Complying With IRS Form 8300 Requirements

General, Industry

This is the second in a series of compliance related posts to help you consider what areas you might want to address for improvement in 2018.

IRS Form 8300 Compliance

Any time your dealership receives $10,000 in cash, whatever the currency—dollars, euros, even Bitcoins—for any single transaction or related transactions (as defined in the first link below), you must file a Form 8300 with the Internal Revenue Service.

The purpose of Form 8300 is to assist law enforcement in its anti-money-laundering efforts. According to the IRS, filing Form 8300 when cash transactions meet certain stipulations leaves an audit trail that helps law enforcement investigate possible tax evasion, drug dealing, terrorist financing, and other criminal activities.

The nuances of this IRS regulation are challenging, so please do not consider these highlights as your complete information. Fortunately, the IRS has two downloadable documents you may want to review (and from which we base this content). These documents are:

A Few Highlights

What Is “Cash”?

To comply with Form 8300, a good starting point is to understand how the IRS defines cash for these purposes. According to the IRS Form 8300 Reference Guide:

“Cash includes the coins and currency of the United States and a foreign country. Cash may also include cashier’s checks, bank drafts, traveler’s checks, and money orders with a face value of $10,000 or less, if the business receives the instrument in:

  • A designated reporting transaction in the retail sale of a consumer durable such as an automobile
  • Any transaction in which the business knows the customer is trying to avoid reporting of the transaction on Form 8300.”

Single vs. Multiple Payments

You must file Form 8300 when (a) a cash payment of $10,000 is made to your dealership for the purchase of a vehicle or (b) a partial cash amount paid is less than $10,000, but adds up to $10,000 over multiple payments (and within one year of the first payment).

Related Transactions

Related transactions are transactions that occur within a 24-hour period. Two or more transactions within a 24-hour period are related transactions, and when they total $10,000 or more, must be reported via Form 8300.

For example: An auto dealer sells a vehicle for $9,000 in cash in the morning and, that afternoon, the buyer returns to buy another vehicle for a family member and pays $9,000 in cash. Since both transactions occurred within a 24-hour period, they are related transactions, and the dealer must file Form 8300.

Informing the Customer

According to the IRS Form 8300 Reference Guide, “When a business is required to file a Form 8300, the law requires the business to provide a written statement to each person(s) named on Form 8300 to notify them that the business has filed the form.”

Penalties

Penalties for failing to file Form 8300 vary depending on the situation and level of intent.

For Further Information

These are just a few highlights based on the requirements laid out in the above linked IRS documents (IRS Form 8300 Reference Guide and Report of Cash Payments Over $10,000 Received in a Trade or Business – Motor Vehicle Dealership Q&As) for filing Form 8300. Be sure to review those documents for more explanation and examples of transactions that do and do not fit the Form 8300 filing requirements.

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