Reporting cash transactions over $10,000
The Internal Revenue Code (IRC) provides that any person who, in the course of its trade or business, receives in excess of $10,000 in cash in a single transaction (or in two or more related transactions) must report the transaction to the IRS and furnish a statement to the payer.
“Cash” generally means the coin and currency of the U.S. or of any other country. For purposes of this reporting requirement, “cash” also includes a cashier’s check, bank draft, traveler’s check, or money order having a face amount of $10,000 or less if the instrument is:
- Received in any transaction in which the recipient knows that such instrument is being used to avoid the reporting of the transaction, or
- Received in a “designated reporting transaction,” which is defined as a retail sale of a consumer durable, a collectible, or a travel or entertainment activity.
Under these rules, the term “cash” excludes personal checks written by an individual. Also, a cashier’s check, bank draft, traveler’s check or money order is not considered to be received in a designated reporting transaction if it constitutes the proceeds of a loan from a bank, thrift institution or credit union or if it is received as a payment on certain promissory notes, installment sales contracts or down payment plans and the recipient does not know that the instrument is being used to avoid reporting of the transaction.
“Transaction” means “the underlying event precipitating the payer’s transfer of cash to the recipient” and includes (but is not limited to) the sale of goods or services (including tuition), the repayment of debt, the sale of real estate, or an exchange of cash for other cash.
Charitable contributions are not considered received in the course of an exempt organization’s trade or business and thus are not subject to these cash receipt reporting requirements. The Regulations which define “transaction” state that a single transaction cannot be separated into multiple transactions to avoid reporting the receipt of cash.
“Related transactions” means:
- Transactions conducted between a payer (or its agent) and a recipient of cash within a 24 hour period of time, or
- Transactions conducted between a payer (or its agent) and a recipient of cash during a period of more than 24 hours if the recipient knows (or has reason to know) that each individual transaction is one of a series of connected transactions.
“Recipient” means the person (including, but not limited to, an individual, a corporation, a partnership, a trust, an estate, an association or a company) receiving the cash.
Receipts of cash in excess of $10,000 must be reported to the IRS on Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business.
Generally, Form 8300 must be filed with the IRS by the 15th day after the date the cash is received. In the case of related transactions or multiple cash payments which relate to a single transaction, the following rules apply:
- The initial payment exceeds $10,000 – Report the initial payment within 15 days.
- The initial payment does not exceed $10,000 – Aggregate the initial and subsequent payments (made within one year) until the aggregate amount exceeds $10,000. Report the aggregate amount within 15 days after receiving the payment that causes the aggregate amount to exceed $10,000.
- Subsequent payments – A report must be made each time that previously unreportable payments (made within a twelve-month period) in the aggregate exceed $10,000. The report must be made within 15 days after receiving the payment that causes the aggregate amount to exceed $10,000.
The Regulations require Form 8300 to be mailed to the address shown in the Form 8300 instructions. For more information on reporting cash transactions over $10,000, contact a ShindelRock tax professional today.