As we are all probably aware, it is very difficult for cannabis businesses to obtain bank accounts. Consequently, these businesses are forced to operate with large amounts of cash. Accordingly, it is of paramount importance that cannabis business owners and its staff are cognizant of Form 8300.
The general rule is that you must file Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business, if your business receives more than $10,000 in cash.
Businesses must report cash payments received predicated upon meeting all of the following criteria:
- The amount of cash is more than $10,000
- The establishment receives the cash in the ordinary course of a trade or business
- The same agent or buyer provides the cash
- The business receives the cash in a single transaction or in related transactions.
- The business receives the cash as:
- One lump sum of more than $10,000, or
- Installment payments that cause the total cash received within one year of the initial payment to total more than $10,000, or
- Previously unreported payments that cause the total cash received within a 12-month period to total more than $10,000.
Cash includes the coins and currency of the United States and a foreign country. Cash may also include cashier’s checks, bank drafts, traveler’s checks, and money orders with a face value of $10,000 or less, if the business receives the instrument in:
- A designated reporting transaction
- Any transaction in which the business knows the customer is trying to avoid reporting of the transaction on Form 8300
In order to comply with the Form 8300 reporting requirements, the recipient must supply and the business must obtain the correct Taxpayer Identification Number of person making the payment(s) on behalf of another person or persons, the business must also obtain the TIN of that person or persons. Failure to include all required information or inclusion of incorrect information, on Form 8300, may result in civil or criminal penalties. However, a filer may be able to avoid penalties when the customer refuses to provide a TIN by showing that its failure to file is reasonable under circumstances.
Under the filing exception, a filer is not required to provide the TIN of a person who is a nonresident individual or foreign organization. However, a name and address verification is required, and the source of the verification must be included on Form 8300. For nonresident aliens, acceptable documentation would include a passport, alien registration card or other official document.
You must file by the 15th day after the date the cash transaction occurred.
You can electronically file Form 8300 using the Bank Secrecy Act (BSA) Electronic Filing (E-Filing) System or mail
The information contained in the form is intended to assist law enforcement in its anti-money laundering efforts. When businesses comply with the IRS’s reporting laws they provide them with an audit trail to investigate possible tax evasion, drug dealing, terrorist financing and other criminal activities.