Question: I have a business and sometimes receive substantial cash payments. Is there a penalty for not reporting a large cash payment?

Answer: If you operate a trade or business and receive $10,000 or more in cash for goods or services you must file IRS Form 8300 and report the payment within 15 days. The calculation of the $10,000 threshold includes lump sum and cumulative payments made in a twelve month period. According to the IRS:

Businesses must report cash payments received if all of the following criteria is met:

1. The amount of cash is more than $10,000;

2. The business receives the cash as:

• One lump sum of more than $10,000, or
• Installment payments that cause the total cash received within one year of the initial payment to total more than $10,000, or
• Previously unreported payments that cause the total cash received within a 12-month period to total more than $10,000
• There are both civil and criminal penalties for failure to timely file a Form 8300.

A person may be subject to criminal penalties for:

• Willfully failing to file a Form 8300,
• Willfully filing a false or fraudulent Form 8300,
• Stopping, or trying to stop, a Form 8300 from being filed, or
• Setting up, helping to set up, or trying to set up a transaction in a way that would make it seem unnecessary to file Form 8300.

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. 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.

Comment: The IRS has been known to prosecute Form 8300 violations. One area that may be of particular interest to the IRS is that of suppliers to cannabis operators. Many cannabis operators run on a cash only basis. Many do not have bank accounts as a result of banking restrictions imposed by banking regulators. Only time will tell how the IRS deals with these issues.

ABOUT STEVE SHANE

Steve Shane provides strategic counseling to clients in need of estate administration, charitable giving and business continuity planning while minimizing estate, gift, and generation-skipping transfer tax exposure. He offers legal guidance to clients on asset protection and the proper disposition of assets in accordance with the client’s objectives, while employing tax planning techniques such as the use of irrevocable trusts, life insurance planning, lifetime gifts and charitable trust. He is also experienced with drafting documents for business planning, the incorporation and application for exemption for Private Foundations and the administration of decedents’ estates.

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