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Part 4. Examining Process

Chapter 26. Bank Secrecy Act

Section 10. Form 8300 History and Law

4.26.10  Form 8300 History and Law

4.26.10.1  (11-21-2006)
Overview

  1. Congress enacted IRC Section 6050I to require that information returns relating to cash received in trade or business ( Forms 8300) are to be filed by all trades or businesses that are not required under the Bank Secrecy Act (BSA)(Title 31) to file similar reports on currency transactions. This section recounts the statutory history of the Form 8300 and describes major provisions of law relating to it.

4.26.10.2  (11-21-2006)
Statutory History

  1. IRC Section 6050I (Title 26) was added, effective January 1, 1985, by section 146 of the Deficit Reduction Act of 1984 (Public Law 98-369), commonly known as the Tax Reform Act of 1984. Final Regulations under IRC Section 6050I were issued on September 4, 1986.

  2. The Omnibus Budget Reconciliation Act (Public Law 101-508), commonly known as the Revenue Reconciliation Act of 1990, expanded the definition of cash to include monetary instruments in certain situations, effective November 5, 1990. Amendments to the final regulations were effective February 3, 1992. The Revenue Reconciliation Act of 1990 also added IRC Section 6050I(f), which prohibits structuring to avoid the reporting requirements of the section.

  3. IRC Section 6050I(g), relating to criminal court clerks, was added effective February 13, 1995, by the Violent Crime Control and Law Enforcement Act of 1994 (Public Law 103-322).

  4. In 2001, Public Law 107-56, known as the USA PATRIOT Act, added Section 5331 to the BSA, requiring filing under the BSA by "non-financial trades and businesses." Treasury Regulations allowing a single Form 8300 to satisfy both Title 26 and Title 31 filing requirements were issued December 20, 2001.

  5. Section 352 of the USA PATRIOT Act added a requirement for BSA compliance programs by non-financial trades and businesses. Pursuant to 31 CFR 103.170, FinCEN temporarily deferred the BSA compliance program requirement in order to implement regulations specific to each industry covered by the requirement. Therefore, unless FinCEN has promulgated an anti-money laundering compliance program requirement specific to a particular category of financial institution, the statutory requirement does not apply. See 31 CFR 103.170

4.26.10.3  (11-21-2006)
Requirements of IRC 6050I

  1. IRC Section 6050I requires that any person engaged in a trade or business that receives cash in excess of $10,000 in one transaction, or two or more related transactions, must file Form 8300 within 15 days of receipt of the reportable cash. A copy of each filed Form 8300 must be retained for five years by the business.

  2. Any business filing a required Form 8300 must also furnish a written statement to each person identified on Form 8300 by January 31 of the succeeding calendar year. The statement must show

    • The name, address, and telephone number of the information contact for the business:

    • The aggregate amount of reportable cash received during the calendar year; and,

    • That the information was reported to the IRS.

    A copy of Form 8300 should not be enclosed. A copy of the written statement must be retained by the business for five years.

4.26.10.4  (11-21-2006)
Requirements of USC 5331

  1. 31 USC Section 5331 of the BSA and 31 CFR 103.30 requires reporting by non-financial trades and businesses under Title 31.

  2. The BSA requirements mirror the IRC 6050I requirements and definitions, with the following major exceptions:

    • Court Clerks are excluded from the BSA filing requirement

    • The written statement to the person named in Form 8300 is not required under Title 31.

  3. A single Form 8300 satisfies both the IRC 6050I and the 31 CFR 103.30 filing requirements.

4.26.10.5  (11-21-2006)
Definitions Under IRC 6050I

  1. Cash - Cash includes the coin and currency of the United States, or any other country, which circulates and is accepted as money in the country in which issued. In addition, after February 2, 1992, cash also includes cashier’s checks, bank drafts, money orders or traveler's checks having a face amount of not more than $10,000 that were:

    1. Received in a designated reporting transaction, or

    2. Received in any transaction in which the recipient knows or has reason to know that such instrument is being used in an attempt to avoid reporting the transaction as required by IRC Section 6050I.

  2. Consumer Durable - An item of tangible personal property of a type that is suitable under ordinary usage for personal consumption or use and has a sales price of more than $10,000. The item can reasonably be expected to be useful for at least one year under ordinary usage.

  3. Designated Reporting Transaction - A retail sale of a consumer durable, collectible, or a travel or entertainment activity.

  4. Identified Person - Each person identified on a Form 8300 from whom cash was received or on whose behalf the transaction was conducted.

  5. Recipient - The person engaged in a trade or business who receives cash in excess of $10,000 subject to the reporting requirements.

  6. Related Transaction - Any transactions between a payer (or the agent of the payer) that occur within a 24-hour period. Also, transactions conducted during a period of greater than 24 hours are related if the recipient knows, or has reason to know, that each transaction is one of a series of connected transactions.

  7. Retail Sale - Any sale made in the course of a trade or business, if that trade or business principally consists of making sales to ultimate consumers.

  8. Transaction - A transaction subject to reporting is the underlying event precipitating the payer’s transfer of cash to the recipient. A transaction may be, but is not limited to:

    • A sale of goods or services;

    • A sale of real property;

    • A sale of intangible property;

    • A rental of real or personal property;

    • The establishment, maintenance of, or contribution to an escrow, trust, or custodial account;

    • Payment of a pre-existing debt; or,

    • The making or repayment of a loan.

  9. Travel or Entertainment - An item of travel or entertainment (within the meaning of Treas. Reg. Section 1.274-2(b)(1)), pertaining to a single trip or event where the aggregate sales price of the item and all other items pertaining to the same trip or event that are sold in the same transaction (or related transactions) exceeds $10,000.

4.26.10.6  (11-21-2006)
Trade or Business Requirement

  1. The provisions of IRC Section 6050I apply to cash received by any person in a trade or business, trade or business having the same meaning as in IRC Section 162. In addition, clerks of court are specifically included by IRC Section 6050I(g).

  2. The term "person" is defined in IRC Section 7701(a)(1) to mean and include an individual, trust, estate, partnership, association, company, or corporation. No governmental units are included in this list.

  3. An exception to the trade or business rule is: Cash received by any financial institution that has a requirement under the BSA (Title 31) to file similar reports of currency transactions is excluded from the Form 8300 reporting requirement by IRC Section 6050I(c), to avoid duplicate reporting.

  4. Trade or business transactions include:

    1. Any transaction by a corporation is considered to be received in connection with a trade or business;

    2. Non-gaming businesses of a casino, such as shops, restaurants and hotels, are considered separate trades or businesses;

    3. Gaming businesses of casinos having gross annual gaming revenue of $1 million or less (The gaming transactions of a casino having gross annual gaming revenue in excess of $1 million would be reportable under Title 31.);

    4. Payments received by accountants, attorneys, doctors and other service providers for services rendered or reimbursement of expenses, including cash received to be held in trust;

    5. Payments received by a collection agency for any one account;

    6. Sales of assets used in a trade or business; and,

    7. Transactions in which a person acts on behalf of another. But an agent who receives cash from a principal and uses it within 15 days in a second cash transaction is not required to report initial receipt of the cash if the agent discloses the name, address, and TIN of the principal to the recipient of the second cash transaction and the recipient in the second transaction is required to report the receipt of cash on Form 8300 or under Title 31 (BSA).

4.26.10.7  (11-21-2006)
Reports Required

  1. IRC Section 6050I, effective January 1, 1985, requires any person who, in the course of carrying on a trade or business, receives more than $10,000 in cash in one transaction, or related transactions, to file Form 8300. Form 8300 must be filed with the Internal Revenue Service by the 15th day after the reportable cash payment was received.

  2. The business may report on one Form 8300 several independently reportable payments received from a customer within a 15-day period. The report must be filed with the Internal Revenue Service by the 15th day after the $10,000 threshold has been exceeded.

  3. Form 8300 must contain the name, address, and taxpayer identification number of the person from whom the cash was received; the amount of cash received; the date and nature of the transaction; and, any other information required. In addition, if the recipient knows or has reason to know that the person from whom the cash was received conducted the transaction as an agent for another person, Form 8300 must contain the name, address, and taxpayer identification number of the person on whose behalf the transaction was conducted.

  4. Before completing any transaction that requires a Form 8300 to be filed, a recipient must verify the identity of the person from whom the cash was received.

    1. For aliens or nonresidents, verification must be done using the person’s passport, alien identification card, or other official document evidencing nationality or residence. Individual Taxpayer Identification Number (ITIN) cards and authorization letters that are issued by the IRS should not be used to verify identity.

    2. Verification of the identity of any other person may be by any document normally accepted as a means of identification when cashing or accepting checks (for example, a driver’s license).

    3. The document used to verify the identity must be recorded on Form 8300.

    4. In addition, a Form 8300 will be considered incomplete if a recipient knows (or has reason to know) that an agent is conducting the transaction for a principal, and the return does not identify both the principal and the agent.

  5. A business must keep a copy of each Form 8300 filed for five years from the date of filing.

  6. Any person required to make an information return under IRC Section 6050I(e) must furnish a single, annual written statement to each person whose name is identified on Form 8300 . The statement must include the following:

    1. The name, telephone number, and address of the information contact for the business filing the form,

    2. The aggregate amount of reportable cash received during the calendar year from the identified person, and,

    3. That the information contained in the statement was reported to the Internal Revenue Service.

  7. The customer is not to be notified when a Form 8300 is voluntarily filed (such as when the filer is voluntarily reporting a transaction that appears to be suspicious) and is not otherwise required.

  8. The statement is not required to be in any particular form or format. The statement must be furnished to the identified person by January 31 of the following year. The statement is considered furnished to the identified person if it is mailed to that person’s last known address. A copy of the statement must be retained for five years.

  9. A copy of the 8300 should not be enclosed with the notification statement.

4.26.10.8  (11-21-2006)
Exceptions to IRC 6050I

  1. IRC Section 6050I does not apply in the following situations:

    1. A cash transaction in excess of $10,000 which occurs entirely outside the United States (the fifty states and the District of Columbia) does not have to be reported unless part of the transaction occurs in Puerto Rico or a possession or territory of the United States, and the recipient of the cash is subject to the general jurisdiction of the Internal Revenue Code.

    2. Cash received by financial institutions that have a requirement under the BSA (Title 31) to file similar reports of currency transactions.

    3. Cash received is not in the course of the recipient’s trade or business.

  2. Exceptions for Governmental Units: The language of IRC Section 6050I does not require governmental units to file Form 8300, except for the specific requirements for criminal court clerks. ( See IRM 4.26.10.9,Clerk of Criminal Court, for additional information.)

4.26.10.8.1  (11-21-2006)
Additional Exceptions for Monetary Instruments

  1. Exceptions for certain loans - A cashier’s check, bank draft, traveler’s check or money order received in a designated reporting transaction is not treated as cash if the instrument constitutes the proceeds of a loan from a bank. The recipient of cash may rely on a copy of the loan document, a written statement, lien instructions from the bank, or similar documentation as evidence that the proceeds are from a loan.

  2. Exceptions for certain installment sales - A cashier’s check, bank draft, traveler’s check or money order received in a designated reporting transaction is not treated as cash if the instrument is received in payment of a promissory note or an installment sales contract.

  3. Exceptions for certain down payment plans - A cashier’s check, bank draft, traveler’s check or money order is not treated as cash if received in payment for a consumer durable, collectible, or travel or entertainment activity and all three of the following statements are true:

    1. It is received under a payment plan requiring one or more down payments and payment of the rest of the purchase price by the date of sale; and

    2. It is received more than 60 days before the date of sale; and

    3. Payment plans with the same or substantially similar terms are used when selling to ultimate consumers in the ordinary course of business.

4.26.10.9  (11-21-2006)
Clerk of Criminal Court Provisions

  1. IRC Section 6050I(g) requires any clerk of a Federal or state criminal court who receives more than $10,000 in cash as bail for an individual charged with any of the following specified criminal offenses to file Form 8300:

    • Any Federal offense involving a controlled substance;

    • Racketeering;

    • Money laundering; or,

    • Any state offenses substantially similar to the three listed above.

  2. If someone other than the clerk receives bail on behalf of the clerk (such as a sheriff), the clerk is treated as having received the bail. The clerk must file the Form 8300 if the other filing requirements are met.

  3. If multiple payments are made to satisfy bail reportable under this section, and the initial payment does not exceed $10,000, the initial payment and subsequent payments must be aggregated, and the information required by IRC Section 6050I(g) must be filed by the 15th day after receipt of the payment that causes the aggregate amount to exceed $10,000. However, payments made to satisfy separate bail requirements are not required to be aggregated.

  4. The court clerk is required to provide a statement of the aggregate amount of reportable cash to each payer of bail. This requirement can be satisfied either by sending a single written statement with an aggregate amount listed, or by furnishing a copy of each Form 8300 relating to that payer of bail. NOTE: This is the only instance where the regulations allow copies of the Form 8300 to satisfy the requirement to furnish the statement.

  5. A copy of each Form 8300 filed by the court clerk must also be sent to the United States Attorney in the jurisdiction in which the individual charged with the specified crime resides, and the jurisdiction in which the specified crime occurred, if different. This copy must be sent by the 15th day after the date the reportable cash bail is received.

  6. Exception for Federal Courts - Normally, compliance reviews are not recommended for the Federal Courts because Policy Statement P-2-4 prohibits penalties against another Federal entity and adequate self-audit procedures exist. Educational contacts are suggested. Before visiting a Federal Court, please notify the BSA Policy Program manager sixty (60) days prior to your planned visit. This will allow time for coordination with the Administrative Office of the Federal Courts’ Audit Branch.

4.26.10.10  (11-21-2006)
Available 8300 Publications

  1. Publication 1544, Reporting Cash Payments of Over $10,000 (Received in a Trade or Business) explains why, when, and where a business should file Form 8300. It also explains key issues and terms related to Form 8300. This publication is available in English or Spanish.

  2. Publication 1428 is a poster that can be used to inform individuals, trades and businesses that any cash payments over $10,000 must be reported to the IRS.

  3. Both publications can be ordered by:

    • Calling the IRS forms line at 1-800-829-3676 or

    • Visiting the IRS website at www.irs.gov.

4.26.10.11  (11-21-2006)
Penalties

  1. Various penalties may be applicable for failure to timely file Form 8300, failure to include complete and correct information on the form, intentional disregard of the filing requirements of the form, and failure to furnish notification to the payer of the filing of Form 8300. Criminal penalties may be applicable if required criteria are met.

4.26.10.11.1  (11-21-2006)
Civil Penalties

  1. Civil penalties and applicable rules are as follows:

    1. Negligent failure to timely file, IRC Section 6721(a)(2)(A) : $50 for each return with respect to which a failure occurs, not to exceed $250,000 per calendar year ($100,000 for persons with gross receipts of not more than $5,000,000);

    2. Negligent failure to include all required information on the return or inclusion of incorrect information, IRC Section 6721(a)(2)(B): $50 for each return, not to exceed $250,000 per calendar year ($100,000 for persons with gross receipts of not more than $5,000,000);

    3. If any failure under IRC Section 6721 is corrected on or before the 30th day after the required filing date, the penalty is reduced to $15 for each return in lieu of $50 and the maximum amount imposed shall not exceed $75,000 ($25,000 for persons with gross receipts of not more than $5,000,000);

    4. Negligent failure to furnish correct payee statements, IRC Section 6722(a) and (b): $50 for each return, not to exceed $100,000 per calendar year;

    5. Intentional disregard of the requirement to timely file or to include all required information, IRC Section 6721(e)(2)(C): the greater of: (1) $25,000 for each return, or (2) the amount of cash received in the transaction, not to exceed $100,000 (with no calendar year limitation applicable);

    6. Intentional disregard of the requirement to furnish a correct payee statement, IRC Section 6722(c)(1)(A): $100 for each statement with respect to which a failure occurs, or if greater, 10 percent of the aggregate amounts of the items required to be reported correctly (with no calendar year limitation applicable).

    7. Civil penalties under Title 31 include those for willful or negligent violations under 31 U.S.C. 5321. IRS does not have the authority to assess civil penalties under Title 31 for violations of the Form 8300 reporting and recordkeeping requirements.

4.26.10.11.2  (11-21-2006)
Reasonable Cause

  1. Under IRC Section 6724(a), no penalty shall be imposed for any failure which is due to reasonable cause and not to willful neglect. Guidance on waivers or abatements of penalties due to reasonable cause may be found in IRM 20.

4.26.10.11.3  (11-21-2006)
Criminal Penalties

  1. Any person required to file Form 8300 who willfully fails to file, fails to file timely, or fails to include complete and correct information is subject to criminal sanctions as a felony under IRC Section 7203. Sanctions include a fine up to $25,000 ($100,000 in the case of a corporation), and/or imprisonment up to five years, plus the costs of prosecution.

  2. Any person who willfully files a Form 8300 which is false with regard to a material matter may be fined up to $100,000 ($500,000 in the case of a corporation), and/or imprisoned up to three years, plus the costs of prosecution. ( IRC Section 7206(1)).

  3. Criminal penalties under Title 31 for willful violations are found at 31 U.S.C. 532.

4.26.10.12  (11-21-2006)
Statute of Limitations

  1. Under IRC Section 6724(b) and IRC Section 6671(a), penalties relating to information returns "shall be paid on notice and demand...and in the same manner as tax." Thus, the statute of limitations found in IRC Section 6501 applies to filed Forms 8300.

  2. Non-filed forms are subject to the exception of IRC Section 6050I(c)(3). No civil statute of limitations is applicable to such non-filed Form(s) 8300. However, the criminal prosecution statute for willful failure to file Form 8300 is three years from the date the Form 8300 was due. See IRC Section 6531.

  3. The statute of limitations for assessing civil penalties for violation of Title 31 requirements is six years from the date of the transaction with respect to which the penalty is assessed. 31 U.S.C. 5321(b).

4.26.10.13  (11-21-2006)
Authority

  1. IRS's authority to conduct the Form 8300 (Title 26) Compliance Program is found in 26 U.S.C. 7601, "Canvass for Taxable Persons and Objects" and 26 U.S.C. 7602, " Examination of Books and Witnesses."

  2. If a financial institution that is subject to a BSA compliance examination by IRS has a requirement to file a Form 8300, the authority for IRS to examine for compliance with the Form 8300 filing requirement as part of the BSA examination is found in 31 C.F.R. 103.56(b)(8) and Treasury Directive 15-41.

Exhibit 4.26.10-1  (11-21-2006)
Form 8300 Filing Requirements (Excludes Requirement for Court Clerks)

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