There are two federal statutes which address an individual’s obligations for reporting large cash transactions and prohibitions on any attempts made to avoid fulfilling these responsibilities.
According to 26 U.S.C. § 6050I, any person who receives $10,000 or more in cash is required to report the transaction to the IRS within 15 days of receipt of the reportable cash by filing Form 8300. This statute applies to any monetary transactions that occur in trade or business that are the result of a single transaction or a series of related transactions within a 12-month period. The IRS considers cash as any U.S. or foreign currency and includes cashier or traveler’s checks, bank drafts, and money orders. A transaction is any event that results in transfer of cash or items with monetary value. As a way to ensure that all cash transactions of $10,000 or more are reported, banks and other financial institutions are also required to inform the IRS of any large monetary transactions or suspected cash structuring.
31 USC § 5324 defines structuring as a way of organizing large cash transactions into smaller deposits or payments in order to evade one’s reporting requirements; causing or attempting to cause a financial institution to fail to perform its reporting requirements; obstructing or attempting to obstruct a business in fulfilling its reporting requirements; and/or assisting or attempting to assist in structuring any transactions that violate 26 U.S.C. § 6050I. Typical structuring schemes involve taxpayers making multiple deposits below the $10,000 threshold in order to avoid having to fill out Form 8300 and report said receipts to the IRS.
Structuring is a felony offense and the punishments can be severe. Penalties include monetary fines, imprisonment of up to 10 years, or both. Additionally, because structuring is often used in connection with other crimes, such as tax evasion or money laundering, an individual accused of structuring could face lengthy jail time and/or civil penalties for the entirety of the individual’s conduct.
If you need assistance in defending claims of structuring payments or cash receipts, please contact Norman D. McKellar today for a FREE CONSULTATION at 865-566-0125.