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Be Careful When Accepting Cash Payments

After 9/11, the United States Government updated cash reporting requirements as part of the Patriot Act to limit money laundering. Any dealer who accepts payments in cash should be aware of Form 8300. 

The IRS says that you MUST file Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business, if your business receives more than $10,000 in cash from one buyer as a result of a single transaction or two or more related transactions in aggregate during the year. The form must be filed electronically or by mail within 15 days of the receipt of the cash. If you are required to file Form 8300, you must do so by the 15th day after the date the cash transaction occurred. A person can file Form 8300 electronically or by mailing the form to the IRS at: Detroit Computing Center, P.O. Box 32621, Detroit, Michigan 48232.

Cash includes:
  • Currency- bills and coins
  • Cashier's checks*
  • Money orders*
  • Bank drafts*
  • Traveler's checks*
*Reportable if (A) the face amount of the instrument is $10,000 or less AND (B) the vehicle had a sales price of more than $10,000.

What is a Related Transaction?
  • A lump sum cash payment of $10,000 or more.
  • Someone purchases two or more cars at one time from the same dealer and the total cash received is $10,000 or more (Ex. Family members).
  • Cash payments or installments payments that total over $10,000 on the purchase of a vehicle received within a 12-month period.
What if the buyer does not have a Social Security number? Under the filing exception as described in Publication 1544, a filer is not required to provide the Tax Identification Number TIN of a person who is a nonresident individual or foreign organization.  However, name and address verification is required, and the source of the verification must be included in item 14 of Form 8300. For nonresident aliens, acceptable documentation would include a passport, alien registration card or other official document.  Example:  A nonresident alien with no SSN or ITIN  makes a purchase requiring Form 8300 reporting and presents a Mexican driver's license to verify his name and address. A driver's license issued by a foreign government would be acceptable documentation for name and address verification purposes. 

Motor vehicle dealers can click HERE for an industry-specific Q&A. For information about Form 8300 e-filing, see the FinCEN news release.

There are many different situations in which the cash reporting requirement may be triggered, far more than a blog post can address. If you have questions, reach out to your attorney or contact TIADA. 
 

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