IRS Seeks Greater Compliance
with Form 8300 Requirements

WASHINGTON - Concerned about the lack of compliance with Form 8300, Report of Cash Transactions Received in a Trade of Business, reporting requirements by attorneys, the Internal Revenue Service announced today that it will begin assessing the intentional disregard penalty against certain attorneys. This is part of its on-going effort to enhance Form 8300 compliance by attorneys who either fail to file the form or file an incomplete one.

The law requires any person engaged in a trade or business who receives more than $10,000 in cash in any one transaction, or two or more related transactions, to report the transaction to the IRS within 15 days of receipt of the cash on Form 8300. The law also requires that a properly filed Form 8300 contains the correct cash payer's name, address and tax identification number, as well as the amount of cash received and the date and nature of the transaction.

While filings of Form 8300 have increased ten-fold since 1987--from 13,900 cash transaction reports in that year, to 142,400 in 1992 and over 105,000 so far in 1993--a substantial number of attorneys who accept cash fees in excess of $10,000 have filed, and continue to file, incomplete Forms 8300.

Despite repeated guidance to the contrary since 1987, including a specific regulatory requirement applicable to attorneys, many attorneys rely on the attorney-client privilege for not disclosing client-identifying information on the form. Two recent court decisions, however, support the IRS' position that client-identifying information required on Form 8300 is not privileged: United States v. Goldberger & Dubin, P.C. and United States v. Leventhal.

The information from the Forms 8300 is added to a data base at the IRS Detroit Computing Center for use in civil and criminal law enforcement and tax administration purposes. IRS personnel around the country can use this information in their examination, collection, and criminal investigation work. The data helps detect nonfiling, unreported income, and money laundering often associated with narcotic trafficking and other illegal activities by some of the customers and clients of the businesses required to file.

According to Donald K. Vogel, Assistant Commissioner, Criminal Investigation, "Forms 8300 are a valuable tool for the IRS because they produce a paper trail which often links individuals with their money."

The IRS may assess civil penalties against a person who fails to file Form 8300 or who fails to file a complete Form 8300. When the failure is due to intentional disregard of the cash reporting requirements, the amount of the penalty IRS may impose is the greater of $25,000 or the amount of cash received in each transaction, not to exceed $100,000.

In FY 1992, in 392 cases IRS assessed $2.6 million in penalties for intentional disregard. In FY 1993, there were 1,034 cases and $1.7 million in penalties. The high 1992 dollar amount is the result of concentrated compliance checks in various industries such as care dealers, boat dealers, furriers and jewelers.

Before now imposing the intentional disregard penalty on attorneys, the IRS had pursued many avenues to encourage full compliance with cash reporting requirements by attorneys. These efforts included serving summonses and sending notices that Form 8300 information is not privileged and the intentional disregard penalty may be imposed.

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