Anyone who watches crime programs (guilty!) knows one piece of tax law.
Television, streaming, and movie crooks are always careful to avoid five-figure financial transactions. When these on-screen crooks deposit or withdraw more than $10,000 of their ill-gotten funds, the bank must report the large amounts to the Internal Revenue Service.
Of course, the fictional accounts of such large amounts only touch on the Internal Revenue Code provision in passing.
But it is a real law. And the Internal Revenue Service is making some changes so that it gets these $10,000+ reports more quickly.
Beginning next year, some of these reports detailed on IRS Form 8300 must be electronically filed.
Plus, the definition of cash for Form 8300 purposes will expand to include payments made with digital assets such as virtual currencies.
Crime-fighting assist from the IRS: Uncle Sam's tax collection agency notes that many cash transactions are legitimate. Others, though, not so up-and-up.
The information on Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business, can help law enforcement track and stop money laundering, tax evasion, drug dealing, terrorist financing, and other criminal activities.
To ensure that the reporting is more useful in cracking these cases effective Jan. 1, 2024, recipients of the payments must electronically file Forms 8300 if they are required to e-file certain other information returns electronically, such as Forms 1099 series and Forms W-2.
Those recipients to whom the reporting rule applies include an individual, company, corporation, partnership, association, trust, or estate. Those whom the IRS says typically need to file Form 8300 include dealers in jewelry, furniture, boats, aircraft, or automobiles; pawnbrokers; attorneys; real estate brokers; insurance companies; and travel agencies.
Next year, these entities must e-file the 8300 forms in a given calendar year if they are required to file at least 10 other information returns of one or more types.
Form 8300 must be filed within 15 days once a business receives more than $10,000 in cash, including the payments made in the expanded definition.
Also, in addition to filing the required Form 8300, the reporting business must notify each person named in the forms about the information reported to the IRS.
The IRS warns that the reporting obligation cannot be avoided by separating a transaction into multiple transactions. Doing this will be considered related transactions. If the IRS determines that these slightly smaller, but connected, cash transactions are actually part of a scheme, usually called structuring, to avoid tax reporting, you'll find yourself in even more tax trouble.
Record keeping is key: As with all things tax, good and thorough records are imperative.
The IRS reminds businesses that they must keep a copy of every Form 8300 filed, along with any supporting documentation, and the required statement that is sent to customers, for five years from the date filed.
Business should keep in mind that filing electronically will provide a confirmation email that the form was filed, but e-file confirmation emails do not meet the record keeping requirement.
When e-filing, filers must save or print a copy or the form prior to finalizing the form
submission. Businesses should associate the confirmation number with the saved copy.
You can find more information on $10,000 transaction tax reporting at IRS.gov in the agency's Publication 1544, Reporting Cash Payments of Over $10,000; the Form 8300 Reference Guide; and the special web page Form 8300 and Reporting Cash Payments of Over $10,000.
You also might find these items of interest:
- A look at IRS seizure, civil forfeiture rules
- RESPECT Act to protect against IRS asset seizures awaiting final Congressional action
- IRS civil asset forfeiture rules would be tightened by Ways and Means approved RESPECT Act
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