IRS Form 8300 compliance – What you can do NOW to prevent penalties.
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By Marilou C. Vroman, CPA, CFE
Most dealers are aware of the requirements to file IRS Form 8300 when they receive more than $10,000 in cash for business transactions. Interestingly, as part of our internal audits we test 8300 compliance and still find even the best run dealerships have 8300 Forms which were either filed late, or not at all.
As a refresher, dealers must report cash payments over $10,000 to the Internal Revenue Service using the Form 8300 within 15 days of the related transaction. The form must be filed regardless of the nature of the transaction or whether the sale has been completed. In addition to filing Form 8300 with the IRS, dealers need to furnish to each person whose name has been reported on Form 8300 a written statement of the 8300 filing by January 31 of the year following the transaction.
Failure to file a timely and correct Form 8300 has a penalty of $250 per violation. The aggregate annual limitation for a typical dealership operation is $3,000,000. The intentional disregard penalty for failure to file a timely and correct Form 8300, is the greater of $25,000 or the amount of cash received by the dealership, not to exceed $100,000. There is no aggregate annual limitation for intentional disregard of Form 8300.
We recommend an individual in the accounting department be assigned the responsibility for auditing the 8300 process on a bi-weekly basis. A custom report can be built in your DMS which shows subtotals of cash receipts grouped by customer name including the form of payment (Cash, Cashier’s Check, etc.) This report should be compared to the Form 8300s that have been filed to date to ensure no required filings have been missed.