Whether you’re a company, a corporation, a partnership, an association, a trust or estate, or even an individual, if you’ve received a cash payment in excess of $10,000, you’ll be responsible for reporting it to the IRS.
If you’ve received cash payments from a trade or business, you can file Form 8300 electronically through the Financial Crimes Enforcement Network’s BSA E-Filing System. After doing so, you’ll receive an electronic acknowledgment. You can also send the form via certified mail and request a return receipt.
Why is there a focus on cash payments? Beyond the IRS wanting their share, cash payments exceeding $10,000 are required to be reported to aid law enforcement in combating illegal activities, like money laundering, drug dealing, and terrorist financing.
What Counts as Cash?
You may be wondering, how does this work with cryptocurrency? What’s considered cash? The IRS considers cash to be any type of currency used in the U.S. or a foreign country, which also includes cashier’s checks, bank drafts, traveler’s checks, or money orders with a face value of $10,000 or less.
You must report the following types of transactions if the cash value is more than $10,000:
- In one lump sum
- In two or more related payments within 24 hours
- As part of a single transaction within 12 months
- As part of two or more related transactions within 12 months
After you’ve received the cash payment, you must file Form 8300 within 15 days. If you received several smaller transactions together that exceed $10,000, you must file.
Tax-exempt groups don’t need to file Form 8300 for cash contributions. However, donors must receive a written acknowledgment of the contribution from the nonprofit or charity; likewise, the tax-exempt organization must report noncharitable cash payments. If the organization received more than $10,000 in cash for renting out its hall for an event, for example, that payment should be reported.
You should also know that banks and other financial institutions report cash purchases of currency with a face value of more than $10,000 by filing currency transaction reports.
Like non-tax-exempt groups, you should file Form 8300 within 15 days of receiving the cash or when the total amounts to more than $10,000. Every time payments aggregate to more than $10,000, you’ll need to file another Form 8300.
Other Considerations for Businesses
If you’re a business, you’ll need to provide customers with a written notice by January 31 of the year following the transaction that you filed Form 8300 with the IRS to report the transaction. If you need to report a suspicious transaction below $10,000, you can file a Form 8300 without informing the customer that you reported it. Make sure to check the “suspicious transaction” box on the form.
You must file Form 8300 if you trade or run a business that receives cash payments of more than $10,000 for pre-existing debt payments, escrow arrangement contributions, expense reimbursements, and making or repaying a loan. This not only ensures that you’re complying with reporting laws, but also provides authorities with an audit trail to investigate possible illegal activities.
If you have questions regarding cash payments, feel free to reach out to our knowledgeable CPAs.