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Compliance

Understanding the Pesky Form 8300

February 2007, F&I and Showroom - Feature

by Michael Benoit

There is a popular sci-fi show on TV called The 4400. It features some 4,400 people who were abducted by aliens and returned to earth en masse. Not surprisingly, the arrival of these folks causes some fear and confusion among the locals, as well as the abductees. It seems to be human nature to be fearful of the unknown. Eek! Be afraid — be very, very afraid!

I’ve been working with some folks lately on a variety of dealer F&I issues, and was surprised to see some fear and confusion around “The 8300.”No, 8,300 alien abductees did not show up at the Hummer dealership down the street. I’m talking about the IRS/FinCEN Form 8300 that dealers need to complete and submit when they are a party in a transaction where $10,000 or more in cash changes hands. It seems like such a simple thing. You fill out a little form and drop it in the mail. Apparently not, as it has caused even sane people to go around the bend. So I thought I’d use this month’s column to ease some fears.

First, as much as I’d like to lay it all out for you right here, my good editors don’t let me have enough room to write the treatise I could on this topic. So, if you have specific questions, reach out to your legal professional to get the right answer. All you’re going to get here are the highlights. Here we go.

What triggers your obligation to complete and submit the Form 8300 to the IRS is your receipt (or payment) of $10,000 or more in cash in a single transaction or related transactions. There are instructions on the form itself about where to mail it. The reporting requirement is triggered within 15 days after receipt of the cash, requiring dealers to submit the form to the IRS.

Cash is exactly what you think it is — cold hard currency and coins. Doesn’t matter if it’s U.S. dollars, bagfuls of shiny new pennies, Iraqi dinar or Icelandic krona. It’s all cash, and if it adds up to $10,000 U.S. dollars or its equivalent, you fill out the form.

Being that this is a government requirement, cash is also not what you think it is. For example, if someone buys a car from you and pays for it (in whole or in part) with a cashier’s check, bank draft, money order or traveler’s check of $10,000 or less, you do the form. What’s that — you think the “or less” is a misprint? No, you read it right. The folks who issue these instruments have their own reporting requirements for purchases of $10,000 or more in cash.

Think you know what a single transaction is? Not so fast. What about a couple that comes in and buys two cars (one for each) and puts down $15,000 in Ben Franklins? I think the IRS would look at that as a single transaction … I think they’d look at it as related transactions as well. What are related transactions, you ask? Two or more transfers of $10,000 or more in the aggregate in a 24-hour period. Related transactions also include those that occur more than 24 hours apart if you know, or have reason to know, that each of the transactions is one of a series of connected transactions.

These related transactions come around when you least expect it. Let’s say you’ve got a customer who bought a car from you and put down $3,000 in cash. You hold the paper, and they pay you another $7,000 in cash over the next 11 months. You fill out the form within 15 days after the payment that hit the $10,000 mark in the aggregate in a 12-month period.

If you report a cash transaction of $10,000 or more on the Form 8300, you also have to tell the individual in writing that you made the report. It doesn’t need to be handed to the customer at the dealership (although you could).A notice does, however, need to be provided to the customer by Jan. 31 of the following year. The notice has to include the name and address of the person completing the Form 8300, the total amount of cash involved in the report and a notice that this information has been provided to the IRS.

This last bit is important, because I don’t know one dealer who wants to say anything to a customer that will do anything to impede the sale. And there are some customers who would balk if they knew that the $15,000 in dimes they were about to drop on you was going to be reported to Uncle Sam.

While you don’t have to say anything to the customer about the reporting requirement (other than the written notice that goes to them by Jan. 31), you want to be very careful if you do. Why, you ask? Because you are prohibited from doing, or attempting to do, anything to help the customer structure a transaction in order to avoid the reporting requirement. If you do, both you and the dealership (i.e., the principal and/or general manager) may find yourselves in orange jumpsuits. You may also find your wallet quite a bit lighter. What you think is just good customer service will not be looked kindly upon by our good friends in the government. I don’t know about you, but orange isn’t my first sartorial choice, and I like a heavy wallet.

There are as many Form 8300 scenarios as there are franchise rooftops across the country. So if you have a question, reach out for your friendly legal professional. Like I said before, these are just the highlights. Should you be confused about your Form 8300 reporting requirement? Absolutely not. While some situations are tricky, it’s not too hard to figure out when $10k walks through the door. Should you be fearful of the Form 8300? Only if you don’t file it when you’re supposed to, or you try to help folks avoid the reporting requirement. In these cases, be very afraid.

Michael Benoit is a partner in the Washington, D.C., office of Hudson Cook LLP. He is a frequent speaker and writer on a variety of consumer credit topics. He can be reached at michael.benoit@bobit.com. Nothing in this article is intended to be legal advice and should not be taken as such. All legal questions should be addressed to competent counsel.

Comment

  1. 1. carolina cruz [ June 04, 2015 @ 08:55AM ]

    Hi Michael, I was asked by irs to send over the 8300 form to some of my customers and also to give an explanation of why it was not turned in and what it's been done to correct the issue. Any advice of what exactly I can write ??! Thanks!

  2. 2. Marty Vem [ April 20, 2016 @ 01:03PM ]

    I am familiar with filing the Form 8300 with the IRS, and I have had several transactions that I thought were suspicious which I also reported, my problem has to do with telling the customer that I reported his transaction as suspicious. I sign the Form 8300 at the bottom, mail it to the customer and get in an argument with the customer because I reported something to the IRS. That's the part that I don't feel is right. if this is "See Something, Say Something" why should I tell the customer that I reported the suspicious transaction?
    Thanks for your assistance!

  3. 3. Terry Craig [ March 21, 2017 @ 02:00PM ]

    I received 3 Cashier's checks written on the same bank, dated the same day. Two of them have consecutive numbers. One is for $1000.00 and the two that are consecutive are for $1600.00 and the other is for $9500.00. Since he did not withdraw this money from the bank, they don't have to file a 8300. Correct? Or can I assume they did so I don't have to? This money was used for down pmt on a vehicle. Surely the bank saw what was going on. Even if he went through 2 different lines they had to notice...

  4. 4. Carl Malone [ March 28, 2017 @ 07:18PM ]

    Marty, no you don't have to inform the customer if you are filing a suspicious transaction report, that's an exception.

    Terry, yes you are required to file the 8300 regardless of what you assume the bank did or didn't do. You are risky a hefty fine and jail time by not filing.

 

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