $1.5 million. Deliberately failing to file the form carries a much higher financial cost. The IRS imposes a penalty of $25,000 or the actual amount of the transaction up to $100,000 for each occurrence, whichever is greater. There is no annual limit for intentionally failing to file Form 8300.

Penalties for Failure to Furnish Full Information

The IRS requires taxpayers to include the names and Taxpayer Identification Numbers (TIN) for each person involved in cash transactions over $10,000 on Form 8300. If individuals refuse to provide their TIN, taxpayers should file Form 8300, along with a statement detailing attempts to obtain the required information. Taxpayers should also retain records that verify when and how attempts to get the required information were made, and be prepared to provide copies of those records to the IRS. Failure to furnish the names of individuals who are required to be included on Form 8300 carries penalties of $100 per violation. Annual aggregate limit for penalties are $500,000 for businesses with annual gross receipts of $5 million or less. Penalties for businesses with more than $5 million in annual gross receipts have an aggregate annual limit of $1.5 million.

If the deficiency is corrected within 40 days, the penalty is decreased to $30 per incident. Annual aggregate limits for penalties imposed on businesses with $5 million or less in annual gross receipts that correct deficiencies within 30 days is reduced to $200,000. The annual aggregate limit for penalties imposed on larger businesses that correct deficiencies within 30 days is $250,000. As with deliberate failure to file Form 8300, the IRS imposes harsher penalties on taxpayers who deliberately omit information. The penalty for intentional failure to furnish required information is $250 per incident or 10 percent of the aggregate annual limit of items that should have been reported, whichever is greater. There is no annual aggregate limitation on penalties.​
 
Form 8300: Report of Cash Payments Over $10,000 Received in a Trade or Business

Federal law requires individuals or businesses receiving more than $10,000 in a single cash transaction or in two or more related transactions within a 12-month period to file Form 8300 within 15 days of receipt. Transactions must be received in the course of business from a single payer or agent. Businesses and individuals may also voluntarily file Form 8300 concerning suspicious transactions of any amount. Information from Form 8300 is added to the Financial Crimes Enforcement Network (FinCEN) database. The information is then cross-referenced with other FinCEN information such as Suspicious Activity Reports and Currency Transaction. The Treasury Department uses information from these cross-reference reports to create traceable money trails that expose criminal activities. (FinCEN). Form 8300 provides the IRS and FinCEN with a tangible record of large cash transactions. FinCEN has its own ideas about what constitutes cash and what does not.

What Is and Is Not Cash?  On its face, the definition of cash is obvious: currency, either domestic or foreign. Wire transfers, which are readily accessed as cash, do not count as cash and don’t need to be reported on Form 8300. On the other hand, for the purposes of Form 8300 any of the following do count as cash and transactions for more than $10,000 in any of these forms must be reported.

  • Travelers’ Checks
  • Cashier’s Checks
  • Bank Drafts
  • Money Orders

What Counts as a Transaction? Some exchanges, such as sale or rental of tangible goods or intangible property that exceed $10,000, are obvious forms of transactions. Cash exchanges, contributions to trust or escrow funds, loan repayments and conversions from cash to checks or bonds that exceed $10,000 also count. The IRS also considers transactions that take place within a single 24-hour period to be related transactions for the purposes of filing Form 8300. Individuals and companies that have received over $10,000 in cash payments during a 12-month period from the same source must understand how to report such cash receipts and which forms are necessary. To ensure that you are reporting and filing your income correctly, consider the following filing requirements as described by the IRS:

What is Form 8300 and who must use it? Form 8300 is used to report cash payments of more than $10,000. You must use Form 8300 if you have received over $10,000 in cash payments (either lump sum or series of payments) while conducting trade or business.

What cash payments are reported? Any cash payments received while doing business which exceed $10,000 must be reported. If you receive a series of payments from the same client which exceeds $10,000 it must be reported on Form 8300. As long as the payment(s) exceed $10,000, are from the same client and paid in a 12 month period, they must be reported on Form 8300.

Transactions and related transaction definition. A transaction is describes as the event which results in the transfer of cash; loan repayment, sale of goods, rentals, etc. A related transaction occurs within a 24 hour period (in a series of transactions).

What are cash transactions? For the purpose of tax filing, the IRS considers cash transactions anything which involves cash, coin, cashier’s check, bank draft, traveler’s check or money order that has a face value of $10,000 – which includes US and foreign currency.

What are designated reporting transactions? 
The retail sale of cars, boats, property, collectibles or items of travel and entertainment with a sales price of over $10,000.
Do personal checks fall under the definition of “cash”? Personal checks are not consider cash for Form 8300 reporting.

When must Form 8300 be filed? Form 8300 is not filed annually with your other tax items. Businesses must file Form 8300 each time they are in receipt of $10,000 or more in cash payments. If the $10,000 is reached after a series of payments, the file is formed once the payments exceed $10,000 (within 15 days). This pattern continues throughout the year if more forms are filed. Each time the eligible cash payments exceed the $10,000 threshold, Form 8300 must be filed within 15 days.

TIN and Form 8300. If a business is unable to obtain the Tax Identification Number of the customer making cash payments, Form 8300 should still be filed as directed including a statement explaining the circumstances surrounding the missing TIN number.

Help with Form 8300. Publication 1544 helps businesses understand how, why, when and where to file Form 8300. In addition, Publication 1544 describes key terms and provides explanations and instructions for filing out the form. Click here to get IRS Publication 1544.