If your business is ever a
party to large cash transactions, you should have written procedures in place,
prepared with advice from legal counsel, concerning how to handle such
transactions. All of your employees should be well trained in cash reporting
procedures, especially those that are involved in processing the transaction.
Failure to comply with cash reporting regulations could cause your business to
be suspected of money laundering, violating cash reporting laws and fined for
the cash reporting violations.
Knowing what transactions
are reportable is necessary to comply with the cash reporting regulations.
You are responsible for
reporting to the IRS any sale that meets the following conditions:
1. The customer pays with
more than $10,000 in cash. Cash includes domestic/ foreign currency. (Note:
personal checks, business checks, certified personal or business checks (the
kind that are from a bank), and proceeds from a loan are not considered cash.)
2. The customer pays with a
cashier’s check, bank draft, traveler’s check, or money order with a face value
of not more than $10,000 that is either received in a designated reporting
transaction or received in any transaction where you know and/or suspect that
the cashier’s check, bank draft, traveler’s check, or money order is being used
to avoid the reporting of the transaction. A “designated reporting
transaction,” is defined as a retail sale of a consumer durable, collectible,
or a travel or entertainment activity. A “consumer durable” is an item of
tangible personal property that is expected to last at least one year, and is
suitable for personal use, and costs more than $10,000.
(For example: automobiles,
light and medium duty trucks and vans would be a designated reporting
transaction. Heavy trucks or farm machinery, however, would not be a reportable
transaction because they are not considered “suitable for personal use.” If you
are in doubt about items being suitable for personal use, report the
transaction to the IRS.)
These transactions must be
reported to the IRS on the form 8300. The customer that is a party to a
reportable transaction must be notified that you sent a form 8300 to the IRS by
no later than January 31st of the year following the date the transaction
occurred.
If the customer tries to
structure his payment with several small payments or a combination of different
cash payments to avoid the 8300 cash reporting requirement, the transaction
should be reported on form 8300 as suspicious.
– Courtesy of Zurich North
America –
https://secure.zurichna.com/zdu