Publication 1544 |
2001 Tax Year |
Who Must File Form 8300?
Generally, any person in a trade or business who receives more than
$10,000 in cash in a single transaction or in related transactions
must file Form 8300.
For example, you may have to file Form 8300 if you are a dealer in
jewelry, furniture, boats, aircraft, or automobiles; a pawnbroker; an
attorney; a real estate broker; an insurance company; or a travel
agency. Special rules for clerks of federal or state courts are
discussed later under Bail for certain criminal offenses.
However, you do not have to file Form 8300 if the transaction is
not related to your trade or business. For example, if you own a
jewelry store and sell your personal automobile for more than $10,000
in cash, you would not submit a Form 8300 for that transaction.
Transaction defined.
A "transaction" occurs when:
- Goods, services, or property are sold.
- Property is rented.
- Cash is exchanged for other cash.
- A contribution is made to a trust or escrow account.
- A loan is made or repaid.
- Cash is converted to a negotiable instrument, such as a
check or a bond.
Person defined.
A "person" includes an individual, a company, a corporation, a
partnership, an association, a trust, or an estate.
Exempt organizations, including employee plans, are also
"persons." But, exempt organizations do not have to file Form
8300 for a more-than-$10,000 charitable cash contribution they receive
since it is not received in the course of a trade or business.
Foreign transactions.
You do not have to file Form 8300 if the entire transaction
(including the receipt of cash) takes place outside of:
- The 50 states,
- The District of Columbia,
- Puerto Rico, or
- A possession or territory of the United States.
However, you must file Form 8300 if any part of the transaction
(including the receipt of cash) occurs in Puerto Rico or a possession
or territory of the United States and you are subject to the Internal
Revenue Code.
Bail for certain criminal offenses.
Any clerk of a Federal or state court who receives more than
$10,000 in cash as bail for an individual charged with any of the
following criminal offenses must file Form 8300:
- Any Federal offense involving a controlled substance,
- Racketeering,
- Money laundering, and
- Any state offense substantially similar to (1), (2), or (3)
above.
For more information about the rules that apply to court
clerks, see Section 1.6050I-2 of the Income Tax Regulations.
What Payments
Must Be Reported?
You must file Form 8300 to report cash paid to you if it is:
- Over $10,000,
- Received as:
- One lump sum of over $10,000,
- Installment payments that cause the total cash received
within one year of the initial payment to total more than $10,000, or
- Other previously unreportable payments that cause the total
cash received within a 12-month period to total more than $10,000,
- Received in the course of your trade or business,
- Received from the same buyer (or agent), and
- Received in a single transaction or in related transactions
(defined later).
What Is Cash?
Cash is:
- The coins and currency of the United States (and any other
country), and
- Cashier's checks, bank drafts, traveler's checks, and money
orders you receive, if they have a face amount of $10,000 or
less and you receive them in:
- A designated reporting transaction (defined later), or
- Any transaction in which you know the payer is trying to
avoid the reporting of the transaction on Form 8300.
Note.
Cash may include a cashier's check even if it is called a
"treasurer's check" or "bank check."
Cash does not include a check drawn on an individual's personal
account.
A cashier's check, bank draft, traveler's check, or money order
with a face amount of more than $10,000 is not treated as
cash. (These items are not defined as cash and you do not have to file
Form 8300 when you receive them because, if they were bought with
currency, the bank or other financial institution that issued them
must file a report on Form 4789.)
Example 1.
You are a coin dealer. Bob Green buys gold coins from you for
$13,200. He pays for them with $6,200 in U.S. currency and a cashier's
check having a face amount of $7,000. The cashier's check is treated
as cash. You have received more than $10,000 cash and must file Form
8300 for this transaction.
Example 2.
You are a retail jeweler. Mary North buys an item of jewelry from
you for $12,000. She pays for it with a personal check payable to you
in the amount of $9,600 and traveler's checks totaling $2,400. Because
the personal check is not treated as cash, you have not received more
than $10,000 cash in the transaction. You do not have to file Form
8300.
Example 3.
You are a boat dealer. Emily Jones buys a boat from you for
$16,500. She pays for it with a cashier's check payable to you in the
amount of $16,500. The cashier's check is not treated as cash because
its face amount is more than $10,000. You do not have to file Form
8300 for this transaction.
Designated
Reporting Transaction
A designated reporting transaction is the retail sale of any of the
following:
- A consumer durable, such as an automobile or boat. A
consumer durable is property, other than land or buildings, that:
- Is suitable for personal use,
- Can reasonably be expected to last at least one year under
ordinary use,
- Has a sales price of more than $10,000, and
- Can be seen or touched (tangible property).
For example, a $20,000 car is a consumer durable, but a $20,000
dump truck or factory machine is not. The car is a consumer durable
even if you sell it to a buyer who will use it in a business.
- A collectible (a work of art, rug, antique, metal, gem,
stamp, or coin).
- Travel or entertainment, if the total sales price of all
items sold for the same trip or entertainment event in one transaction
(or related transactions) is more than $10,000.
To figure the total sales price of all items sold for a trip or
entertainment event, you include the sales price of items such as
airfare, hotel rooms, and admission tickets.
Example.
You are a travel agent. Ed Johnson asks you to charter a passenger
airplane to take a group to a sports event in another city. He also
asks you to book hotel rooms and admission tickets for the group. In
payment, he gives you two money orders, each for $6,000. You have
received more than $10,000 cash in this designated reporting
transaction. You must file Form 8300.
Retail sale.
The term "retail sale" means any sale made in the course of a
trade or business that consists mainly of making sales to ultimate
consumers.
Thus, if your business consists mainly of making sales to ultimate
consumers, all sales you make in the course of that business are
retail sales. This includes any sales of items that will be resold.
Broker or intermediary.
A designated reporting transaction includes the retail sale of
items (1), (2), or (3) of the preceding list, even if the funds are
received by a broker or other intermediary, rather than directly by
the seller.
Exceptions to Definition of Cash
A cashier's check, bank draft, traveler's check, or money order you
received in a designated reporting transaction is not treated as cash
if one of the following exceptions applies.
Exception for certain bank loans.
A cashier's check, bank draft, traveler's check, or money order is
not treated as cash if it is the proceeds from a bank loan. As proof
that it is from a bank loan, you may rely on a copy of the loan
document, a written statement or lien instruction from the bank, or
similar proof.
Example.
You are a car dealer. Mandy White buys a new car from you for
$11,500. She pays you with $2,000 of U.S. currency and a cashier's
check for $9,500 payable to you and her. You can tell that the
cashier's check is the proceeds of a bank loan because it includes
instructions to you to have a lien put on the car as security for the
loan. For this reason, the cashier's check is not treated as cash. You
do not have to file Form 8300 for the transaction.
Exception for certain installment sales.
A cashier's check, bank draft, traveler's check, or money order is
not treated as cash if it is received in payment on a promissory note
or an installment sales contract (including a lease that is considered
a sale for federal tax purposes). However, this exception applies only
if:
- You use similar notes or contracts in other sales to
ultimate consumers in the ordinary course of your trade or business,
and
- The total payments for the sale that you receive on or
before the 60th day after the sale are 50 % or less of the
purchase price.
Exception for certain down payment plans.
A cashier's check, bank draft, traveler's check, or money order is
not treated as cash if you received it in payment for a consumer
durable or collectible, and all three of the following statements are
true.
- You receive it under a payment plan requiring:
- One or more down payments, and
- Payment of the rest of the purchase price by the date of
sale.
- You receive it more than 60 days before the date of sale.
- You use payment plans with the same or substantially similar
terms when selling to ultimate consumers in the ordinary course of
your trade or business.
Exception for travel and entertainment.
A cashier's check, bank draft, traveler's check, or money order
received for travel or entertainment is not treated as cash if all
three of the following statements are true.
- You receive it under a payment plan requiring
- One or more down payments, and
- Payment of the rest of the purchase price by the earliest
date that any travel or entertainment item (such as airfare) is
furnished for the trip or entertainment event.
- You receive it more than 60 days before the date on which
the final payment is due.
- You use payment plans with the same or substantially similar
terms when selling to ultimate consumers in the ordinary course of
your trade or business.
Taxpayer Identification Number (TIN)
You must furnish the correct TIN of the person or persons from whom
you receive the cash. If the transaction is conducted on the behalf of
another person or persons, you must furnish the TIN of that person or
persons. If you do not know a person's TIN, you have to ask for it.
You may be subject to penalties for an incorrect or missing TIN.
There are three types of TINs.
- The TIN for an individual, including a sole proprietor, is
the individual's social security number (SSN).
- The TIN for a nonresident alien individual who needs a TIN
but is not eligible to get an SSN is an IRS individual taxpayer
identification number (ITIN). An ITIN has nine digits, similar to an
SSN.
- The TIN for other persons, including corporations,
partnerships, and estates, is the employer identification
number.
Exception.
A nonresident alien individual or a foreign organization does not
have to have a TIN, and so you do not have to furnish a TIN for them,
if all the following are true.
- The individual or organization does not have income
effectively connected with the conduct of a trade or business in the
United States, or an office or place of business or fiscal or paying
agent in the United States, at any time during the year.
- The individual or organization does not file a Federal tax
return.
- In the case of a nonresident alien individual, the
individual has not chosen to file a joint federal income tax return
with a spouse who is a U.S. citizen or resident.
What Is A
Related Transaction?
Any transactions between a buyer (or an agent of the buyer) and a
seller that occur within a 24-hour period are related transactions. If
you receive over $10,000 in cash during two or more transactions with
one buyer in a 24-hour period, you must treat the transactions as one
transaction and report the payments on Form 8300.
For example, if you sell two products for $6,000 each to the same
customer in one day and the customer pays you in cash, these are
related transactions. Because they total $12,000 (more than $10,000),
you must file Form 8300.
More than 24 hours between transactions.
Transactions are related even if they are more than 24 hours apart
if you know, or have reason to know, that each is one of a series of
connected transactions.
For example, you are a travel agent. A client pays you $8,000 in
cash for a trip. Two days later, the same client pays you $3,000 more
in cash to include another person on the trip. These are related
transactions, and you must file Form 8300 to report them.
What About
Suspicious Transactions?
If you receive $10,000 or less in cash, you may voluntarily file
Form 8300 if the transaction appears to be suspicious.
A transaction is suspicious if it appears that a person is trying
to cause you not to file Form 8300 or is trying to cause you to file a
false or incomplete Form 8300, or if there is a sign of possible
illegal activity.
If you are suspicious, you are encouraged to call the local IRS
Criminal Investigation Division as soon as possible. Or, you can call
toll free 1-800-800-2877.
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