If your business is ever aparty to large cash transactions, you should have written procedures in place,prepared with advice from legal counsel, concerning how to handle suchtransactions. All of your employees should be well trained in cash reportingprocedures, especially those that are involved in processing the transaction.Failure to comply with cash reporting regulations could cause your business tobe suspected of money laundering, violating cash reporting laws and fined forthe cash reporting violations.
Knowing what transactionsare reportable is necessary to comply with the cash reporting regulations.
You are responsible forreporting to the IRS any sale that meets the following conditions:
1. The customer pays withmore than $10,000 in cash. Cash includes domestic/ foreign currency. (Note:personal checks, business checks, certified personal or business checks (thekind that are from a bank), and proceeds from a loan are not considered cash.)
2. The customer pays with acashier’s check, bank draft, traveler’s check, or money order with a face valueof not more than $10,000 that is either received in a designated reportingtransaction or received in any transaction where you know and/or suspect thatthe cashier’s check, bank draft, traveler’s check, or money order is being usedto avoid the reporting of the transaction. A “designated reportingtransaction,” is defined as a retail sale of a consumer durable, collectible,or a travel or entertainment activity. A “consumer durable” is an item oftangible personal property that is expected to last at least one year, and issuitable for personal use, and costs more than $10,000.
(For example: automobiles,light and medium duty trucks and vans would be a designated reportingtransaction. Heavy trucks or farm machinery, however, would not be a reportabletransaction because they are not considered “suitable for personal use.” If youare in doubt about items being suitable for personal use, report thetransaction to the IRS.)
These transactions must bereported to the IRS on the form 8300. The customer that is a party to areportable transaction must be notified that you sent a form 8300 to the IRS byno later than January 31st of the year following the date the transactionoccurred.
If the customer tries tostructure his payment with several small payments or a combination of differentcash payments to avoid the 8300 cash reporting requirement, the transactionshould be reported on form 8300 as suspicious.
Courtesy of Zurich NorthAmerica https://secure.zurichna.com/zdu