You’ve heard the saying: “cash is king” and the government knows it. To help
detect money-laundering schemes and other illegal activities, the IRS has implemented a system for reporting large cash transactions. No one is accusing auto dealers of any wrongdoing with this system, but businesses are asking for trouble if they don’t comply with the rules.
The cash reporting requirements may also apply to cashier’s checks, traveler’s checks, bank drafts and money orders with a face value of $10,000 or less. Personal checks are not considered cash, regardless of the amount.Specifically, auto dealerships are required to file Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business,with the IRS within 15 days of receiving more than $10,000 in a single cash transaction. Form 8300 also must be filed if the total for two or more related transactions exceeds $10,000.
In addition, your dealership must give a written statement to each person named on a required Form 8300 on or before January 31 of the year after the calendar year in which the cash is received.
Federal Investigation of One Car Dealer
A Connecticut car dealer pleaded guilty to federal currency reporting violations in two incidents.
Details of the case: The FBI and IRS conducted an undercover operation, which targeted a preowned car dealership. In the first incident, a law enforcement officer, posing as a drug trafficker, purchased a vehicle for $30,540 in cash. During negotiations, the undercover officer revealed the money was from drug proceeds and he didn’t want his name on paperwork. The dealer agreed to sell the vehicle and put the paperwork in the name of the buyer’s girlfriend. IRS Form 8300 was filed, but the purchaser was falsely identified.
In the second incident, a customer purchased a car for $18,000. After making a $1,000 cash down payment, the customer wanted to pay the rest in cash. The dealer refused because he didn’t want to file Form 8300. Instead, he took $9,000 cash and told the customer to return with a $9,000 cashier’s check.
The U.S. Attorney’s office noted that the prosecution should serve as a warning to business owners who willfully ignore IRS reporting requirements and knowingly accept payment in drug money.
Filing for Less than $10,000 is Voluntary
Form 8300 can voluntarily be filed if a cash transaction is less than $10,000 but appears to be suspicious. The form asks for the identity of the individual from whom cash was received, including name, address, tax identification number and the document used to verify the person, such as a driver’s license.
Failure to comply with the law can result in severe civil and criminal penalties.
The IRS has coordinated its efforts with the Department of Justice to prosecute criminals who have infiltrated the automotive industry. Their investigations have focused on a variety of potential infractions, including tax evasion, employment tax fraud, money laundering conspiracies and violations of the Bank Secrecy Act.