- 4.26.10 Form 8300 History and Law
- 18.104.22.168 Overview
- 22.214.171.124 Statutory History
- 126.96.36.199 Requirements of IRC 6050I
- 188.8.131.52 Requirements of 31 USC 5331
- 184.108.40.206 Definitions / Elements
- 220.127.116.11.1 Person
- 18.104.22.168.2 Trade or Business
- 22.214.171.124.3 Cash or Currency
- 126.96.36.199.4 Cash Equivalent Rules and Exceptions
- 188.8.131.52.5 Transaction and Related Transactions
- 184.108.40.206.6 Other Definitions
- 220.127.116.11 Exceptions to Form 8300 Rules
- 18.104.22.168 Documents Required
- 22.214.171.124 Clerk of Criminal Court Provisions
- 126.96.36.199 Available Form 8300 Publication
- 188.8.131.52 Form 8300 Penalties
- 184.108.40.206.1 Title 26 Civil Penalties for Failures to File Before 1/1/2011
- 220.127.116.11.2 Title 26 Civil Penalties for Failures to Furnish Before 1/1/2011
- 18.104.22.168.3 Title 26 Civil Penalties for Failures After 1/1/2011
- 22.214.171.124.4 Reasonable Cause Penalty Waiver
- 126.96.36.199.4.1 Reasonable Cause and Missing TINs
- 188.8.131.52.4.2 Reasonable Cause and Incorrect TINs
- 184.108.40.206.4.3 Procedure for Seeking a Reasonable Cause Waiver
- 220.127.116.11.5 Civil Penalties Under Title 31
- 18.104.22.168.6 Form 8300 Structuring
- 22.214.171.124.6.1 Form 8300 Structuring Under Title 26
- 126.96.36.199.6.2 Form 8300 Structuring Under Title 31
- 188.8.131.52.7 Criminal Penalties
- 184.108.40.206 Form 8300 Statutes of Limitations
- 220.127.116.11.1 Statute of Limitations Under Title 26
- 18.104.22.168.2 Statute of Limitations Under Title 31
- 22.214.171.124 Authority
- Exhibit 4.26.10-1 Form 8300 Filing Requirements (Excludes Requirement for Court Clerks)
- Exhibit 4.26.10-2 Form 8300 Penalty Changes Chart
Part 4. Examining Process
Chapter 26. Bank Secrecy Act
Section 10. Form 8300 History and Law
July 13, 2012
(1) This transmits revised text for IRM 4.26.10, Bank Secrecy Act, Form 8300 History and Law.
(1) The revised text includes recent legislative and regulatory changes affecting Form 8300.
(2) Citations from 31 CFR Part 103 were renumbered to 31 CFR Chapter X, effective March 1, 2011.
(3) New Exhibit 4.26.10-2 includes the changes to Form 8300 penalty provisions effective January 1, 2011.
William P. Marshall
Congress enacted IRC 6050I to require that information returns relating to cash payments over $10,000 received in trade or business (Form 8300, Report of Cash Payments over $10,000 Received in a Trade or Business) are filed by all trades or businesses that are not required to file similar reports on currency transactions under the Bank Secrecy Act (BSA) (Title 31) .
Subsequently, nearly the entire language of IRC 6050I was enacted as 31 USC 5331. Form 8300 fulfills the requirements under two different titles of the U.S. Code.
This section recounts the statutory history of Form 8300 and describes its major provisions.
IRC 6050I (Title 26) was added, effective January 1, 1985, by section 146 of the Deficit Reduction Act of 1984 (P.L. 98-369, section 146), commonly known as the Tax Reform Act of 1984. Final Regulations under IRC 6050I were issued on September 4, 1986.
In 1986, the Tax Reform Act of 1986 (P.L. 99-514 Sec. 1504(c)(12)) amended the notice provisions effective for returns due after December 31, 1986, by requiring, among other things, an annual statement to the payer that aggregates the amounts received during the year.
In 1988, as part of the Anti-Drug Abuse Act of 1988 (P.L. 100-690, Sec. 7601(a)(1)), Congress added subsection (f) to IRC 6050I, effective for actions after November 18, 1988. The new section prohibited causing or attempting to cause a trade or business to fail to file a required return, to file a required return that contains a material omission or misstatement of fact, or structuring transactions; and provided penalties for violating the rules of IRC 6050I.
The Omnibus Budget Reconciliation Act of 1990 (P.L. 101-508, section 11318), commonly known as the Revenue Reconciliation Act of 1990, expanded the definition of cash to include certain monetary instruments, along with foreign currency, effective for amounts received after November 5, 1990. Amendments to the final regulations were effective February 3, 1992.
IRC 6050I(g) applies the provisions of section 6050I to cash received by criminal court clerks. It was added by the Violent Crime Control and Law Enforcement Act of 1994 (P.L. 103-322, section 20415(a)), effective February 13, 1995.
The notice requirements of subsection (e) were amended to include the telephone number of the contact in addition to the name and address. The amendment, included in the Taxpayer Bill of Rights 2 (P.L. 104.168, section 1201(a)), applies to statements required to be furnished after December 31, 1996.
In 2001, Congress enacted the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act (P.L. 107-56, section 365), commonly known as the USA PATRIOT Act, which added section 5331 to the BSA. This section requires nonfinancial trades or businesses to file reports under the BSA. Treasury regulations allowing a single Form 8300 to satisfy both Title 26 and Title 31 filing requirements were issued December 20, 2001. See 31 CFR 1010.330(a)(1)(ii) and (e) (formerly 103.30(a)(ii)).
Effective January 1, 2011, the penalties for Form 8300 violations under Title 26 were increased. See Exhibit 4.26.10-2 for these penalty changes.
On December 23, 2011, 31 USC 5331 was amended to require clerks of criminal courts as well as trades and businesses to file Form 8300 under Title 31. A regulation at 31 CFR 1010.331 implementing this new rule was added effective July 9, 2012.
IRC section 6050I(a) and 26 CFR 1.6050I-1(e) require that any person engaged in a trade or business that receives cash in excess of $10,000 in one transaction, or two or more related transactions, must file Form 8300 by the 15th day after the date the cash is received. Under IRC 6050I(g) and 26 CFR 1.6050I-2, the reporting requirement explicitly extends to criminal court clerks in specified circumstances.
Filing Form 8300 is not required if a Currency Transaction Report (CTR) or FinCEN Form 104 or similar form is required.
Any person required to file Form 8300 must retain a copy for five years. See Treas. Reg. 1.6050I-1(e)(3)(iii).
IRC 6050I(e) and 26 CFR 1-6050I-1(f) explains that any person filing a required Form 8300 must also furnish a written statement to each person identified on Form 8300 by January 31 of the succeeding calendar year. The statement must show
The name, address, and telephone number of the information contact for the business,
The aggregate amount of reportable cash received during the calendar year, and,
That the information was reported to the IRS.
A copy of the written statement must be retained by the business for five years.
Court clerks furnish a written statement to the United States Attorney for the jurisdiction in which the individual charged with the specified crime resides and the United States Attorney for the jurisdiction in which the specified criminal offense occurred (applicable United States Attorney(s)). The written statement must be filed with the applicable United States Attorney(s) by the 15th day after the date the cash bail is received. 31 CFR 6050I-2(d).
31 USC 5331 of the BSA and 31 CFR 1010.330 (formerly 103.30) require reporting by any person, who in the course of a nonfinancial trade or business in which that person is engaged, receives currency in excess of $10,000 in one transaction (or two or more related transactions).
The section does not apply to amounts received for which a CTR filing is required.
The BSA requirements mirror the IRC 6050I requirements and definitions, with the following major exceptions:
Criminal court clerks were not required to file Forms 8300 under Title 31 until Title 31 was amended on December 23, 2011 and implementing regulations were issued effective July 9, 2012; and
The written statement to the person named in Form 8300 is not required under Title 31.
31 USC 5331 does not require the person making a report (either as a trade or business or a clerk of court) to furnish a statement concerning the report to the person whose name is required to be set forth on the report; or to Federal prosecutors for the jurisdiction in which such person resides and the jurisdiction in which the specified criminal offense occurred. (As in 26 USC 60501(e) and (g)). The final rule, therefore, does not place either of these notification requirements upon clerks of court.
A single Form 8300 satisfies both the IRC 6050I and the 31 USC 5331 filing requirements. See 31 CFR 1010.330(a)(1)(ii) and (e) (formerly 103.30(a)(1)(ii)).
In general, the definitions of terms expressed in both IRC 6050I and 31 USC 5331 are the same.
The term "person" is not defined the same way under Titles 26 and 31, but the regulations explicitly bring them into conformity using the definition of person at IRC 7701(a)(1). See 26 CFR 1.6050I-1(a)(1)(i) and 31 CFR 1010.330(a)(1)(i) (formerly 103.30(a)(1)).
IRC section 7701(a)(1) defines "person" to mean and include an individual, trust, estate, partnership, association, company, or corporation.
"Person" , as defined in 31 USC 5312(a)(5), includes an individual, corporation, company, association, firm, partnership, society, joint stock company, trustee, a representative of an estate, and, when the Secretary prescribes, a governmental entity.
The applicable regulations specifically provide that "solely for purposes of section 5331 of title 31, United States Code and this section, “person” shall have the same meaning as under 26 USC 7701(a)(1)." 31 CFR 1010.330(a)(1) (formerly 103.30(a)(1)).
The end result is that "person" is defined exactly the same for purposes of the Form 8300 sections, 26 USC 6050I and 31 USC 5331.
The prohibition against structuring and similar actions to evade reporting requirements, which appears in IRC 6050I (f), was included in 31 USC 5324(b) , not 31 USC 5331. Therefore, the definition of "person" for purposes of applying the prohibition against these actions is not determined by IRC 7701. In Title 31 examinations involving this situation, the definition of person in 31 USC 5312(a)(5) applies.
The requirements of both IRC 6050I and 31 USC 5331 apply to cash received by any person in a trade or business, with trade or business having the same meaning as under IRC 162. Note that criminal court clerks are specifically included by IRC 6050I (g) if the examination is conducted under Title 26, and by 31 USC 5331(g) if the examination is conducted under Title 31.
Trade or business transactions include:
Any transaction by a corporation is considered to be received in connection with a trade or business;
Non-gaming businesses of a casino, such as shops, restaurants, and hotels, are considered separate trades or businesses;
Payments received by accountants, attorneys, doctors, and other service providers for services rendered or reimbursement of expenses, including cash received to be held in trust;
Payments received by a collection agency for any one account;
Sales of assets used in a trade or business; and,
Transactions in which a person acts on behalf of another. (But an agent who receives cash from a principal and uses it within 15 days in a second cash transaction is not required to report initial receipt of the cash if the agent discloses the name, address, and TIN of the principal to the recipient of the second reportable cash transaction. The recipient in the second transaction is required to report the receipt of cash on Form 8300.)
To avoid duplicate reporting, 26 CFR 1.6050I-1(d)(1) provides an exception to the reporting requirements of IRC 6050I for cash received by most financial institutions having a requirement under the BSA (Title 31) to file Currency Transaction Reports (CTRs). In addition, subsection (d)(2) clarifies regarding casinos that those with gross annual gaming revenue over $1 million must file CTRs under the BSA and, therefore, need not file Form 8300. Those casinos exempted from the CTR filing requirement because their gross annual gaming revenue is below the threshold must file Form 8300. In any case, cash greater than $10,000 received in a non-gaming business of a casino is reportable on Form 8300.
IRC 6050I requires reporting cash receipts while 31 USC 5331 requires reporting receipts of coins or currency.
IRC 6050I(d) defines "cash" to include foreign currency and, to the extent provided in regulations, any monetary instrument with a face amount of not more than $10,000 except a check drawn on the account of the writer in a financial institution.
"Cash" is defined in the regulation, 26 CFR 1.6050I-1(c)(1), to include
Coin and currency of the United States, or any other country, which circulates and is accepted as money in the country in which it is issued
If received after February 3, 1992, a cashier’s check, bank draft, traveler’s check, or money order having a face amount of not more than $10,000 that is (1) received in a designated reporting transaction, or (2) received in any transaction in which the recipient knows that the instrument is being used in an attempt to avoid the reporting of the transaction under section 6050I.
Under Title 31 "currency" is defined to include foreign currency and to the extent provided in regulations prescribed by the Secretary, any monetary instrument (whether or not in bearer form) with a face amount of not more than $10,000, except a check drawn on the account of the writer in most financial institutions.
The regulatory definition of currency at 31 CFR 1010.330(c)(1) (formerly 103.30(c)(1)) parallels the definition of cash under 26 CFR 1.6050I-1(c)(1). It includes the cash equivalent rules discussed below.
Regulations under both titles are the same regarding the cash equivalent rules. See 26 CFR 1.6050I-1(c)(1)(ii) and 31 CFR 1010.330(c) (formerly 103.30(c)). Both Title 31 and Title 26 regulations contain the same references to Title 26. Both contain examples of the application of the following rules.
A monetary instrument, including a cashier’s check, bank draft, traveler’s check, or money order having a face amount of $10,000 or less may be considered cash if received in a "Designated Reporting Transaction," which is a retail sale of a consumer durable, collectible, or a travel or entertainment activity, or if received in any transaction in which the recipient knows that such instrument is being used in an attempt to avoid reporting the transaction.
Retail Sale - Any sale made in the course of a trade or business, if that trade or business principally consists of making sales to ultimate consumers.
Consumer Durable - An item of tangible personal property of a type suitable under ordinary usage for personal consumption or use, has a sales price of more than $10,000 and can reasonably be expected to be useful for at least one year under ordinary usage.
Collectible - An item described in paragraphs (A) through (D) of IRC 408(m)(2), which includes any work of art, rug or antique, metal or gem, or stamp or coin.
Travel or Entertainment - An item of travel or entertainment (within the meaning of 26 CFR 1.274-2(b)(1)), pertaining to a single trip or event where the aggregate sale price of the item and all other items pertaining to the same trip or event that are sold in the same transaction (or related transactions) exceeds $10,000.
There are exceptions to these rules. A cashier’s check, bank draft, traveler’s check, or money order received in a designated reporting transaction is not treated as cash if the instrument:
Constitutes proceeds of a loan from a bank. The recipient of cash may rely on a copy of the loan document, a written statement, lien instructions from the bank, or similar documentation as evidence that the proceeds are from a loan.
Is received in payment of a promissory note or an installment sale contract but only if i) promissory notes or installment sale contracts with the same or substantially similar terms are used in the ordinary course of the recipient's trade or business in connection with sales to ultimate consumers; and ii) the aggregate payments for the sale that are received on or before the 60th day after the date of the sale do not exceed 50 percent of the purchase price of the sale.
Is received in payment for a consumer durable, collectible, or travel or entertainment activity under a payment plan requiring one or more down payments and payment of the rest of the purchase price by the date of sale (or the date of furnishing an item of travel or entertainment) and the following statements are true: i) The recipient uses payment plans with the same or substantially similar terms in the ordinary course of its trade or business in connection with sales to ultimate consumers; and ii) It is received more than 60 days before the date of sale.
Transaction - A transaction subject to reporting is the underlying event precipitating the payer’s transfer of cash to the recipient. A transaction may be, but is not limited to:
A sale of goods or services
A sale of real property
A sale of intangible property
A rental of real or personal property
An exchange of currency for other currency
The establishment, maintenance of, or contribution to an escrow, trust, or custodial arrangement
Payment of a pre-existing debt
Conversion of currency to a negotiable instrument
Reimbursement for expenses paid
The making or repayment of a loan
Related transactions are:
Any transactions between a payer (or the agent of the payer) with the recipient that occur within a 24-hour period
Transactions conducted during a period of greater than 24 hours are related if the recipient knows, or has reason to know, that each transaction is one of a series of connected transactions
Identified Person - Each person identified on a Form 8300 from whom cash was received or on whose behalf the transaction was conducted.
Recipient - The person engaged in a trade or business who receives cash in excess of $10,000 subject to the reporting requirements.
Form 8300 rules do not apply in the following situations:
Cash received by financial institutions and casinos that have a requirement under the BSA (Title 31) to file similar reports of currency transactions. See 26 CFR 1.6050I-1(d)(1) and (2).
Cash received is not in the course of the recipient’s trade or business. See 26 CFR 1.6050I-1(d)(3).
A cash transaction that occurs entirely outside the United States (the fifty states and the District of Columbia) does not have to be reported unless part of the transaction occurs in Puerto Rico or a possession or territory of the United States, and the recipient of the cash is subject to the general jurisdiction of the Internal Revenue Service under Title 26. See 26 CFR 1.6050I-1(d)(4)(i).
The language of IRC 6050I does not require governmental units to file Form 8300, except for the specific requirements for criminal court clerks.
Criminal court clerks were not required to file Forms 8300 under Title 31 until the statute was amended on December 23, 2011 and the regulation at 31 CFR 1010.331 effecting the statute was issued effective July 9, 2012.
Under Title 31, a recipient of cash does not need to furnish a written statement to each person identified on Form 8300 or to Federal prosecutors for the jurisdiction in which such person resides and the jurisdiction in which the specified criminal offense occurred.
Two types of documents are required by IRC 6050I.
Form 8300 must be filed for the transaction(s).
An annual written statement must be sent to each person identified on the Form 8300.
The annual statement is not required under Title 31, but Form 8300 must be filed.
The rules for clerks of criminal court are somewhat different and are discussed after the general rules. See IRM 126.96.36.199.
Any person who, in the course of carrying on a trade or business, receives more than $10,000 in cash in one transaction, or two or more related transactions, must file Form 8300 by mailing it to the address shown on the form by the 15th day after the reportable cash payment was received.
The recipient may report on one Form 8300 several independently reportable payments received from a customer within a 15-day period. The report must be filed by the 15th day after the $10,000 threshold has been exceeded. Filing is considered to occur on the date that the Form 8300 is postmarked under IRC 7502.
Form 8300 must contain the name, address, and taxpayer identification number of the person from whom the cash was received; the amount of cash received; and the date and nature of the transaction.
In addition, if the recipient knows or has reason to know that the person from whom the cash was received conducted the transaction as an agent for another person, Form 8300 must contain the name, address, and taxpayer identification number of the person on whose behalf the transaction was conducted. A Form 8300 is considered incomplete if a recipient knows or has reason to know that an agent is conducting the transaction for a principal, and the return does not identify both the principal and the agent.
Before completing any transaction requiring the filing of a Form 8300, a recipient must verify the identity of the person from whom the cash was received.
For aliens or nonresidents, verification must be done using the person’s passport, alien identification card, or other official document evidencing nationality or residence. Individual Taxpayer Identification Number (ITIN) cards and authorization letters issued by the IRS should not be used to verify identity.
Verification of the identity of any other person may be by any document normally accepted as a means of identification when cashing or accepting checks (for example, a driver’s license).
The document used to verify the identity must be recorded on Form 8300.
A Form 8300 may be filed voluntarily if the filer believes the transaction is suspicious even if the transaction is $10,000 or less. The filer checks the "Suspicious Transaction" box on the form if it is a voluntary filing.
A business must keep a copy of each Form 8300 filed for five years from the date of filing.
Any person required to make an information return under IRC 6050I(a) must furnish a single, annual written statement to each person whose name is identified on Form 8300. The statement must include the following:
The name and address of the information contact for the business filing the form,
The aggregate amount of reportable cash received during the calendar year from the identified person, and
That the information contained in the statement was reported to the Internal Revenue Service.
The customer is not to be notified when a Form 8300 is voluntarily filed.
Except as noted in (2) above, the statement must be furnished to the identified person by January 31 of the year following the transaction. The statement is considered furnished to the identified person if it is mailed to that person’s last known address. A copy of the statement must be retained for five years.
The statement is not required to be in any particular form or format.
If there is only one Form 8300 filed during the year, a copy of that Form 8300 can satisfy the annual statement requirement. The copy contains the filer's name and address and the total amount of cash received, and the obvious purpose of the form is to report the transactions to the Service. Therefore, a Form 8300 filer can use a copy of the filed form as the required notification if it includes all the reportable transactions with the customer during the calendar year. It must be provided after the close of the year, otherwise it could not reflect the entire year. If the filer uses the filed Form 8300 as notification, the filer should redact his/her Tax Identification Number (TIN) from the copy of the Form 8300 given to the customer.
If there is more than one transaction, the requirement of a single annual statement means that the Form 8300 amounts must be aggregated on one end-of-year statement with all the required information. The statement is sufficient by itself. Copies of the Forms 8300 may, but are not required to, be attached. The practice of providing a copy of the Form 8300 to the payer at the time of sale or sending multiple copies at year’s end does not meet the Form 8300 notice requirements.
IRC 6050I(g) and 26 CFR 1.6050I-2 require any clerk of a Federal or state criminal court who receives more than $10,000 in cash as bail for an individual charged with any of the following specified criminal offenses to file Form 8300 by the 15th day after the date the cash bail is received:
Any Federal offense involving a controlled substance (as defined in 21 USC 802);
Racketeering (as defined in 18 USC 1951, 1952, or 1955);
Money laundering (as defined in 18 USC 1956 or 1957); or,
Any state offenses substantially similar to the three listed above.
Cash for purposes of this requirement includes
The coin and currency of the United States, or of any other country, that circulate in and are customarily used and accepted as money in the country in which issued; and
A cashier's check (by whatever name called, including treasurer's check and bank check), bank draft, traveler's check, or money order having a face amount of not more than $10,000. There is no requirement that the cash equivalent be received in a designated reporting transaction.
If someone other than the clerk receives bail on behalf of the clerk (such as a sheriff), the clerk is treated as having received the bail. The clerk must file the Form 8300 if the other filing requirements are met.
If multiple payments are made to satisfy bail reportable under this section, and the initial payment does not exceed $10,000, the initial payment and subsequent payments must be aggregated, and the information required by IRC 6050I(g) must be filed by the 15th day after receipt of the payment that causes the aggregate amount to exceed $10,000. However, payments made to satisfy separate bail requirements are not required to be aggregated.
A clerk required to file Form 8300 under this section must, in accordance with the regulations at 26 CFR 1.6050I-1(e)(3)(ii), verify the identity of each payer of bail listed in the return.
By January 31 of the succeeding calendar year, the court clerk is required to provide a statement of the aggregate amount of reportable cash received during the year to each payor of bail. This requirement can be satisfied either by sending a single written statement with an aggregate amount listed, or by furnishing a copy of each Form 8300 relating to that payer of bail. This is an exception to the general rule that providing copies of multiple forms cannot substitute for a single annual statement. 26 CFR 1.6050I-2(d)(2)(iii). This statement is not required under Title 31.
A copy of each Form 8300 filed by the court clerk must also be sent to the United States Attorney in the jurisdiction in which the individual charged with the specified crime resides, and the jurisdiction in which the specified crime occurred, if different. This copy must be sent by the 15th day after the date the reportable cash bail is received. This statement is not required under Title 31.
Exception for Federal Courts - Normally, Form 8300 examinations are not recommended for the Federal Courts because Policy Statement P-2-4 prohibits penalties against another Federal entity and adequate self-audit procedures exist. Educational contacts are suggested. Before visiting a Federal Court, notify the BSA Policy Program manager sixty (60) days prior to your planned visit. This allows time for coordination with the Administrative Office of the Federal Courts’ Audit Branch.
The clerk of court requirement for Form 8300 filing was not carried over to 31 USC 5331 until December 23, 2011, and implementing regulations did not become effective until July 9, 2012. Any clerk of court Form 8300 examinations for periods before that date must be conducted under Title 26.
Publication 1544, Reporting Cash Payments of Over $10,000 (Received in a Trade or Business), explains why, when, and where a business should file Form 8300. It also explains key issues and terms related to Form 8300. This publication is available in English or Spanish.
The publication can be ordered by:
Calling the IRS forms line at 1-800-829-3676, or
Visiting the IRS website at www.irs.gov.
Civil penalties are applicable under Title 26 sections 6721 and 6722 for failure to timely file Form 8300, failure to include complete and correct information on the form, intentional disregard of the filing requirements of the form, and failure to furnish notification to the persons required to be identified in the form about its filing. The same penalty provisions apply to the Clerk of Court rules, Treas. Reg. 1-6501-2. These penalty provisions also apply to violations of IRC 6050I(f) for structuring or attempting to cause a trade or business to file incorrectly or not at all. Criminal penalties under IRC 7203 may apply if required criminal criteria are met. See IRM 188.8.131.52.1 for failure to file penalties and IRM 184.108.40.206.2 for failure to furnish penalties occurring before January 1, 2011. See IRM 220.127.116.11.7 for criminal penalties.
Section 2102 of the Small Business Jobs and Credit Act of 2010 changed the civil penalties and ceilings for failures for information returns, IRC 6721, and related statements, IRC 6722. During the transition period, examiners may be faced with applying both the old and new Title 26 penalties. No changes in the Title 31 penalties resulted from the Small Business Jobs and Credit Act of 2010. See IRM 18.104.22.168.3 for penalties applicable to failures occurring on or after January 1, 2011. See Exhibit 4.26.10-2 Penalty Table comparing penalties.
Title 26 penalty provisions have a technical reasonable cause exception. The reasonable cause provisions of IRC 6724 are unchanged by the Small Business Jobs and Credit Act and do not apply to Title 31 penalties. There are special rules regarding securing taxpayer identification numbers (TINs) and reasonable cause. See IRM 22.214.171.124.4 for reasonable cause.
Because Form 8300 is a dual purpose form, civil penalties may be asserted either under Title 31 or Title 26. Differences in requirements mean that the same action may or may not involve a penalty depending on the title under which the examination is conducted. The BSA lacks some of the Title 26 requirements and where there is no requirement, there is no penalty. Under the BSA:
Clerks of court were not required to file Form 8300 until December 23, 2011 and the implementing regulation at 31 CFR 1010.331 became effective in July 9, 2012; and
Recipients are not required to provide an end-of-year statement to persons required to be named in the Form 8300 or to U.S. Attorneys.
The amount of the penalties under Title 31 is also different. The provisions of 31 USC 5321 apply to civil penalties and 31 USC 5322 apply to criminal penalties for most violations. The criminal penalties for structuring are found in 31 USC 5324. See IRM 126.96.36.199.5 for civil penalties and IRM 188.8.131.52.7 for criminal penalties under Title 31.
The statute of limitations on assessment of the penalties is different under Titles 26 and 31. See IRM 184.108.40.206 for Form 8300 statutes of limitations.
Generally, BSA examiners conduct their Form 8300 examinations under Title 26. However, for entities that are required to have an anti-money laundering compliance program under Title 31 (such as insurance companies or dealers in precious metals, precious stones, and jewels), the Form 8300 examination is conducted under Title 31. Form 8300 violations under Title 31 are included on the Letter 1112. If any Form 8300 penalties are applicable, they are asserted under Title 26.
IRC 6724 defines both information returns and payee statements for purposes of the information return penalty provisions found in IRC 6721 (failure to file) and IRC 6722 (failure to furnish).
The term "information return" includes any return required by sections 6050I(a) (trade or business) or (g)(1) (clerk of criminal court).
The failure to file penalty includes any failure to file Form 8300 on or before the required filing date, and any failure to include all the information required to be shown on the return or the inclusion of incorrect information.
Under Title 26, the civil negligence penalty for failure to timely file, IRC 6721(a)(2)(A), or failure to include all of the information required to be shown on the return or the inclusion of incorrect information, IRC 6721(a)(2)(B), is $50 for each return for which a failure occurs, not to exceed $250,000 per calendar year ($100,000 for persons with gross receipts of not more than $5,000,000).
An inconsequential error or omission is not considered a failure to include correct information, IRC 6721(c). A failure is inconsequential if it does not prevent the IRS from putting the return to its intended use. Errors or omissions never considered inconsequential include:
A taxpayer identification number;
A surname of a person required to be furnished a copy of the information set forth on an information return; or
Any monetary amounts, 26 CFR 301.6721-1(c)(2).
This basic negligence filing penalty is reduced if any failure under IRC section 6721 is corrected on or before the 30th day after the required filing date. The penalty is reduced from $50 to $15 for each return and the maximum amount imposed shall not exceed $75,000.
Other reductions for certain information returns do not apply to Form 8300:
Reductions that are related to corrections after 30 days but on or before August 1 of the year in which the form is due do not apply to returns not due on February 28 or March 15 (for example, Forms 8300). 26 CFR 301.6721-1(b)(6).
The exception for a de minimis number of failures does not apply to failures for returns that are not due on February 28 or March 15 (for example, Forms 8300). 26 CFR 301.6721-1(d)(4).
The penalty for intentional disregard of the requirement to timely file or to correctly include all required information, is the greater of:
$25,000 for each return, or
The amount of cash received in the transaction, not to exceed $100,000 (with no calendar year limitation applicable), IRC section 6721(e)(2)(C).
Under IRC section 6724(a), no penalty is imposed for any failure that is due to reasonable cause and not to willful neglect. See the discussion of reasonable cause below.
IRC 6724 defines both information returns and payee statements for purposes of the information return penalty provisions of IRC 6721, Failure to File Form 8300, and IRC 6722, Failure to Furnish Correct Payee Statements.
The term "payee statement" includes any statement required to be furnished under section 6050I(e) by businesses to persons required to be named in Form 8300 or under IRC 6050I(g) by clerks of court to Federal prosecutors or payers of bail, IRC 6724(d)(2)(N). This situation differs from most information returns, such as Forms W-2 or 1099, where the payee statement is provided by the payer filer to a payee.
There is no special form or format required for Form 8300 payee statements.
The penalty for negligent failure to furnish a timely, complete, and correct statement to each person whose name is required to be on Form 8300 ("identified person" ) is $50 for each statement not to exceed $100,000 per calendar year. IRC 6722(a) and (b).
Inconsequential errors and omissions in the payee statement are not considered failures. 26 CFR 301.6722-1(b)
A failure is inconsequential when it cannot reasonably be expected to prevent or hinder the identified person from timely receiving correct information and reporting it on his or her return or from otherwise putting the statement to its intended use.
Failures that are never inconsequential for a Form 8300 payee statement relate to dollar amounts and significant items in the address of the identified person.
Penalties for intentional disregard of the requirement to furnish a correct payee statement are $100 for each statement for which a failure occurs, or if greater, 10 percent of the aggregate amounts of the items required to be reported correctly (with no calendar year limitation). IRC Section 6722(c)(1)(A).
Amendments made by the Small Business Jobs and Credit Act of 2010:
Raised penalty amounts and ceilings for trades and businesses required to file Forms 8300 on or after January 1, 2011, and to furnish statements to the identified persons after that date;
Both structuring and clerk of court penalties are determined by the trade or business penalties so they were increased also;
Inflation adjustments apply each 5th year after 2012; and
The act does not affect the BSA Title 31 Form 8300-related penalties.
Effective for Forms 8300 due on or after January 1, 2011, the penalties for failure to file and failure to file timely, or to include complete and correct information, were amended.
IRC 6721(a)(1) was amended. The basic penalty was increased from $50 to $100. The aggregate annual limitation (ceiling) was raised in the case of businesses with gross receipts exceeding $5 million, from $250,000 to $1,500,000. For businesses with gross receipts not exceeding $5 million the aggregate annual limitation was raised from $100,000 to $500,000.
IRC 6721(b)(1), which applies when the failure is corrected on or before 30 days after the required filing date, was amended to raise the penalty from $15 to $30. The aggregate annual limitation has been raised in the case of businesses with gross receipts exceeding $5 million, from $75,000 to $250,000. For businesses that correct the violation on or before 30 days after the required filing date and have annual gross receipts not exceeding $5 million, the aggregate annual limitation was raised from $25,000 to $75,000.
The intentional disregard penalty for failure to file Form 8300, IRC 6721(e)(2)(C), remains unchanged and provides a penalty of the greater of $25,000 or the amount of cash received in the transaction not to exceed $100,000. There is still no ceiling for the penalty amount for intentional disregard of the requirement to file Form 8300.
Failure to Furnish: IRC 6722, Failure to Furnish Correct Payee Statements, was completely rewritten for statements required after the date of enactment of the statute which was September 27, 2010. The new failure to furnish penalties apply to statements for 2010 due January 31, 2011, and for years thereafter.
The failure to furnish penalty, IRC 6722(a)(1), was raised from $50 to $100 per violation. The aggregate annual limitation was raised from $100,000 to $1,500,000. In the case of a business having gross receipts of not more than $5 million, the aggregate annual limitation is $500,000.
If the violation is corrected on or before 30 days after the required furnishing date, IRC 6722(b)(1), the penalty is reduced from $50 to $30. The aggregate annual limitation was increased from $100,000 to $250,000. In the case of a business that corrects the failure on or before 30 days and has gross receipts of not more than $5 million, the aggregate annual limitation is $200,000.
The penalty for intentional disregard of the furnishing requirements, IRC 6722(e), was previously the greater of $100 per failure or 10 percent of the aggregate amount of the items required to be reported correctly. The penalty was increased to the greater of $250 per failure or 10 percent of the aggregate amount of the items required to be reported correctly with no annual aggregate limitation.
The penalty for a failure relating to an information reporting requirement can be waived if the failure is due to reasonable cause and is not due to willful neglect, IRC 6724 and 26 CFR 301.6724-1. The regulation spells out the requirements in general and, in particular, defines each element that must be proven by the person required to file to avoid the penalty.
The burden of proof is on the filer to establish:
Significant mitigating factors for the failure, such as prior to the failure, the filer was never required to file that particular type of return or furnish that particular type of statement for which the failure occurred, or that the filer has an established compliance history. 26 CFR 301.6724-1(b).
Alternatively, the filer must establish that the failure arose from events beyond the filer's control. This may include events resulting in the destruction of needed records or actions of others such as the IRS or refusal of the transactor to reveal his taxpayer identification number to the recipient. 26 CFR 301.6724-1(c).
In addition to one of the above, it must also be established that the filer acted in a responsible manner both before and after the failure occurred. In other words, the filer must show that reasonable care was exercised and significant steps to avoid or mitigate the failure were taken. 26 CFR 301.6724-1(d).
Mitigation means rectifying the failure as promptly as possible once the impediment was removed or the failure was discovered. Ordinarily, a rectification is considered prompt if made within 30 days after the date the impediment is removed or the failure is discovered, or on the earliest date following a regular submission of corrections.
Special rules apply to Taxpayer Identification Number (TIN) issues. 26 CFR 301.6724-1(e) and (f).
A filer seeking a waiver for reasonable cause for a failure resulting from a missing or an incorrect TIN will be deemed to have acted in a responsible manner only if the filer satisfies the requirements of 26 CFR 301.6724-1(e), relating to missing TINs, or (f) relating to incorrect TINs.
A number is treated as a missing TIN if the number does not contain nine digits or includes one or more alpha characters. A filer seeking a reasonable cause waiver based on a failure of the transactor to provide information to the filer (i.e., a missing TIN) must make the initial and, if required, annual solicitations.
A filer must make an initial solicitation specifically requesting the TIN at the time the transaction occurs.
If the transaction occurs in person, the initial solicitation may be made by oral or written request, such as on an account creation document.
If the transaction is effected by mail, telephone, or other electronic means, the TIN may be requested through the same type of communications. If the account is opened by completing and mailing an application furnished by the Form 8300 filer that requests the transactor’s TIN, the initial solicitation requirement is considered met.
If the initial solicitation is made but the requested TIN is not received, a first annual solicitation must be made on or before December 31 of the year in which the transaction occurred (for transactions occurring before December) or January 31 of the following year (for transactions occurring in December).
Where the initial solicitation and the first annual solicitation have been made, but the TIN has not been received, the business has satisfied its requirement to act in a reasonable manner. The failure was caused by the transactor’s refusal to provide the TIN, an event beyond the business’ control. Therefore, the penalty is waived. See 26 CFR 301.6724-1(k) Example 1.
Only two solicitations are required to establish responsible action-- the initial solicitation and a follow-up solicitation at the end of the year. An annual solicitation is not required when no reportable transactions occur during the year following the year in which the transaction with the missing TIN occurred. 26 CFR 301.6724-1(e)(1)(vi)(B).
If the trade or business fails to make one (or more) of the required solicitations under paragraphs (e)(1)(i) (Initial), (ii) (First Annual), and (iii) (Not required for Form 8300), the penalty will apply to the year in which the filer failed to make the initial solicitation. 26 CFR 301.6724-1(e)(1)(vi)(C).
The annual solicitation must meet the form (in person, phone, letter) prescribed in 26 CFR 301.6724-1(e)(2) and contain:
A request for the TIN, and
Information for the person failing to provide the TIN that he or she is subject to a $50 penalty imposed by the Internal Revenue Service under IRC 6723 if he or she fails to furnish his or her TIN.
The filer must maintain contemporaneous records showing that the solicitation was properly made, and provide them to the IRS on request.
A filer seeking a waiver for reasonable cause for a failure resulting from a missing or an incorrect TIN will be deemed to have acted in a responsible manner only if the filer satisfies the requirements of 26 CFR 301.6724-1(e), relating to missing TINs, or (f) relating to incorrect TINs.
Acting in a responsible manner for an incorrect TIN requires that an initial solicitation for a correct TIN be made at the time of the transaction. 26 CFR 301.6724-1(f)(1)(i).
No additional solicitation is required after the filer receives the TIN unless the Internal Revenue Service or, in some cases, a broker notifies the filer that the TIN is incorrect. 26 CFR 301.6724-1(f)(1)(i). Also see 26 CFR 301.6724-1(k) Example 2.
Following notification, the filer must make a first annual solicitation on or before December 31 of the year in which the filer is notified of the incorrect TIN, or by January 31 of the following year if the filer is notified of an incorrect TIN in the preceding December. A second annual solicitation is not required if no payments are made to the account for the year or if no return is required to be filed for the account for the year. 26 CFR 301.6721-1(f)(5)(ii).
The method and content of the solicitation must be similar to the manner used for failure to provide a TIN.
In seeking an administrative determination that the failure was due to reasonable cause and not willful neglect, the filer must submit a written statement to the area director or the director of the Internal Revenue Service Campus where the returns, as defined in 26 USC 6724(d), are required to be filed. Since Forms 8300 are filed with Enterprise Computing Center - Detroit, the request for an administrative determination should be sent to:
CTR Operations Manager
985 Michigan Avenue
Detroit, MI 48226-1128
The statement, under 26 CFR 301.6724-1(m), must:
State the specific provision under which the waiver is requested, i.e., significant mitigating factors or events beyond the filer’s control,
Set forth all the facts alleged as the basis for reasonable cause,
Contain the signature of the person required to file the return, and
Contain a declaration that it is made under penalties of perjury.
IRS does not have the authority to assess civil penalties under Title 31 for violations of the Form 8300 reporting and recordkeeping requirements. If it is determined that a penalty under Title 31 is appropriate, the case must be forwarded to the Financial Crimes Enforcement Network (FinCEN) through the BSA liaison to FinCEN. However, information obtained during the course of a Form 8300 examination conducted under Title 26 may be disclosed to FinCEN only as authorized by IRC 6103.
Title 31 Form 8300 requirements do not include two important areas included under Title 26, so there is no penalty parallel to the Title 26 penalty in these situations:
There is no requirement to furnish an annual statement to the persons required to be identified in the Form 8300 and U.S. Attorney for the jurisdiction in which such person resides and the jurisdiction in which the specified criminal offense occurred; and
Clerks of court were not required to file Form 8300 under Title 31 until December 23, 2011. The requirement to file, under the regulation at 31 CFR 1010.331, became effective on July 9, 2012.
Title 31 penalties are higher than the Title 26 penalties, even after the Title 26 penalty increase effective January 1, 2011. There are no limitations or reductions. There is no waiver for reasonable cause.
There are two types of negligence penalties under Title 31.
31 USC 5321(a)(6) provides a penalty of not more than $500 on any nonfinancial trade or business that negligently violates any provision of or regulation prescribed under this subchapter. Instead of the $50 (now $100) failure to file penalty under Title 26, there is a $500 penalty that applies for each Form 8300 not filed.
If any nonfinancial trade or business engages in a pattern of negligent violations of any provision of or any regulation prescribed under this subchapter, the Secretary of the Treasury may, in addition to the basic negligence penalty, impose a civil money penalty of not more than $50,000 on the nonfinancial trade or business. This additional penalty is not available under Title 26.
The Title 31 willfulness penalty found in section 5321(a)(1) is generally the same as the penalty for intentionally disregarding the rules in Title 26. This section provides that a domestic nonfinancial trade or business, and a partner, director, officer, or employee of a domestic financial institution or nonfinancial trade or business, willfully violating this subchapter or a regulation prescribed or order issued under this subchapter … is liable to the United States Government for a civil penalty of not more than the greater of the amount (not to exceed $100,000) involved in the transaction (if any) or $25,000.
Structuring and related activities are prohibited and penalized under both Title 26 and Title 31 of the U.S. Code.
The Title 31 structuring definition is limited to persons structuring to affect a "nonfinancial trade or business," whereas the Title 26 definition refers to a "trade or business."
The definition in IRC 6050I(f) provides that no person shall, for the purpose of evading the return requirements of this section, cause or attempt to cause a trade or business to fail to file or to file an incomplete or incorrect return required by this section, or structure.
31 USC 5324(b) provides that no person shall, for the purpose of evading the 8300 reporting requirements of 31 USC 5331, cause or attempt to cause a nonfinancial trade or business to fail to file or to file a return with a material omission or misstatement, or structure.
As applied, the two structuring prohibitions reach the same result. They only apply if the trade or business is not required to file a CTR.
Title 26 arrives at this result in the initial filing requirement, which is limited to certain financial institutions defined in 31 USC 5312(a)(2) and excepts those required to file a CTR, such as money services businesses.
Title 31 arrives at this result by reference to 31 USC 5331, which requires Form 8300 but excepts those who are required to file a CTR by Section 5313.
Although the application of the structuring provisions is the same, the penalties are different under the two titles.
The structuring penalty under Title 31 is found in 31 USC 5314(4), which authorizes the Secretary of the Treasury to impose a civil money penalty up to the amount involved in the transaction. The civil penalty provisions of 31 USC 5321(a)(4) reiterate this language. As structuring is a willful act, the civil penalty for negligence does not apply.
Under Title 26, IRC 6050I(f)(2), any violation is subject to the same civil and criminal sanctions that apply to a person who fails to file or completes a false or incorrect return under this section. In other words, the provisions of IRC 6721 apply. See the general discussion of penalties in this section.
Structuring is prohibited and penalized under IRC 6050I(f).
The section provides that no person shall for the purpose of evading the return requirements of IRC 6050I:
Cause or attempt to cause a trade or business to fail to file a return required under this section;
Cause or attempt to cause a trade or business to file a return required under this section that contains a material omission or misstatement of fact; or
Structure or assist in structuring, or attempt to structure or assist in structuring, any transaction with one or more trades or businesses.
Violations are subject to the same civil and criminal sanctions that apply to a person who fails to file or completes a false or incorrect Form 8300 as discussed above. IRC 6050I(f)(2). This includes the increase in penalties for failures to file discussed above for Forms 8300 required to be filed on or after January 1, 2011.
The structuring prohibitions of IRC 6050I (f) were not carried over to its Title 31 counterpart, section 5331. The BSA's structuring prohibitions are found in 31 USC 5324 (b).
That section provides that no person shall, for the purpose of evading the Form 8300 reporting requirements of section 5331 or any regulation prescribed under such section:
Cause or attempt to cause a nonfinancial trade or business to fail to file a report required under section 5331 or any regulation prescribed under such section;
Cause or attempt to cause a nonfinancial trade or business to file a report required under section 5331 or any regulation prescribed under such section that contains a material omission or misstatement of fact; or
Structure or assist in structuring, or attempt to structure or assist in structuring, any transaction with one or more nonfinancial trades or businesses.
A civil penalty for violating these prohibitions is found in 31 USC 5321(a)(4). The Secretary of the Treasury may impose a civil money penalty on any person who violates any provision of section 5324.
The amount of any civil money penalty imposed shall not exceed the amount of the coins and currency (or other monetary instruments as the Secretary may prescribe) involved in the transaction for which the penalty is imposed.
The amount of any civil money penalty imposed shall be reduced by the amount of any forfeiture to the United States in connection with the transaction for which the penalty is imposed.
Criminal penalties are provided in 31 USC 5324(d).
Whoever violates this section prohibiting structuring shall be fined in accordance with Title 18, USC, imprisoned for not more than 5 years, or both.
An enhanced penalty is provided for violating the structuring provisions while violating another law of the United States or as part of a pattern of any illegal activity involving more than $100,000 in a 12-month period. The penalty is twice the amount provided in subsection (b)(3) or (c)(3) of section 3571 of Title 18, USC, imprisonment for not more than 10 years, or both.
Criminal penalties are available for failures to file Form 8300 under both titles, but there is no criminal failure to furnish under Title 31 because there is no requirement to furnish a statement under Title 31. Criminal structuring is discussed under structuring.
A Form 8300 criminal case under Title 26 is examined by IRS Criminal Investigation.
In the case of a willful violation of any provision of section 6050I any person… shall, in addition to other penalties provided by law, be guilty of a felony and, upon conviction thereof, shall be fined not more than $25,000 ($100,000 in the case of a corporation), or imprisoned not more than five years, or both, together with the costs of prosecution. 26 USC 7203. See also IRM 220.127.116.11.4(a). Since this section applies to any provision of IRC 6050I, it applies not only to failure to file, but also failure to furnish, and structuring.
Any person who willfully files a Form 8300, made under penalties of perjury, without believing every material matter to be true and correct may be fined up to $100,000 ($500,000 in the case of a corporation), and/or imprisoned up to three years, plus the costs of prosecution. IRC 7206(1).
A Form 8300 criminal case under Title 31 is examined by IRS Criminal Investigation. 31 CFR 1010.810(c)(2) (formerly 103.56(c)(2)).
Criminal penalties under Title 31 for willful violations of the Form 8300 provisions of 5331 are found at 31 USC 5322. They are more severe than the Form 8300 criminal penalties under Title 26.
A person willfully violating this subchapter or a regulation prescribed or order issued under this subchapter… shall be fined not more than $ 250,000, or imprisoned for not more than five years, or both.
A person willfully violating this subchapter or a regulation prescribed or order issued under this subchapter while violating another law of the United States or as part of a pattern of any illegal activity involving more than $100,000 in a 12-month period, shall be fined not more than $500,000, imprisoned for not more than 10 years, or both.
The statutes of limitations on assessing penalties for the Form 8300 requirements differ depending on whether the examination is conducted under Title 26 or Title 31, and whether or not the case is civil or criminal.
Failure to file a timely correct and complete Form 8300 can result in civil and criminal penalties.
Under IRC 6724(b), civil penalties relating to information returns "shall be paid on notice and demand... by the Secretary and in the same manner as tax." Thus, the usual civil statute of limitations found in IRC 6501 applies to assessment of Form 8300 penalties, as follows:
Under IRC 6501(a), the penalty must be assessed generally within three years from the date the return was filed. This rule applies to both negligent and intentional failures to include complete and correct information.
Under IRC 6501(c)(3), the failure to file penalty may be assessed at any time. This rule applies to both negligent and intentional failures to file the Form 8300.
Under IRC 6050I(f)(2), which prohibits structuring, a violator is subject to the same civil and criminal sanctions applicable to a person that fails to file or completes a false or incorrect return under this section.
There is a three-year statute if the structuring was an attempt to cause a trade or business to file a Form 8300 containing a material omission or misstatement of fact.
No statute applies if the structuring caused a trade or business to fail to file.
Similarly, criminal court clerk penalties under IRC 650I(g) depend on whether the required Form 8300 was filed. The regulations specifically refer to sections 6721 through 6724 for penalties. The statute under section 6501(a) is three years for a violation when the Form 8300 has been filed. There is no statute when a court clerk files no Form 8300.
Title 26 criminal prosecution is governed by IRC 7203 and IRC 6531. Section 7203 provides that in the case of a criminally willful violation of any provision of section 6050I, the penalty shall be a felony with up to five years of imprisonment.
Because section 7203 applies to any provision of IRC 6050I, section 6531 applies to:
Filing a Form 8300 that is not timely, complete, nor correct;
Failure to file Form 8300;
Court clerk violations.
IRC 6722 civil penalties for failure to furnish or include all required information in the statement required under IRC 6050I(e) and (g) have no statute of limitations. They can be assessed at any time.
The criminal penalty of IRC 7203 applies to any violation of section 6050I and the general statute of section 6531 applies so that the criminal prosecution is limited to within three years after the commission of the offense of failure to furnish.
The civil statute of limitations for assessing civil penalties for violation of Title 31 requirements is six years from the date of the transaction for which the penalty is assessed. 31 USC 5321(b)(1). There is no exception to the running of the statute for unfiled returns under Title 31. Even if the Form 8300 was not filed, the statute still runs in a case examined under Title 31.
Criminal penalties are imposed under 31 USC 5322 (filing) and 5324 (structuring). There is no failure to furnish penalty under Title 31. Title 31 criminal penalties look to Title 18 for procedure. For non-capital offenses, 18 USC 3282 provides a general statute of limitations for finding an indictment or instituting an investigation within five years after the offense was committed.
IRS's authority to conduct the Form 8300 (Title 26) examination is found in 26 USC 7601, which authorizes the Secretary to inquire into taxpayers' tax liability, and 26 USC 7602, which authorizes the Secretary to examine books and witnesses for specific purposes including determining and collecting federal tax liabilities.
Authority to conduct the Form 8300 examination under Title 31 is found in 31 USC 310(2)(b)(2)(I) and Treasury Directive 15-41.