Good day, everyone. My name is Arlene Good. I am a Stakeholder Liaison with the IRS in Houston, TX and I will be your moderator for today’s call. Thank you for participating in our webinar on: When Businesses Should File Form 8300 for Cash Transactions.

This program is being recorded, and will be maintained in accordance with federal recordkeeping laws.

We have two presenters on today’s webinar and an IRS Counsel Representative that will be assisting during the Q&A session. You will find a link to information about them on this Web page. You’ll also find a link to a PDF file of this presentation, in case you would like to download or print a copy. Now I will provide you with background information on our representatives.

Gary Watkins is a senior Stakeholder Liaison analyst for the Bank Secrecy Act unit, and is responsible for outreach and education efforts on several Anti-Money Laundering programs nationwide, including the Report of Foreign Bank and Financial Accounts, Form 8300 currency reporting by trade or businesses and commercial casino compliance requirements under Title 31.

Elizabeth Witzgall is a senior Bank Secrecy Act analyst attorney for the Small Business/Self Employed headquarters staff. Her duties include reviewing the Internal Revenue Manual, drafting policies and procedures, creating and delivering training, answering program related questions and participating in outreach for the IRS Form 8300 program.

Stuart Murray is from the Office of Chief Counsel and is a senior Counsel in the Procedure and Administration Branch. As senior Counsel, he advises Field and National office components of the IRS and the Office of Chief Counsel and works with Treasury and the Department of Justice, on significant procedural and legal issues concerning interest, penalties, tax assessments, return preparation, filing, and information reporting, including Form 8300 and the requirements of Section 6050I.

And with that, I’ll turn it over to our presenters, Gary Watkins and Elizabeth Witzgall. Stewart will be joining in for the question and answer session at the end. Gary, Elizabeth, take it away.

It’s a pleasure to be with you today. We’re going do our best to make this as enjoyable and informative as we can. As Arlene mentioned, co-presenting with me today is Elizabeth Witzgall from BSA Compliance Policy. Elizabeth is the Program Analyst assigned to the Form 8300 Program and an expert on the subject.

We’re very lucky to have her. We plan to stray a little from the usual Webinar format. Using football terminology, I’m going to be the play-by-play man in presenting the slides and Elizabeth is going to be the color analyst. Among other things she’ll give you her insight into why the laws were written as they are and she’ll provide real-life examples highlighting the who and why of filing the 8300s. So, we’ve got a lot to talk about, so let’s get started.

Slide 2 states the objective of this presentation and they are pretty simple. Primarily we want you to leave here with an understanding of the Form 8300 filing requirements. At the onset, we will talk a little bit about money laundering and how the requirement to file Form 8300 came about. But we will spend the majority of our time looking at who must file Form 8300, the different types of transactions which must be reported, designated reporting transaction, related transactions and multiple payments. The requirement to provide notification to the customer that a Form 8300 has been filed with the Internal Revenue Service and we’ll talk about the potential civil and criminal penalties for non-compliance with the filing and recordkeeping requirements associated with the Form 8300. And finally we want to make sure you know where to get help if you need it.

So let’s go ahead and go on to slide 3. This slide is telling us that money laundering is the process of engaging in financial transactions in order to conceal or disguise the origin, nature and ownership of illicit funds. For our purposes, I don’t think we need to get too deep into the technical aspects of money laundering, although I do think it’s important for you to understand how the Form 8300 fits into the country’s comprehensive anti-money laundering Program, a program which was established with the passing of the Bank Secrecy Act in 1970. The goal of the Bank Secrecy Act was pretty simple. The goal was to create a paper trail by requiring financial institutions to maintain transactional records and file reports of cash transactions and suspicious activities. Over the years the definition of a financial institution has expanded to include not only traditional banks but also non-bank financial institutions such as money services businesses that would be money transmitters, currency exchangers, check cashers and issuer/redeemers of money orders and traveler checks. In the early 1980’s Congress came to the realization that trades or businesses, not defined as financial institutions under Title 31, were increasingly being used to launder money. To address this problem Congress passed the Deficit Reduction Act of 1984 which broadened the reach of the anti-money laundering reporting requirements. This law codified the Form 8300 filing requirements in Title 26 under Code Section 6050I, requiring all trades or businesses, except those required to file currency transaction reports under Title 31, to report cash transactions exceeding $10,000 received from the same person in a single transaction or two or more related transactions. Elizabeth, that’s kind of the big picture look at how the Form 8300 came to be.

Are there any details that you would like to share with the audience?

Well Gary I always like to share. There are some big differences between the requirements for financial institutions and those for other trades and businesses. First there is the obvious difference that financial institutions must report both receipts and disbursements over $10,000 on the Currency Transaction Report, but even more important was the fact that the Form 8300 requirement was placed in the Internal Revenue Code. Congress did this because of IRS experience in dealing with trades and businesses. But there was a drawback that Congress didn’t foresee. Tax return information is very strictly protected from disclosure for purposes other than tax by IRC 6103. This meant that the information on Form 8300 could not be used by law enforcement in general, the way they were used to using CTR information. That was a problem. The terrorist attacks on 9/11, 2001 energized Congress to pass the USA PATRIOT Act in October of that year. Among many other changes, Congress included a provision very similar to IRC 6050I in Title 31 of the United States Code that is Section 5331. The purpose of this section duplicating IRC 6050I was to allow law enforcement to access Form 8300 filings. That is the reason that Form 8300 has become a dual purpose form. You can see that at the top of the Form 8300 where on the left it is shown as an IRS form and on the right it is shown as a FinCEN form.

There are even different Office of Management and Budget numbers for it. In filing Form 8300, one is meeting the obligation under two different titles of the United States Code.

We probably should tell the audience that FinCEN is the Financial Crimes Enforcement Network, which is a Bureau of the Department of Treasury. Just for a little context here, where the Internal Revenue Service has administrative responsibility over Title 26 and the Internal Revenue Code, FinCEN has administrative responsibility over the Bank Secrecy Act as codified in Title 31. Okay, so let’s go ahead move into the meat of the presentation.

Slide 4 provides us with the general definition of who must file Form 8300. It’s telling us that a person who, in the course of a trade or business in which such person is engaged, receives cash over $10,000 from the same person, or an agent acting on behalf of that person, in a single transaction or two or more related transactions must file a Form 8300 to report the transaction. Now at first glance the terms used here seem pretty simple, but before we go to the next slide let’s examine what we mean by a person, trade or business and the term transaction. Elizabeth, could you provide us with a little clarity on these?

Alright, let’s start with person. There are two potential definitions of person for the Form 8300. For Title 26 purposes a person is defined in 26 CFR 301.7701-6(a) and for Title 31 purposes a person is defined at 31 CFR 103.11(z). They are word for word the same at the beginning but when one arrives at the catchall phrasing at the end the Title 31 definition is definitely broader saying “all entities cognizable as legal personalities.” However the regulations under Title 31 at 31 CFR 103.30 provide that the statutory income tax definition governs.

So for 8300 purposes the term person shall be construed to mean and include an individual, a trust, estate, partnership, association, company or corporation.

And this definition comes with all the baggage of the tax regulations.

Alright, moving along to trade or business. Let’s go to the next part of this requirement. Having established that you or your client actually is a person, the next step is to determine if the cash was received in the course of the person’s trade or business.

Is there a definition of trade or business? Of course there is. According to the regulations at 26 CFR 1.6050I-1(c)(6) the term trade or business has the same meaning as under section 162 of the Internal Revenue Code. And this same language is repeated in 31 CFR 103.30(c)(6), the Title31 regulation. Basically this means that if the person dreams of deducting any business expenses, that person is in a trade or business. That business may be the wholesale or retail sale of goods, services or other property. It may be renting out property whether real or personal. It may even be making loans.

These are some of the following situations that meet the reporting requirements of receiving in a trade or business for 6050I purposes.

Any cash received in a transaction by a corporation is considered to be received in connection with the trade or business of the corporation.

Cash received by non-gaming operations at gambling casinos, such as shops, restaurants, entertainment, and hotels, is considered received by separate trades or businesses.

Cash payments received by attorneys, accountants, doctors, and other service providers is of course, incurred in their trade or business but even cash received as reimbursements of expenses by these service providers is considered received in the trade or business.

Cash received which is to be held in trust is also included.

Cash payments received by a collection agency for any one delinquent account is also reportable.

On the other hand exempt organizations do not need to report the receipt of cash donations over $10,000 because an exempt organization is not included in the definition of a trade or business under IRC 162.

And remember that the cash must be received in the course of the trade or business.

Let me assume that a person has a business of selling yachts. He also likes to ride shiny new motorcycles and has just sold his slightly used personal motorcycle for $11,000 in cash. Must he file a Form 8300? The answer is no because the cash was not received in the course of the trade or business. It was a personal transaction.

You know you just answered a question that I often receive when I talk to groups about Form 8300 filing requirements, Elizabeth, and that question is, would charitable organizations be required to file an 8300 when it receives cash transactions exceeding $10,000? The answer would be, as you stated, that exempt organizations are not trade or businesses as defined under IRC Section 162 and as such, would not be required to file 8300s and that’s good.

The next slide tells us that the recipient must report not only a lump sum payments of over $10,000, but also installment payments or other previously unreported payments received over a 12 month period when the sum of the cash payments received exceeds $10,000. You know, I guess an obvious example of this would be auto dealership or jewelry store which sells a car or piece of jewelry on time, receiving payments from the purchaser each month via an installment agreement or a series of payments if the monthly payments are being made in cash, when the total cash received exceeds $10,000, the recipient would have an 8300 filing requirement. Elizabeth, are there examples that are a little less obvious than that one?

Well how about the situation where an attorney agrees to represent a client in a criminal case and his fees are determined on an hourly basis. The first month the attorney bills client $8,000 which the client pays in cash. The second month the attorney bills $4,000, having spent less time and again the amount is paid by the client in cash. Since the aggregate amount of cash received by the attorney is $12,000, all of which relates to a single transaction, that being the sale of legal services relating to the criminal case, the receipt of cash must be reported on Form 8300.

It’s interesting that you would use an attorney for your example. When I’m giving this presentation to lawyers they’re always concerned with attorney/client privilege in regard to filing of Form 8300 and I always tell them that the Courts have consistently held that attorney client privilege does not extend to the identity of a client or the receipt of fees.

You’re right. There have been a number of court cases that have said just that. One of the best explanations of the attorney client privilege is found in the case of Lefcourt vs US, decided in the Southern District of New York in 1996. In this particular case, the plaintiff was an attorney seeking a refund of the penalty asserted against him for failure to file a complete Form 8300. He wasn’t just any attorney, he was a vice-president of the National Association of Criminal Defense Lawyers, a founder and vice-president of the New York State Association of Criminal Defense Lawyers, a member of the American Bar Association House of Delegates, a past president of the New York Criminal Bar Association and formerly Chair of the Association of the Bar of the City of New York's Criminal Advocacy Committee. So you know that every possible privilege argument was covered in this case. He filed Form 8300s without the name of the payer client or amount. He justified this by citing the Attorney Client privilege using three different aspects of this claim. The judge specifically stated first, that the fact that the state bar association ethical rules prohibited providing this information, could not trump a federal law requiring the information. The court held in the second instance, plaintiff's failure was not due to reasonable cause, and there were no grounds for a waiver of the penalty under 26 U.S.C. § 6724, that is reasonable cause, because the plaintiff knew that the IRS intended to assert a penalty unless he filed including the identity and the amount. Finally the court held the Plaintiff had not made any showing that including the client-identifying information omitted from the8300 Form filed would reveal a confidential communication or constitute the last link in a chain of incriminating evidence against its client. Thus, the information necessary to file a complete Form 8300 was not protected from disclosure. The court pointed out that the plaintiff attorney’s firm was attempting to obtain from the courts that which it could not obtain from Congress, mainly a statutory attorney client privilege and that the attorney should insist on checks if they didn’t want to file 8300’s. So we see that the Form 8300 must show the person from whom the cash was received in the course of that person’s trade or business and of course the amount of the cash received.

You know, I’ve actually cited that Lefcourt case in presentations to attorneys and practitioners as well, primarily because I love what the judge said to the attorney, if you don’t want to file Form 8300s insist on checks. Pretty simple. In a few minutes we’ll be talking about what isn’t cash and checks drawn from personal or business accounts are not cash. But now let’s take a look at what cash is on slide 6. You wouldn’t think we’d need a slide for this, but things are not always as simple as they first appear. Cash is currency and coins and it doesn’t make any difference if it’s domestic or foreign currency.

This slide is also telling us that under certain conditions we are going to expand the definition of cash to include monetary instruments such as cashier’s checks, bank drafts, traveler’s checks and/or money orders of $10,000 or less. So, when would we expand the definition of cash to include monetary instruments when we have a designated reporting transaction or any transaction in which the recipient knows that the payer is trying to keep the form 8300 from being filed. Our next slide provides a definition of a designated reporting transaction but before we go there, I want to get your take on this Elizabeth, why was the definition of cash expanded in this manner and why are we only looking at monetary instruments of $10,000 or less?

Congress expanded the definition of cash for designated reporting transactions because of the greater risk in such transactions that criminals could convert small denomination bills typically received in drug sales into money orders or other negotiable instruments and then move them into the economic mainstream through the purchase of luxury goods such as consumer durables, including cars and boats or collectibles such as art works or travel and entertainment items.

This type of activity is referred to as the integration stage of money laundering and is clearly where the payoff is for the criminal.

Of course when a transaction is suspicious there is also more likelihood that it would be useful to law enforcement or intelligence analysis so that such transactions also include the expanded definition of cash.

As for why we are only expanding the definition of cash to include monetary instruments having a value of less than $10,000, when a financial institution sells a monetary instrument with a face value of more than $10,000 and the monetary instrument is purchased with cash, the financial institution is required by Title 31 to report the transaction by filing a Currency Transaction Report so there is already a report.

That’s a really good explanation and it ties right back into the discussion we had at the beginning of the presentation on financial institutions and the Bank Secrecy Act. Since we’ve thrown a lot of information at the audience let me take just a few seconds to recap. All trade or businesses, with the exception of financial institutions as defined by Title 31, that receive cash exceeding $10,000 from the same person, or an agent acting on behalf of the person, in a single transaction or two or more related transactions must file a Form 8300 in order to report the transaction. If the transaction is a designated reporting transaction or if the payer is trying to keep the recipient from filing a timely and accurate Form 8300 then we are going to expand the definition of cash to include not only currency but also monetary instruments having a face value of less than $10,000. This is a great time to define a designated reporting transaction.

Slide 7 defines a Designated Reporting Transaction as a retail sale of a consumer durable, a consumer durable being an item suitable for personal use, which can last at least one year, has a sales price of more than $10,000 and is tangible personal property. When I read this definition of a consumable durable, the items that come to mind would be an automobile, a recreational vehicle, RV, boats, jewelry, generally big ticket items. We need to keep in mind that we are talking about tangible personal property. We’re not talking about real property and not intangible property. So a customer comes into an auto dealership and buys a used car for $10,001 and gives the dealer a money order for $10,000 and $1 in cash, the dealership would have to file a Form 8300 since this would be a retail sale of a consumer durable and the total cash and monetary instruments received exceeds $10,000.

That’s an interesting example. Had the sale price of the vehicle been exactly $10,000 then it would not be a consumer durable and you would not expand the definition of cash to include monetary instruments. If that were the case, than the filing of the Form 8300 would only be required if the cash and currency in the transaction exceeded $10,000. I also want to point out that although the slide doesn’t say it, a designated reporting transaction would also include the sale of collectibles such as art work, antiques, stamps, coins, and so on, and the sale of travel and entertainment packages.

And I’m glad you did point that out since the slide didn’t mention it. The next slide, slide 8 tells us what isn’t cash. Monetary instruments, which would be cashier’s checks, bank drafts, traveler’s checks or money orders, with a face amount over $10,000 would never be considered cash since the financial institution selling them would be required to file Currency Transaction Reports if purchased with cash. And for essentially the same reason, wire transfers would not be considered cash since Title 31 and the Bank Secrecy Act requires money transmitters to file CTRs, Currency Transaction Reports and maintain transactional records. Checks drawn on an individual’s personal or business checking accounts would also not be considered cash since the banks servicing the accounts are required to file Currency Transaction Reports if cash exceeding $10,000 is deposited into these accounts. This is why the judge in the Lefcourt case made the comment that if the attorney didn’t want to file Form 8300s then he should insist on checks.

This also reminds me of a question that was recently received from the auto industry. The question concerned the receipt of a bank check of less than $10,000 received from a customer. The check was drawn on the funds of the bank and not the customer’s personal account however, contained on the front of the check, was both the customer’s name and personal account number. Since the customer’s name and bank account number was shown on the check, the dealer wanted to know if the check would still need to be treated as a cash equivalent?

I remember that particular question, we were working on an Auto Industry Q&A to be placed on irs.gov. The answer would be that bank checks of $10,000 or less drawn on the bank’s account and not the account of the customer, would be considered cash under the expanded definition of cash, unless they are loan proceeds. The fact that there are notations on the check or even that the check is made payable to the dealership does not negate this.

Let me make sure that the audience knows how to pull up this Auto Industry Q&A page on the web especially since you and I worked so hard on this, and Stuart Murray who will be joining us during the Q&A session, don’t want to forget about him, he was also involved in it. So if we have anyone in the audience from the auto industry you definitely will want to take a look at these Q&As. Go to www.irs.gov and do a key word search for Automotive Tax Center that would be Automotive Tax Center. This landing page not only has the Form 8300 Q&As, but it also provides a wealth of tax information about the Auto Industry, great information in there.

Moving right along. Slide 9 tells us that a related transaction by definition is any transaction between a buyer or agent of the buyer and seller that occurs within a 24 hour period. The receipt of more than $10,000 during two or more transactions with one buyer in a 24 hour period would be treated as one transaction and trigger the filing of a Form 8300. So a jewelry store customer buys a man’s ring paying $6,000 in cash on Monday afternoon and then the customer, feeling guilty that that he didn’t buy his wife a ring, returns to the jewelry store Tuesday morning and buys a ring for his wife paying $5,000 in cash. Since the two transactions occurred within a 24 hour period and since the total cash received exceeded $10,000, the jewelry story would need to file a Form 8300.

Now, a related transaction can occur outside the 24 hour period if there is something that connects the transactions. In the example I just gave, if the customer bought the ring on Monday afternoon and told the jeweler to hold the women’s ring for him, returning to the store on Friday to purchase it, even though the two transactions occurred outside the 24 hour period, the transactions would be a related transaction since there was an agreement or understanding between the customer and the jeweler.

I always like to go to the regulations and in the regulations the term related transactions means any transaction conducted between a payer or its agent and a recipient of cash in a 24 hour period. Or transactions conducted between a payer or its agent and a cash recipient during a period of more than 24 hours.

If a recipient knows or has reason to know that each transaction is one of a series of connected transactions.

For two or more transactions outside a 24 hour period to be related there needs to be some type of connectivity, a contract or an agreement. Simply doing business with the same customer throughout the year does not make each transaction a related transaction.

Suppose for example a person intends to contribute a total of $45,000 to a trust fund and the trustee of the fund knows or has reason to know of that intention. The $45,000 contribution is a single transaction and the reporting requirement of this section cannot be avoided by the grantor's making five separate $9,000 cash contributions to a single fund or by making five $9,000 cash contributions to five separate funds administered by a common trustee.

That really is a good example and one that I need to use when I’m talking to estate attorneys. Well, I tell you, I’m certainly glad I came to this Webinar.

I’m getting a lot of information I can use in my discussions on Form 8300, hopefully the audience is getting a lot of information they can use in their business. Ok, so let’s go on to slide 10.

This slide was included in the presentation in order to let businesses know that when cash is received at different branches or departments of their business and they haven’t the ability to aggregate the transactions such as they don’t maintain a central accounting system that links the branches or departments then the business would not be required to aggregate specifically for 8300 reporting purposes. On the flip side, if the business does have the ability to aggregate transactions the business would be expected to aggregate for 8300 reporting purposes and I think that’s fair, if the business doesn’t have the ability to aggregate transactions they shouldn’t have to do it, but if they do, they should.

Let’s give an example of this. Suppose a corporation owns and operates a racetrack. The racetrack contains 100 betting windows at which pari-mutuel wagers may be made. An individual places cash wagers of $ 3,000 each at five separate betting windows during the day.

Assuming that in the ordinary course of business each betting window, or a central unit linking windows, does not have reason to know the identity of persons making wagers at other betting windows, each betting window would be deemed to be a separate cash recipient. As no single individual recipient received cash in excess of $10,000, no report would need to be made by the corporation.

Let’s go ahead and move on to slide 11. Slide 11 defines a multiple payment as occurring when the same buyer or agent for the buyer makes more than one cash payment on a single transaction or a series of related transactions. It goes on to say that multiple payments must be reported when the total amount received exceeds $10,000 in a 12 month period. So the business would have 15 days from the date in which the total amount received exceeded $10,000 to file a Form 8300 and after filing the initial 8300, a new count would begin. So, clearly there could be several Form 8300s filed on the same transaction.

Maybe our audience would like to know how to report these in a little more detail, let’s look at three different scenarios.

First, if the initial payment is more than $10,000, and the subsequent payments made within one year do not exceed $10,000, the recipient would report the initial payment within 15 days of its receipt. No report filed on the remaining payments since they never reached $10,000.

Okay a second scenario. If the initial payment is $10,000 or less, then the recipient must aggregate all payments made within one year of that initial payment until the aggregate exceeds $10,000. Each time the payments aggregate in excess of $10,000, a report is due within 15 days after receiving the payment that causes the total amount to exceed $10,000. If a Form 8300 is due and additional payments are received within the 15-day period, they should be added to the $10,000 amount.

Third, if the initial payment exceeds $10,000, and the subsequent payments individually do not exceed $10,000, but in the aggregate they exceed $10,000, then the recipient must file a Form 8300 within 15 days after the receipt of the initial payment and all subsequent payments made within one year from the initial payment will require the filing of a Form 8300 each time the aggregate exceeds $10,000.

That’s good information. Moving right along, slide 12. This slide addresses customer identification. Before completing any transaction that requires a Form 8300, a recipient must verify the identity of the person from which the cash was received. Verification must be made by examination of a document normally accepted as a means of identification when cashing checks, for example, obvious examples, a driver’s license, passport, alien registration card or other official document. Elizabeth when I talk to groups about obtaining identifying information on their customers there’s always two questions that they ask me, first how do you handle a non-resident alien that does not have a Social Security Number and secondly if the business is unable to obtain proper identification from the customer, what should they do, I know how I would you answer those questions, but I would like to hear how you would answer them.

Unless a non-resident alien is in this country on a work related visa, they won’t have a SSN and unless they have a Social Security Number, and unless they have a filing requirement they won’t have an Individual Taxpayer Identification Number ITIN either. When there is no SSN or ITIN, the filer should enter NONE on item 6 of Form 8300. Keep in mind that when the nonresident alien’s name and address would still need to be verified and reflected in item 14 of the 8300. Acceptable documentation for a nonresident alien would include a passport, alien registration card or other official document. As for the second question, if the business is unable to obtain proper identification from the customer, the 8300 should be filed with a statement explaining why the taxpayer identification number or other customer identification is not included.

That’s amazing, it’s exactly the way I would have answered them. Boy I’m good.

Let’s go on to slide 13. The next slide tells us that the Form 8300 is due within 15 days after receiving the cash payment exceeding $10,000 and a record of the transaction needs to be retained for 5 years. If the due date does fall on a Saturday, Sunday or holiday, the Form 8300 would be due on the next day that is not a Saturday, Sunday or holiday. Makes sense. It doesn’t say it on this slide, but the Form 8300 is filed with the Enterprise Computing Center in Detroit, the form and instructions contain the mailing address of ECC-Detroit. Unfortunately, you can’t file the Form 8300 electronically right now.

Those of you who have memorized the Form 8300 may remember that the Form says to file it with the Detroit Computing Center. The Enterprise Computing Center is the same building with the same people.

I’d also like to say you should remember to retain a copy of your filed Form 8300 along with your Certified Mail receipt stapled to it. That Post Office Box on the address on the form is used only for Form 8300s. If you are really concerned you can go on line if you have certified mail to at www.usps.com, US Postal Service.com, put in your certified mail number and print out the Postal Service delivery information and staple that to your retained copy.

That’s good advice. On slide 14 we talk about notification requirements. A written statement must be given to each person named on Form 8300 on or before January 31 of the year following the calendar year in which the cash is received. There is nothing in the code or regulations mandating a specific format for the customer statement however the regulations do require certain information be contained in the statement including the name and address of the business, the name and telephone number of a contact, total amount reported to the Internal Revenue Service and that the information was reported to the IRS.

Elizabeth I’m always asked if the 8300 itself can be used as the written statement or could the sales invoice be used as a written statement if the required language in inserted on it? How would you respond to those two questions?

Well, there are a couple of considerations. The regulations at 26 CFR 1.6050I-1(f) do specifically say that the statement need not follow any particular format, but then they say it must be a single, annual, written statement to each person whose name is set forth in the return. This sounds to me like a format.

It also must contain certain information. That content is mandated. That content is listed on the Form 8300 and is the name and address and telephone number of the person making the return. This appears in Part 4 of every Form 8300 and the sales invoice probably shows this also. Then you must report the aggregate amount of reportable cash received by the person who made the Forms 8300 during the calendar year in all cash transactions relating to the identified person. This requirement creates a problem if more than one 8300 has been filed or sale made. The Form does not total the annual amount and sales invoices do not total the total sales made during the year.

The next requirement is a legend stating that the information contained in the statement is being reported to the Internal Revenue Service. There is no legend about IRS on the Form 8300. There are enough urban legends about IRS elsewhere. But it is pretty clear that the informaton is being reported to the Internal Revenue Service since the filer is told to send the Form 8300 to IRS. A normal sales invoice would totally lack this legend and lack the filing instruction.

So from a practical point of view if there is only one transaction with a customer during the year a copy of the Form 8300 could meet the requirements. But a copy of the sales invoice probably couldn’t. The copy of the Form 8300 should be sent at year end not just given at the time of the transaction in order to show that it is the single annual written notice.

Having said that I would caution the business in providing a copy of the 8300 to the customer since the form contains identity information about the business like the Employer Identification Number or Social Security Number in Part 4. The filer may not want to share that information in this age of identity theft.

And remember, if multiple transactions occur between the business and the customer throughout the calendar year, neither providing a copy of the 8300 or the Sales Invoice would be appropriate because the regulations require a single written statement so you can’t just staple all your copies of the Form 8300 together because that would not be a single written statement.

One of the major differences between the provisions of 31 USC 5331 and 26 USC 6050I is the fact that the Bank Secrecy Act 5331 has no notice requirement in it. However the notice requirement is clearly set forth in the instructions which are part of the Form, so that it appears to have been incorporated in the Title 31 requirements in this manner. In any case the filer needs to comply with both laws and failing to give notice is a violation of the Internal Revenue Code.

So providing a copy of the Form 8300 in order to satisfy the written notification requirements is really not a good idea because of the business identifying information contained on the form and when a business conducts multiple transactions with the same customer, since the regulations require a single written notice, the business should wait until end of the calendar year to provide the customer with written notification. That’s a good explanation. Probably should also mention that written notification via e-mail is allowable as long as the customer agrees to receive the written notification in that manner. Ok, no one can say we didn’t completely cover that topic, Elizabeth. Let’s go on to slide 15.

This next slide addresses suspicious transactions. If less than $10,000 in cash is received during a transaction and the transaction appears to be suspicious, we would encourage the business to file a suspicious Form 8300 even though the business is not required to. A transaction would be suspicious if the customer is trying to cause the business to either not file the Form 8300 or to file a false or incomplete form or if there are signs of possible illegal activity. If a business does voluntarily file a Suspicious Form 8300, the business should check the Suspicious Transaction box in item 1 of Form 8300 and this part is important the business should not provide the customer with an end-of-the-year written statement. Written statements are only required when the business has a filing requirement.

Elizabeth, here’s another area I would like to get your thoughts on. Many business owners are not exactly sure what to say to a customer that questions them about the Form 8300 filing requirements. They’re afraid that any type of discussion with the customer on this topic can turn into a structuring conversation. Is there any advice you can give these folks?

Well yes, structuring a transaction so as it would appear not to be reportable carries its own penalties which can be assessed against the recipient of the cash. What I would say is a customer can be told but is not required to be told at the time of the transaction about the law requiring the reporting of cash payments over $10,000 to IRS and FinCEN. What a business owner can’t do is aid the customer in structuring a transaction to prevent a Form 8300 from being filed. For example a business can say, “please pay us by check because we have more paperwork with cash payments.” A business cannot give advice about how the customer can structure the transaction so that the business is not required to report it.

It also bears repeating, that the business owner who is filing Form 8300 voluntarily because of suspicious activity cannot inform the customer of the filing.

That’s great advice there. Slide 16 identifies the various civil and criminal penalties, although it doesn’t tell you the size of the penalties, penalties for failure to timely file, failure to include all required information and for filing incorrect information can be assessed to the tune of $50 per violation not to exceed $250,000 per calendar year. Failure to furnish a payee with a written notification statement carries a penalty of $50 per failure, not to exceed $100,000 per calendar year. Intentional Disregard carries a penalty of the greater of $25,000, or the amount of the cash received in the transaction, not to exceed $100,000 per failure. Criminal penalties for willful failure to file can include both fines and imprisonment. If anyone in the audience would like to take a closer look at the Form 8300 penalty code section in the Internal Revenue Code, they can be found in Sections 6721 and 6722.

Elizabeth, I think this is a good time to talk about the Examination Compliance Program for Form 8300. Could you give us a quick overview on this program?

Yes. Since 2001 citizens and the IRS working together have increased the number of Form 8300s filed by 133 per cent, providing that much more information to law enforcement and intelligence to prevent terrorism. Also during this time period, IRS set up a new organization, Fraud Bank Secrecy Act. Whereas in the 1980s and 1990s Form 8300 examinations were predominantly covered by revenue agents whose primary focus was tax examinations, once the Bank Secrecy Act department was established the Form 8300 examinations were predominantly covered by specialized BSA examiners whose focus was to ensure that law enforcement had the steady stream of information on the underground economy provided by the Bank Secrecy Act information reports and Form 8300. There are now hundreds of BSA examiners who cover information reporting compliance. This compliance force is coupled with outreach such as this webinar to produce the increase in filings which has occurred.

You know, although I hate to admit it I was a Revenue Agent in the 80’s and 90’s and I do remember the Form 8300 sweeps that where done by General Programs.

I guess I’m getting old.

And lastly, let’s look at slide 17. The last slide of the presentation discusses Resources available to you which there are quite a few. If any one in the audience likes to surf the internet, boy are you in luck, you’re going to want to go to the IRS web site at www.irs.gov and do a key word search for Form 8300, there you will find the form and instructions, filing information, publication 1544, frequently asked questions and a wealth of additional information.

If you have a specific question and you prefer to e-mail us, send it to, send your questions to 8300questions@irs.gov, that’s 8300questions@irs.gov, employees from the Enterprise Computing Center in Detroit review the questions and will provide you with a quick response. Form 8300 and Publication 1544 are available in English and Spanish and can be ordered on line at www.irs.gov or by phone at 1-800-829-3676. We also mentioned FinCEN several times during the presentation. Their site at www.fincen.gov also provides a wealth of information on Title 31 and Anti-Money Laundering. Finally if you have any questions and would like to talk to a live person, you can talk to a live person these days, you can either call our general toll free number at 1-800-829-1040 or you can call your local Stakeholder Liaison representative and the contact number for Stakeholder Liaison can be found on irs.gov.