The Internal Revenue Service (IRS) is demanding businesses to file Form 8300 electronically from next year onwards while reporting transactional receipts over $10,000.
“Beginning Jan. 1, 2024, businesses must e-file all Forms 8300 if they’re required to file at least 10 information returns other than Form 8300,” said the IRS on Aug. 30. For instance, if a business files five Forms 1099-INT and five Forms W-2, they should e-file all their returns electronically for the year, including Forms 8300. If a business files less than 10 forms, excluding Forms 8300, they can opt not to e-file.
The $10,000 can be in a single transaction or multiple entries.
“Although many cash transactions are legitimate, information reported on Forms 8300 can help combat those who evade taxes, profit from the drug trade, engage in terrorist financing, or conduct other criminal activities,” according to the release.
“The government can often trace money from these illegal activities through payments reported on Forms 8300 that are timely filed, complete, and accurate.”
In case a business is facing undue hardship, they can request a waiver not to e-file their returns. If the waiver is granted, the exemption will also be applicable for Form 8300. A business cannot request a waiver from e-filing Forms 8300 alone.
The IRS also provides an exemption to e-filing Form 8300 in case the technology required to do so “conflicts with a filer’s religious beliefs.”
Even if the business e-files Form 8300 and receives confirmation emails, they should still retain a copy of their filings as well as supporting documentation for five years from the date of filing them. Confirmation emails alone “don’t meet the record keeping requirement.”
Written Statements, Penalties
The IRS requires businesses to file Form 8300 within 15 days after the cash transaction takes place. They must also submit a written statement to each party whose name is included in Form 8300.“This statement must include the name, address, contact person, and telephone number of your business and the aggregate amount of reportable cash. The statement must also indicate that you provided this information to the IRS,” according to the agency.
Those who do not provide such written statements will be subject to penalties even if they file the required Form 8300. Penalties are also applicable in case a business has filed Form 8300 by paper even though they are required to e-file and have not secured a waiver or religious exemption.
In case of late returns, businesses should file a late Form 8300 in the same way they would a timely one. Penalties would be applicable for late filing as well.
Failure to file Form 8300 can also result in prison terms. An owner of two jewelry stores from Kansas, for example, recently pleaded guilty to not filing Form 8300.
The jeweler, Junaid “Jay” Sahibzada, 37, met with an undercover federal agent posing as a heroin dealer looking to launder money by purchasing jewelry in cash, according to an Aug. 4 press release by the U.S. Attorney’s Office, Western District of Missouri.
Mr. Sahibzada sold two pieces of jewelry for $21,000 to the agent and did not file Form 8300 or instruct his employee to do so. The jeweler later admitted to federal agents that he has never filed Form 8300 despite having completed multiple cash transactions worth more than $10,000.
Electronic Filing Push
In its Aug. 30 press release, the IRS encouraged businesses to electronically file form 8300, pointing out that many of them “have already found the free and secure e-filing system to be a more convenient and cost-effective way to meet the reporting deadline of 15 days after a transaction.”“They get free email acknowledgment of receipt of the form when they e-file. Businesses can batch e-file their reports, which is especially helpful to those required to file many forms.”
The requirement to e-file Form 8300 comes as the IRS is pushing ahead with digitizing operations.
Earlier this month, the agency announced its “paperless processing initiative” that will allow individual taxpayers to submit non-tax documents and correspondence digitally beginning next year.
“As the next phase of its modernization, the IRS is accelerating paperless processing efforts,” said an Aug. 2 press release from the U.S. Department of the Treasury.
“By Filing Season 2025, the IRS will achieve paperless processing, digitizing all paper-filed returns when received. In effect, this means all paper will be converted into digital form as soon as it arrives at the IRS.”
The paperless processing initiative is expected to “eliminate up to 200 million pieces of paper annually, cut processing times in half, and expedite refunds by several weeks.”
