Yes! The government requires banks to report all cash deposits greater than $10,000.
This and other guidelines relating to large cash transactions, which apply to all banks and financial institutions, are set out in the Bank Secrecy Act. This is sometimes known as the Currency and Foreign Transactions Reporting Act. The Act was created in order to stop criminals from laundering money and disguising the illegal sources of their funds.
Do Banks Have to Report Large Deposits?
Banks are required to complete a reporting form for any transaction, or series of related transactions (we will define what this means in real terms shortly) with a value in excess of $10,000. So a single deposit of $10,000 or more would have to be reported, and so would two “related” deposits of $5,000 or more each.
According to the Act, “related transactions” are defined in two ways:
● Two or more related transactions within 12 months
● Two or more related payments within 24 hours
In addition, banks must also report when $10,000 or more is used to purchase a “negotiable instrument” like a cashier’s check or bank draft. As well as US Dollars, these rules apply to any foreign currency transaction with a value equal to $10,000 or more.
Do Business Owners Have to Report Large Deposits?
Again, yes. As well as the rules governing banks and financial institutions, business owners must also report any cash payment they receive in excess of $10,000. This is done using Form 8300.
Form 8300 is used to provide information about large cash payments received by businesses to the IRS. The information also goes to the Financial Crimes Enforcement Network (FinCEN) and is used to fight money laundering by criminal enterprises such as drug dealers and terrorists.
All businesses receiving cash payments of $10,000 or more in a single payment or related payments must complete Form 8300 for the IRS and FinCEN. This applies to transactions including:
● Sale of goods and services
● Lending, or repayment of a loan
● Expenses reimbursement
● Sale of real property
● The exchange of cash for other cash
● Payment of pre-existing debts
This is not an exhaustive list, and advice should be taken if you are unsure whether a specific transaction needs to be reported. The rules apply to single payments of $10,000 or more as well as payments in installments that total more than $10,000 within a 12 month period, and refer both to US Dollar transactions and foreign currency transactions of an equivalent value.
Bear in mind that the rules do not only govern cash transactions. Money orders, traveller’s checks, bank drafts and cashier’s checks also fall under the same regulations.
Importantly, you must complete the Form 8300 within 15 days of receiving the payment. The form can be completed online, or printed and mailed to the IRS, and there are severe penalties imposed on businesses which fail to report applicable transactions.
Do Smaller Deposits Need to be Declared?
For single deposits less than $10,000 it is not usually a requirement to report them to the IRS. However, if you make or receive multiple related payments within a 12 month period (such as staggered payments for goods or services) with a total value of $10,000 or more, then these would need to be reported.
The 15 day reporting “window” begins as soon as the payment which takes the total to $10,000 or more is transacted.
The IRS also has the power to investigate what it believes are suspicious transactions below the $10,000 threshold. For example, regular deposits of just under $10,000 may be made with the intention of avoiding attention from the IRS, and these may well be flagged for attention. Under these circumstances, a Suspicious Activity Report is filed by the IRS with the FinCEN.
Remember: as a business owner you should talk to your bank or credit union if you anticipate receiving payments of $10,000 or more. They can offer you tailored advice to ensure you stay on the right side of the Bank Secrecy Act.
Billwaze 