One of the most underrated and undiscussed IRS forms is Form 8300. Many business owners are confused about their need to report cash payments over $10,000 given to a trade or business from a single entity or an individual. It’s not a typical filing, but it’s critical for many companies and individuals. If overlooked, it can create prison terms.
Who Must Fill Out Form 830
If you’re in a trade or business and receive more than $10,000 in cash in a single transaction or related transactions, you must file Form 8300. This cash transaction can be a one-time or multiple transactions over 12 months. Cash includes traveler’s checks, bank drafts, physical cash, and money orders with a face value of $10,000 or less. If the value of those cash instruments tied to a financial institution is more than $10,000, the financial institution reports on your behalf.
The form aims to provide information to the IRS and the Financial Crimes Enforcement Network to combat money laundering. Money is “laundered” to conceal illegal activity, including crimes like drug trafficking, tax evasion, and terrorist financing.
As of December 2023, Form 8300 does not include digital assets in the definition of cash and related payments. Because of the Infrastructure Investment and Jobs Act of 2021, it may only be a matter of time before a cryptocurrency transaction of $10,000 or more becomes reportable on Form 8300.
Those who must file a Form 8300 include an individual, company, corporation, partnership, association, trust, or estate.
The form must be filed if any part of the transaction occurs within the 50 states, the District of Columbia, or a U.S. possession or territory. Additionally, Form 8300 must be filed within 15 days after the date the cash transaction occurred by the individual or business receiving the funds.
Filing Form 8300
Effective January 1, 2024, individuals and business owners must electronically file Form 8300 if they e-file other information returns, like Form 1099 and Form W-2. You must e-file your Form 8300 if you’re required to file at least ten information returns of one or more types other than Form 8300 during a calendar year. You must mail the form and related information if you do not meet these electronic filing requirements.
You must also provide a written statement to each party whose name you include on Form 8300 by January 31 of the year following the reportable transaction. This statement must include your business’s name, address, contact person, telephone number, and the aggregate amount of reportable cash. The statement must also indicate that you provided this information to the IRS.
Penalties
If you do not send the written statement to each person, the business owner will be subject to penalties of around $290 per form. Further, if false Forms 8300 are filed, a person can incur up to $100,000 in penalties and three years in federal prison.
If these Forms are not filed on time or the annual statement is submitted, and the transaction is brought to the attention of the IRS via a different route, the IRS can open a Form 8300 audit on your business or that transaction. Ultimately, during an IRS Form 8300 audit, the government is looking to determine whether, under the Internal Revenue Code, there was a willful failure to file, a willful failure to make a complete and accurate filing, etc. As with any audit, the IRS does understand that individuals and entities make mistakes, and some audits merely end in a fine.
Further, you are required and expected to keep your Form 8300 files for five years in case you are audited, or any information related to those transactions with specific individuals or entities is requested by the IRS.