Dealerships that receive more than $10,000 in cash from a customer must report these payments to the Internal Revenue Service within 15 days of the completion of the transaction by using IRS Form 8300. In addition to filing Form 8300 with the IRS, dealerships need to furnish to each customer whose name is required to be included in the Form 8300 a written statement by January 31 of the year following the transaction.
The statement must include:
- The name, address, contact person, and telephone number of the business filing Form 8300;
- The aggregate amount of cash the business reported to the IRS; and
- A statement that the business provided this information to the IRS.
The following is a sample statement you can provide to your customer:
"Dear Customer: We are required by the Internal Revenue Service to report all transactions involving more than $10,000 in cash and cash equivalents under the provisions of 26 U.S.C. 0501. We filed Form 8300 with the IRS on (insert date), indicating that you gave us $(enter cash amount) in connection with your purchase of a (make, model, year, VIN). Sincerely, . . ."
All Form 8300 correspondence between dealers, customers and the IRS should be documented using certified mail, return receipt requested.
PENALTIES
The penalty amounts for failure to file the 8300 forms increased in 2015. The penalty for failure to file a timely and correct Form 8300 is now $100 per occurrence. The aggregate annual ceiling has been raised for 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 has been raised from $100,000 to $500,000.
If the dealership is found to have intentionally disregarded the filing requirements then the penalty is the greater of $25,000 or the amount of cash received in such transaction not to exceed $100,000. There is no aggregate annual ceiling for intentional disregard of Form 8300 requirements.
Failure to provide a customer with the required notice that their name was included in a Form 8300 submitted to the IRS can result in fines of $100 per violation. The aggregate annual limitation has been raised from $100,000 to $1,500,000. In the case of a business having gross receipts not more than $5 million, the aggregate annual limitation is $500,000.
For more information on the IRS Cash Reporting requirements contact
Stevan LaBonte at 516-280-8580 or by e-mail slabonte@labontelawgroup.com.
