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Large cash transactions with your business must be reported to the IRS

Businesses, Large Cash Transactions and the IRS

In this technological information age, most consumers and merchants are doing more business by means of electronic transfers of funds. This development has increased the tempo of buying and selling and — in so doing — often increased business volume, as well. Yet good, old-fashioned cash is viewed as a more reliable and conservative means of exchange. For consumers, paying in cash helps to save money and say no to tempting impulse buying. It also precludes expensive finance charges and fees to buyers and sellers associated with credit and debit cards. Identity theft is also less likely. Still, cash-only deposits and withdrawals raise suspicions with banks since criminal activity like money-laundering thrives in cash.

Banks and Cash Money

Moving money into and out of bank accounts is the very stuff of banking. However, large amounts of cash — either withdrawn or deposited — sometimes represent nefarious business dealings, e.g. drug traffiking, human traffiking or even the enabling of terrorist activity. In view of these possibilities, federal bank regulations set a threshold of $10,000 for cash transactions, anything above which is officially deemed suspicious. In such cases, bank officials must file a suspicious activity report (SAR) with the United States Department of the Treasury Financial Crimes Enforcement Network (FinCEN). This SAR filing must take place within 30 days of the transaction.

Small Businesses and Cash Money

Of all the account holders with whom a bank does business, small retail establishments and service providers are the most probable candidates for large cash depositor. A luncheonette or diner; a coin laundromat or dry cleaner; and a florist or specialty cheese shop would all expect to receive a lion’s share of daily revenue in cash. A SAR report merely helps their bank to be transparent with the government. Still, what responsibility does a business owner bear in financial reporting of hefty cash receipts? In short, significant responsibility falls on the owner.

Big Cash and the IRS

While banks report high-volume cash transactions to FinCEN, business owners must report single-day revenues in excess of $10,000 to the Internal Revenue Service (IRS). IRS form 8300 is the vehicle for this type of accountability. The government has an interest not only is preventing criminal activity, but also in inhibiting tax evasion — an easier dodge when cash changes hands. When remittances are reported on Form 8300, the IRS can discover the path and source of these cash payments.

How Does the IRS Define Cash?

Of course, U.S. government-issued currency and coinage always meet the standard for cash. Yet other means also qualify, e.g. traveler’s checks, postal money orders, cahier’s checks — as when a financed new car requires certified funds at the dealership — or other drafts. An experienced IRS tax lawyer is well-briefed on the rules pertaining to these means of exchange.

In fact, with large sums of cash under examination, IRS tax help is crucial to business and tradespeople. Contact Guardian Tax Law for a free consultation.

Guardian Tax Law

310 S Williams Blvd Ste 260,
Tucson, AZ 85711
(520) 485-7371

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