Under the Bank Secrecy Act, codified as part of the Internal Revenue Code, any person or company that receives more than $10,000 in cash in the course of business in one transaction or in two or more related transactions must file a Form 8300 with the IRS within 15 days. A Form 8300 includes the person or company’s taxpayer identification number, the name and address of the payer, the amount received, and the date and nature of the transaction. This Currency Transaction Reporting law is intended to prevent money laundering and fraud by organized crime, drug dealers, and other legitimate businesses that deal largely in cash. By having a record of large cash transactions that businesses and individuals engage in, the IRS and federal law enforcement are better able to identify crime that would otherwise be hidden without a paper trail.
Structuring Violations
The requirement to file Form 8300 applies to all individuals and businesses, even lawyers when they accept large cash payments from clients. And while the requirement does not apply to transactions of less than $10,000, it is also illegal under the Bank Secrecy Act to “structure” payments or deposits in order to avoid the reporting requirement. As many small businesses unhappily discover, making multiple deposits of $9,000 in an attempt to avoid filing Form 8300 is a felony, punishable similarly to not filing the form on covered transactions. Banks are even required by law to inform the government when clients make multiple deposits just under $10,000. The deposits do not need to be illegal proceeds or connected to any other illegal behavior. The crime is the deposits themselves. And worst of all, Congress has changed the law so that individuals may be prosecuted even if they were unaware that “structuring” was illegal.
However, there has been a lot of change lately in how the law will be enforced.
New IRS enforcement policy ignites debate on the value of bank ‘structuring’ reports.
A New York Times article published in early January outlined instances in which a small business owner and others had their money taken. In the article the IRS announced it had changed its policy and would only seek the forfeiture of funds linked to structuring involving crime proceeds.
Rich Weber, chief of IRS – Criminal Investigation, or IRS-CI, confirmed the decision in an interview with Thomson Reuters and said the new policy had been in the works for months and came into force on October 17.
“After conducting a review of structuring cases, which predated the recent press reports, the IRS concluded that it will focus its limited resources on cases where evidence indicates that the structured funds are derived from illegal sources,” Weber said.
Weber added that egregious cases, such as those involving significant sums or an unusually large number of transactions, could warrant exceptions to the new policy. He said the goal was to ensure a consistent approach by IRS agents across the country.
If you have any questions, call JV LAW GROUP, LLP today at (714) 752-3270.
