Even if a business is a legitimate operation, it must comply with rules designed to ferret out money laundering schemes and similar criminal activities. Unfortunately, failing to file the proper paperwork, even if you’re innocent of any wrongdoing, can result in substantial penalties. This issue arose in a new case, Dealers Auto Auction of Southwest, TC Memo 2025-38, 4/28/25, where the company claimed that forms weren’t filed due to a software glitch.
Basic rules: Generally, if you’re in a trade or business and receive more than $10,000 in cash in a single transaction or in related transactions, you must file Form 8300, Report of Cash Payments Over $10,000, within 15 days of receiving the cash. This requirement applies to individuals, companies, corporations, partnerships, associations, trusts and estates—virtually everybody.
For these purposes, “cash” includes coins and currency of the U.S. or any foreign country. It also covers cash equivalents, such as cashier’s checks (sometimes called treasurer’s checks or bank checks), bank drafts, traveler’s checks or money orders with a face amount of $10,000 or less that a person receives for:
- A designated reporting transaction, or
- Any transaction in which the person knows the payer is trying to avoid the reporting requirement.
Form 8300 is filed with both the IRS and FinCEN (Financial Crimes Enforcement Network). It may be filed electronically or by mail.
The penalties for failing to Form 8300 are severe. The basic penalty is $250 for each occurrence that is not intentional. There are also mitigating rules where a deficiency is discovered and promptly addressed. For an intentional non-filing, the penalty is the greater of $25,000 or the amount of the cash transaction, up to $100,000. A willful failure to file could even result in a fine of up to $25,000 ($100,000 for a corporation) and imprisonment for up to one year.
New case: A company sells automobiles through an auction house in Arizona. In the ordinary course of its business, it receives cash payments for purchases of vehicles and accepts installment payments. The payments made to the company sometimes exceed $10,000 individually or in the aggregate for a series of related payments.
For reasons not entirely clear on the record, the company didn’t file and furnish all the required information returns for 2016. The IRS assessed penalties against the company for its failure to file and furnish the required Forms 8300 for the tax year in question and pursued collection of those penalties.
At trial, the company asserted that it should not be assessed the penalties or failing to file the required Forms 8300. It claimed that software malfunctions outside of its control led to the non-filing. But the company could not prove to the Tax Court’s satisfaction that the software failed to meet the requirements for the intended purpose of filing of Form 8300. Not did the company install any safeguards to identify noncompliance. Accordingly, the company is liable for penalties totaling $21,200.
Inform your clients of their responsibilities and take precautions to ensure that filing Form 8300 obligations are met.
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