What Your Business Needs to Know
As a business owner, understanding the laws surrounding reporting cash transactions is not just good practice – it is a legal obligation that must not be overlooked. Under federal law, a person is required to report cash transactions of more than $10,000, whether in a single transaction or a series of related transactions. This gets done by filing the IRS Form 8300 within 15 days of receiving the cash. Businesses can file the form electronically using the Bank Secrecy Act (BSA) Electronic Filing System.
The Basics: Cash Transactions
For purposes of reporting cash transactions, the term “person” covers a wide range of entities, including individuals, companies, corporations, partnerships, associations, trusts, or estates. Tax-exempt organizations are also persons and may be required to report certain transactions. The term “cash” refers to any coin or currency of either the U.S. or any other country. Additionally, cash transactions include cashier’s checks, money orders, and traveler’s checks. However, personal checks are not considered cash for reporting purposes.
Penalties for Non-Compliance
Failure to comply with the reporting requirements may be punishable by civil or criminal penalties. A negligent failure to timely file, include all required information, or include correct information will result in a civil penalty of $310.00 per return. Intentional disregard of filing requirements constitutes a felony and is subject to criminal sanctions. Individuals may face fines ranging from $25,000-$100,000, along with possible imprisonment for up to 5 years.
Additionally, a person who attempts to interfere with or prevent the proper filing of Form 3800 may also be subject to penalties. This includes structuring the payments to break up a large transaction in an attempt to disguise the true amount of cash involved.
Mitigating Risks and Ensuring Compliance
To avoid the penalties associated with non-compliance, a business must report the cash transaction within 15 days of receipt. If the 15th day falls on a weekend or holiday, the report must be filed on the next business day. Adherence to satisfactory recordkeeping can help ensure compliance. Businesses should keep a copy of every Form 3800 filed for at least five years from the date filed. In essence, the penalties for failing to report large cash transactions far outweigh the temporary inconvenience of filing the necessary form. Consulting with an attorney can assist you in navigating the financial regulations in place to help protect you and your business every
step of the way.
