Are You Required to File Form 8300?
During a recent conversation with a cannabis wholesaler, I determined that they should have been filing Form 8300. As a new client to Bridge West, we began by compiling the information to prepare the past due Form 8300s, which could result in a six-figure penalty. It is essential for cannabis business owners to know about Form 8300; therefore, I decided to republish a previously released article on this topic.
Form 8300 is an IRS/FinCEN Form that reports cash payments received over $10,000 in a trade or business. This includes the sale of goods or services. According to the IRS, cash includes coins and currency in the United States and a foreign country. Cash may also include cashier’s checks, bank drafts, traveler’s checks, and money orders with face value of $10,000 or less. This does not include checks over $10,000 or personal checks because the financial institution issuing the monetary instrument is required to report the transaction by filing FinCEN Currency Transaction Report (CTR).
The law requires that trades or businesses report transactions via Form 8300 when customers use cash in a single transaction or related transactions. Related transactions include any transactions that occur within a 24-hour period. Money launderers typically structure multiple transactions under $10,000 to make it seem unnecessary to file Form 8300. Upon a business becoming suspicious about transactions, the business should report the activity by checking the “suspicious transaction” box (box 1b) on the top line of Form 8300. This may include a person trying to prevent the filing of Form 8300 or signs of possible illegal activity. The business may voluntarily file Form 8300 where the transaction(s) are less than $10,000 and are suspicious.
Additionally, Form 8300 should be filed within 15 days after receipt of the cash and the documentation should be kept for at least five years from the date filed.
Businesses may be subject to civil and criminal penalties for noncompliance with the law, e.g. willfully failing to file Form 8300, failing to file timely, or failing to include complete and correct information. This is a felony under IRC Section 7203 and criminal penalties include:
- Fines up to $25,000 ($100,000 in the case of a corporation) per transaction;
- Imprisonment up to five years; and
- Additional prosecution costs.
Furthermore, according to IRC Section 7206(1), any person who willfully files Form 8300, which is false in a material matter, may be:
- Fined up to $100,000 ($500,000 in a case of a corporation); and/or
- May face imprisonment up to three years, plus the costs of prosecution.
Avoiding criminal penalties and remaining compliant, aka ‘keeping the IRS off your back’ is simple and will pay for itself!
Bridge West CPAs and Advisors to the cannabis industry has been helping cannabis clients deal with Form 8300 filings and address specific questions for many years. For more information about Form 8300 or to schedule a confidential consultation, contact Cory Parnell, CPA, Chief Operating Officer, Bridge West LLC at cparnell@bridgewestcpas.com or 651-287-6327.
