New anti-money-laundering (AML) rules for jewelers are reinforcing the need for them to file an IRS form 8300 for cash transactions of $10,000 or more.
The laws requiring the filing of 8300s have been in effect for many years and are not actually part of the PATRIOT Act. Still, the PATRIOT Act’s AML rules have highlighted them, resulting in a flurry of calls to the Jewelers Vigilance Committee. Here, JVC—while stressing that this article is not meant as any form of legal advice—answers frequently asked questions on the topic. For more information on anti-money-laundering programs, visit jvclegal.org, or call JVC at (212) 997-2002.
When must I file Form 8300?
As a jewelry seller, you must file an IRS form 8300 whenever you receive cash (or cash equivalents) in the amount of $10,000 or more. They also must be filled out when you receive cash for a series of related transactions. So if, for example, you sell an item for $25,000, and the buyer pays you $5,000 in cash on five separate occasions, you still have to file the 8300. Specifically, you should file when you have an amount of $10,000 or more in cash. So, if two payments for $5,000 each are made a week apart, file after the second payment is made. You would file again when you receive the second $10,000.
The 8300 is filed with the IRS and identifies the party from whom you received the cash and the nature of the transaction. The forms also identify the party who received the cash.
What does the irs consider cash?
Obviously, it’s the green pieces of paper we carry around in our wallets. But there are other forms of cash. Money orders and traveler’s checks are considered “cash equivalents” and therefore qualify as cash under this law. Cashiers checks are cash. Checks that have been certified by the issuing bank are cash.
What is not considered cash?
Wire transfers and checks issued by the payer and deposited by the payee in a bank for negotiation.
What is “structuring” and what should I do about it?
Often, when cash is offered as payment for an item, the reason for paying in cash might seem suspicious to the seller. For example, the buyer might be reluctant to provide the identifying information required for completing the 8300 form. Or, the buyer might ask to split the invoice in order to avoid the filing requirement. This activity is known as “structuring.” The payer is arranging the payment in smaller amounts of cash for the sole purpose of avoiding the cash- reporting requirement. Structuring is against the law.
If you as the seller believe that someone is giving you a suspicious payment of cash, there is a box you can check off on the 8300 form to indicate to the IRS that you believe the transaction was suspicious.
Who enforces Form 8300 Compliance?
The Internal Revenue Service. The IRS can—and often does—audit your business for 8300 compliance. This audit is very much like a tax audit; the IRS checks your records to determine if you have received cash payments that required filing of the 8300 form. They will ask to see your books and records, including bank statements, to make this determination. Failure to file the 8300 can result in fines, penalties, and, in extreme cases, criminal prosecutions.