A curious form that dealers must file from time to time is the “Report of Cash Payments Over $10,000 Received in a Trade or Business.” It has two form numbers: IRS Form 8300 and FinCEN Form 8300.
It’s interesting to note that the Internal Revenue Service was founded in 1862 to collect taxes for the Civil War effort (It was ultimately found unconstitutional, and an amendment was made in 1913 to allow income tax assessment.) It is also responsible for administering the Internal Revenue Code, the main body of the federal statutory tax law.
The Financial Crimes Enforcement Network, or FinCEN, was created in 1990 to support law enforcement, both at home and abroad, by analyzing the information required under the Bank Secrecy Act, one of the nation's most important tools in the fight against money laundering.
Both the IRS and FinCEN are under the auspices of the U.S. Treasury Department.
As Form 8300 is unrelated to collecting taxes, the involvement of the IRS is to assist FinCEN in tracking financial transactions, as the IRS has extensive capability in collecting data and reporting it. The central purpose of this form is to report potential money laundering and suspicious activity.
A Précis of the Cash Reporting Rule
Any person in a trade or business who receives more than $10,000 cash in a single transaction or in related transactions must file Form 8300. The italicized terms cash, transaction, and related transactions must be studied in order for a dealer to complete the two-page Form 8300. Cash has a special definition for the application of this rule and includes forms of exchange beyond the usual concept of cash. Transactions and related transactions also have special interpretations, and need to be understood for a correct report to be filed.
An important dealer responsibility is to report suspicious transactions. A suspicious transaction is one in which it appears that a person is attempting to cause Form 8300 to not be filed, or to file a false or incomplete form, or that appears suspicious for any reason.
Filing this form is a serious matter, as a minimum penalty of $25,000 may be imposed if the failure is due to an intentional or willful disregard of the cash-reporting requirements. Dealers should be conscientious in this form’s preparation and filing.
What’s New About the Rule?
First of all, starting Jan. 1, 2024, dealers must electronically file Form 8300 if they are required to file certain other information returns electronically, such as the 1099 or W-2 forms. Dealers must examine this part of the rule.
Secondly, if dealers accept cryptocurrency, they must now include it in their Form 8300 filing. There are remarkably many such cryptocurrencies, some with creative names, such as ApeCoin and PancakeSwap. Previously, the IRS considered these electronic currencies as property, and they hence wouldn’t have been considered cash for purposes of the rule. However, passage of the Infrastructure Investment and Jobs Act in 2021 changed the definition of cash to include these currencies. The effective date is also Jan. 1, 2024.
Dealers as Government Conscripts
Consequently, dealers are conscripts in the safeguarding of the financial system from illicit use: money laundering, and its related crimes, including terrorism. Other laws, such as the restrictions pursuant to the Office of Foreign Assets Control, add to this conscription. Although the Cash Reporting Rule may be burdensome, it serves a compelling purpose, and dealers need to comply. Filing this form is a solemn responsibility.
Terry O’Loughlin is director of compliance for Reynolds & Reynolds and is admitted to the Pennsylvania and Florida Bars. Before joining Reynolds, he was employed by the Florida Office of the Attorney General, where he investigated automobile dealers and financing sources. He previously was a public accountant.
