Am I Required to File Form 8300?
Every year, around this time our compliance consultation service receives calls and emails asking . . .
Every year, around this time our compliance consultation service receives calls and emails asking about Form 8300, otherwise known as the IRS cash reporting form over $10,000.
Interestingly enough, the time of year has nothing to do with when you are required to file the form with the IRS. We will discuss that more in just moment.
There is a lot of confusion and questions regarding this form. We are not offering any legal or accounting advise today, but we are going to attempt to answer one of the more common questions we receive. The question usually goes like this: “Hey TIADA, if a dealer sold a car this year to a customer who paid the dealer $12,000, should the dealer file that IRS form? By the way, I am asking for a friend.”
The answer is: maybe.
First, let's review what constitutes a “cash” payment: Currency is the most obvious, bills and coins. However, cashier's checks, money orders, bank drafts and even traveler's checks can be considered “cash” payments.
So when should a cashier's check, money order, bank draft or traveler's check be considered? It should be considered when the face value is less than $10,000. Why is that? If a dealer receives multiple payments that are less than $10,000, but eventually add up to or total over $10,000 in the reporting period, the dealer should treat those as cash and file the form 8300. You are the first business to receive $10,000 from that customer in the reporting period.
If the dealer receives a cashier's check, money order, bank draft or traveler's check that is $10,000 or more, it should not be treated as cash, because the financial institution that issued that payment instrument would then be responsible for reporting that transaction; they were the first business to receive over $10,000 from that customer.
So in our original scenario, if the dealer received a $9,000 casher's check and $3,000 in $100 bills, the answer is yes, the dealer should file the Form 8300—they are the first business to receive over $10,000 from that same customer.
If that same dealer received a $12,000 cashier's check from the same customer for the same car, the answer is no. The financial institution that issued the $12,000 cashier's check would be responsible for reporting that transaction to the IRS.
There are three time periods you need to keep in mind when it comes IRS Form 8300.
- First, is the reporting time period. If you receive one cash payment for a single transaction or for related transactions, you must report the multiple payments any time you receive a total amount that exceeds $10,000 within any 12-month period.
- Second, you should file the report within 15 days of the date you receive the payment that causes the total amount to exceed $10,000, and
- Third, you should keep a copy of the form for 5 years after the date you file it with the IRS.
We strongly encourage you check with a licensed accounting professional or the IRS if you have questions on filing the IRS Form 8300.