10 Pages Posted: 6 Mar 2013
Date Written: December 1, 2012
Enactment of the Currency and Foreign Transactions Reporting Act, better known as the Bank Secrecy Act (BSA) in 1970, authorized the Secretary of the Treasury to issue regulations requiring financial institutions to maintain records and file reports on certain financial transactions. The Treasury's Financial Crimes Enforcement Network (FinCEN) was initially established to provide a government-wide, multi-source intelligence and analytical network to support the detection, investigation, and prosecution of domestic and international money laundering and other financial crimes. Subsequently, its mission was broadened to include regulatory responsibilities. FinCEN currently oversees and implements policies designed to prevent and detect money laundering while using counter-money laundering laws (such as the BSA) to enforce reporting and record-keeping requirements by banks and other financial institutions. FinCEN also provides intelligence and analytical support to other law enforcement authorities. FinCEN concentrates on combining information reported under the BSA with other government and public information which is then disclosed in the form of intelligence reports to the law enforcement community. These reports assist ongoing investigations and help plan future money laundering investigative strategies.
There are different reporting requirements for different types of transactions and for both financial and non-financial institutions. Most reports are filed electronically and coordinated at the IRS Detroit Computing Center in Michigan (although many can be hand-delivered to a local IRS office) where they are entered into the Currency and Banking Retrieval System (CBRS) creating an electronic roadmap for investigations of financial crimes and illegal activities, including tax evasion, embezzlement, and money laundering. Reports are to be entered into the CBRS within 30 days following their receipt and much of this data can be accessed by federal, state, and local law enforcement agencies (subject to disclosure restrictions) for at least 10 years thereafter.
Form 8300 (Rev. July 2012) - Report of Cash Payments Over $10,000 Received in a Trade or Business. The Form 8300 must be filed by each person engaged in a trade or business who, in the course of that trade or business, receives more than $10,000 in cash in one transaction or in two or more related transactions. Transactions that require Form 8300 include, but are not limited to the sale of goods, services or real or intangible property; rental of goods or real or personal property; cash exchanged for other cash; establishment, maintenance of or contribution to a trust or escrow account; conversion of cash to a negotiable instrument such as a check or a bond; negotiable instrument purchases; reimbursement of expenses; making or repaying a loan; or the exchange of cash for other cash. The IRS routinely conducts compliance checks of various cash intensive businesses (check cashers, jewelry stores, diamond merchants, bail bondsmen, etc) in an effort to determine filing compliance. These compliance checks often provide solid leads to taxpayers failing to comply with the reporting of their income and other tax obligations.
A person must file Form 8300 to report cash paid to it if the cash payment is over $10,000; received as one lump sum of over $10,000, two or more related payments that total in excess of $10,000, or payments received as part of a single transaction (or two or more related transactions) that cause the total cash received within a 12-month period to total more than $10,000; received in the course of trade or business; received from the same payer (or agent), and received in a single transaction or in two or more related transactions. A transaction is the underlying event resulting in the transfer of cash. A related transaction includes transactions between a buyer, or agent of the buyer, and a seller that occur within a 24-hour period are related transactions. If the same payer makes two or more transactions totaling more than $10,000 in a 24-hour period, the business must treat the transactions as one transaction and report the payments. A 24-hour period is 24 hours, not necessarily a calendar day or banking day. In addition, transactions more than 24 hours apart are related if the recipient of the cash knows, or has reason to know, that each transaction is one of a series of connected transactions. If more than one cash payment is received for a single or related transaction within a 12 month period, Form 8300 must be filed within 15 days of the date payment is received causing total cash received to exceed $10,000. If the Form 8300 due date (the 15th or last day the form can timely be filed) falls on a Saturday, Sunday, or legal holiday, it is delayed until the next day that is not a Saturday, Sunday, or legal holiday.
Taxpayers (and those who ought to be taxpayers) seem to continually underestimate the desire, ability and resourcefulness of the government. The events of September 11, 2001 have enhanced the government's already strong desire to ensure the reporting of monetary transactions within the United States. As a result of their electronic matching programs, the government can better identify those attempting to evade their information reporting requirements. With Congress and numerous others demanding a reduction in the Tax Gap, searching for those who ignore reporting of currency-related transactions has become a high priority among various government agencies. Those who choose not to comply face potentially significant civil and criminal sanctions that should not be ignored. Now is the time to advise clients of their reporting obligations. Penalties will always be less severe, if any, for those who timely, voluntarily and completely come into compliance.
Keywords: Form 8300, currency reportng, IRS, FinCEN, bank secrecy act, BSA, examination, tax, money laundering, criminal tax, tax fraud
Suggested Citation: Suggested Citation