Report of Cash Payments Over $10,000 Received in a Trade or Business - Motor Vehicle Dealership Q&As
Generally, any person in a trade or business who receives more than $10,000 in cash in a single transaction or related transactions must complete a Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business (PDF). Form 8300 is a joint form issued by the IRS and the Financial Crimes Enforcement Network (FinCEN) and is used by the government to track individuals that evade taxes and those who profit from criminal activities. Although the cash reporting requirements apply to many types of businesses, auto dealerships frequently receive cash in excess of $10,000 and are required to comply with the filing requirements.
The Motor Vehicle Technical Advisor Program in conjunction with IRS specialists on money laundering would like to assist dealers in their compliance with the filing requirements of Form 8300. In pursuit of that goal, we have compiled a list of dealership-specific questions and answers. As we receive additional questions that need to be addressed, we will update this document as appropriate.
The questions contained in this document are dealer specific and do not include basic questions dealing with the filing and notification requirements of Form 8300. Frequently asked questions dealing with filing requirements, written statement to customers and reportable transactions can be found in FAQs Regarding Reporting Cash Payment of Over $10,000 (Form 8300).
A customer purchased a vehicle for $9,000 cash. Within the next 12 months, the customer paid the dealership additional cash of $1,500 for a repair to the vehicle's transmission, accessories and a customized paint job, etc. Should a Form 8300 be filed?
- No, unless the dealer knew or had reason to know the sale of the vehicle and the subsequent transactions were a series of connected transactions (for example, if the dealer and the customer agreed, as a condition of the sale of the vehicle, that the customer would be obligated to buy an additional $1,500 of goods or services).
- Transactions are related if they occur within a 24-hour period. 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, items or services negotiated during the original purchase are related to the original purchase.
A customer wired $7,000 from his bank account to the dealership's bank account and also presented a $4,000 cashier’s check. Does the dealership complete Form 8300?
- A wire transfer does not constitute cash for Form 8300 reporting. Since the remaining cash remitted was below $10,000, the dealer has no 8300 filing requirement.
A customer makes weekly payments in cash to a dealership as a lease payment or loan payment on a vehicle. During a 12-month period, these payments total more than $10,000. Are these payments considered related transactions and is the dealership required to file a Form 8300?
- Yes, the weekly lease or loan payments constitute payments on the same transaction (the leasing or purchase of the vehicle).
- Accordingly, the dealership is required to file Form 8300 when the total amount exceeds $10,000.
- Each time the payments aggregate in excess of $10,000 the dealership must file another Form 8300 within 15 days of the payment that causes the previously unreportable payments to total more than $10,000
A husband and wife purchase two cars at one time from the same dealer and the total cash received is $10,200. How many Form 8300s should the car dealer file?
- The transaction(s) can be viewed as either a single transaction or two related transactions. Either way, it warrants only one Form 8300.
If a customer purchased a cashier's check at the bank for over $10,000, would the bank report the transaction? Does the seller of a vehicle need to report the transaction if the same cashier's check is subsequently used to purchase a vehicle?
- If the cashier's check was purchased with cash exceeding $10,000, the bank would file a Currency Transaction Report (not a Form 8300).
- The purchase of a vehicle with 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 and a business does not have to file Form 8300 when it receives them.
How should a dealership handle a nonresident alien with no SSN?
- Use the IRS Individual Taxpayer Identification Number (ITIN) if the nonresident has one. If there is no ITIN enter (NONE) on Item 6 of Form 8300. Pub 1544 provides a list of exceptions in which a filer is not required to provide a Taxpayer Identification Number of a person who is a nonresident alien individual or a foreign organization.
- You must verify the individual's name and address and insert this information on Item 14 of Form 8300. For nonresident aliens, acceptable documentation would include a passport, alien registration card or other official document.
Do payments in excess of $10,000 in cash paid to a body shop need to be reported? Do the 8300 filing requirements apply to services as well as goods?
- Yes. Cash, in the form of currency, received in excess of $10,000 must be reported. However, a service is not a consumer durable so the expanded definition of cash does not apply to payments for services. The body shop would file an 8300.
A dealership sold cars on Jan. 31 and Feb. 6 to one customer and received $20,000 cash in two payments of $10,000 each on the same date for the two cars. Is a Form 8300 required?
- Yes. The dealership received over $10,000 in cash within 24 hours.
Customer purchased five cars, each separately though the year totaling $15,000 and none of which individually exceeded $10,000. Is Form 8300 required?
- If the dealer knows, or has reason to know, that each transaction is one of a series of connected transactions a Form 8300 would be required. If there is no reason to believe that they are connected, the five transactions would be viewed as separate transactions none of which exceed $10,000 in cash and a Form 8300 would not be required.
Are wire transfers considered cash?
- Wire transfers are not considered to be cash and no Form 8300 is required to be filed.
- The Money Services Business (MSB) or bank that handles the wire transfer must document these types of transactions by filing a CTR on amounts over $10,000.
A dealership receives greater than $10,000 in cash on day one for the sale of a vehicle. On day three, the deal is cancelled due to an inability to finance the deal. The dealership returns the cash. Is a Form 8300 required?
- Yes. Once the dealership receives cash exceeding $10,000, a Form 8300 must be filed.
- The deal not going through may in fact be an attempt to launder illegal funds.
- If $10,000 or less was received by the dealer and the deal was cancelled, the dealer may voluntarily file a Form 8300 if the transaction appears suspicious.
If a dealership receives a bank check drawn on the funds of the bank (not a personal checking account check or a check drawn on a personal account of the customer) with the customer's personal account number and customer name on it, is this considered cash or a cash equivalent?
- Bank checks (drawn on the bank's account, not the account of the customer) of $10,000 or less are cash under the expanded definition of cash, unless they are loan proceeds.
- The fact that there are notations on the check or even that the check is made payable to the dealership does not negate this.
A customer purchases a vehicle for $15,000 and pays for it with $9,000 in cash and puts the remaining $6,000 on a personal credit card. Should a Form 8300 be filed? Instead of a personal credit card, the customer pays the remaining $6,000 with his ATM card. Is the ATM amount considered cash or a cash equivalent that makes the total amount received over $10,000 and thus reportable on Form 8300?
- No Form 8300 is required.
- Less than $10,000 in cash was received. A credit card is not cash.
- The ATM card works the same as a credit card in this instance. The only difference is that the account will be charged with a debit against existing funds instead of charged for a debit to nonexisting funds, but a promise to repay later.
- An ATM transaction is not given the consideration of cash; therefore, since the amount received in cash or cash equivalents is less than $10,000, the transaction is not reportable.
For wholesalers, where a purchasing retailer buys more than one vehicle in a single day, is that one transaction, a series of related transactions or a series of unrelated transactions given that there are multiple vehicles? What happens on separate purchases over the course of a week? What about a month?
- Two or more transactions within a 24-hour period are related transactions. A trade or business that receives more than $10,000 in related transactions must file Form 8300.
- If purchases are more than 24 hours apart and not connected in any way that the seller knows, or has reason to know, then the purchases are not related and a Form 8300 is not required.
What exactly can be said to a customer who inquires about IRS Form 8300 reporting? Some dealers are advised not to refer to IRS Form 8300 reporting in the presence of the customer. In particular, dealers are concerned that advising customers that they need information for an IRS 8300 report could degenerate into a structuring conversation. What if the customer asks what the information is for? Can the dealer volunteer that it is for IRS Form 8300 reporting?
- A customer can be, but is not required to be, told at the time of the transaction about the law requiring the reporting of cash payments over $10,000 to the IRS and FinCEN.
- What a dealer cannot do is aid a customer in structuring a transaction to prevent a Form 8300 from being filed.
- A dealer who is filing Form 8300 voluntarily because of suspicious activity cannot inform the customer of the filing.
What are the penalties if a dealership does not file a Form 8300?
- There are civil penalties for failure to file a correct Form 8300 by its due date and for failure to provide a statement as required.
- Additional penalties apply for intentional disregard of the filing requirements.
- Criminal penalties may apply in the case of willful filing of false or fraudulent Forms 8300.
Can Form 8300 be filed electronically?
- Yes. On Sept 19, 2012, FinCEN announced that businesses are now able to electronically file their Form 8300 using the Bank Secrecy Act (BSA) Electronic Filing (E-Filing) System. E-filing is free, and is a quick and secure way for individuals to file their Form 8300s. Filers will receive an electronic acknowledgement of each submission. For more information about Form 8300 e-filing, read the FinCEN news release.
A dealership receives monthly ACH payments [automatic payments from a customer bank account]. If the payments total in excess of $10,000, should the payments be treated as cash?
- ACH payments are not considered cash for the purpose of reporting on Form 8300.
A related finance company provides financing to customers of multiple related used vehicle dealerships. The finance company purchases contracts from the used car lot and a bank check is issued to the car lot for the amount of the car deal. Would the definition of cash to include cashier's checks and money orders apply to the finance company?
- As to the sale to the customer, the dealership’s sale of the vehicle constitutes a retail sale of a consumer durable requiring reporting of certain monetary instruments if the face amount was $10,000 or less and the total transaction exceeds $10,000.
- When the finance company purchases the "finance contract," they do not have a designated reporting transaction. The finance contract is not a consumer durable, collectible, or travel or entertainment activity. Thus monetary instruments with a face amount of $10,000 or less received from the finance company to pay off the finance contract would under normal situations not be reportable.
What type of records might an examiner request during an 8300 examination?
- Records requested may vary by examiner but typically the following records are requested:
- Checking, savings, and/or other financial account statements and deposit slips.
- An electronic bank deposit reconciliation in Excel format extracted from the dealer’s Dealers Management System (DMS). The report generally requires all receipts of the business from any source including:
- The amount, date received, method of payment (cash, check, credit card number, etc.),
- Payer name, and
- Receipt number.
- Receipt sources should include new and used vehicle sales, leases, service, parts, body shops and any non-customer receipts.
- Deal jackets for leases and sales during the examination period.
- Sales journals, cash receipts journals, accounts/notes receivable, sales invoices.