Business clients need to know that many companies will be required to start to electronically report cash payments over $10,000 starting Jan. 1.
Federal law requires a person to report cash transactions of more than $10,000 by filing Form 8300. A “person,” the IRS says, is an individual, company, corporation, partnership, association, trust or estate. Tax-exempt organizations are also “persons” and may need to report certain transactions, though waivers are available for some companies.
The move is in part an effort to deter tax evasion as well as streamline filing.
“The push toward electronic filing shouldn’t be a surprise,” said Miri Forster, a partner and national leader of the Eisner Advisory Group LLC’s Tax Controversy and Dispute Resolution practice group in Iselin, N.J.
“The requirement to file Form 8300 for cash payments of over $10,000 has existed for many years,” said Jim Brandenburg, a CPA and Milwaukee-based tax partner at the national professional services firm Sikich. “The filing was often done in a paper-filing format. What these latest regulations require is that Form 8300 must now be filed electronically, as a business may do with some of its other tax filings. The IRS and FinCEN also reduced the number of tax returns threshold where electronic tax filing is required.”
Clients may not be up to speed with the new e-filing requirement with Form 8300, advisors said. “The e-filing threshold for the number of information-type returns has dropped to 10 for 2024 from 250 for the current year,” Brandenburg said. Other tax forms, such as Form W-2 [or] Form 1099 series, that are filed with the IRS are included in the number of information tax forms being filed. The more forms a business has, the more likelihood they’ll exceed the threshold of 10 returns, thus requiring the use of electronic filing, including Form 8300.”
“What taxpayers may [also] not realize,” Forster said, “is that Form 8300 is not electronically filed with the IRS [but] with the Financial Crimes Enforcement Network (FinCEN) as the form is used to combat money laundering and other criminal behavior.”
“An 8300 filed late and by paper may be missed. E-filing makes it easier to track,” said Morris Armstrong, an enrolled agent and RIA at Armstrong Financial Strategies in Cheshire, Conn.
“It’s healthy that the government has better technology now and hopefully can narrow the tax gaps,” Armstrong added. “All my high-income clients welcome the additional efforts put forth by the Treasury. Right now, [the Employer Retention Credit] is one of the top priorities due to all the suspected fraud, but it’s good that they’re also focusing on more routine matters.”
Also beginning in 2024, digital assets will be treated as cash for filing an 8300, though the IRS hasn’t issued guidelines on how the 8300 will apply to digital assets, Brandenburg said.
“By the end of October, the IRS intends to open examinations of 75 of the largest partnerships—hedge and private equity funds, REITS, PTPs, law firms and others—and to mail inquiry notices to 500 partnerships with balance sheet discrepancies,” Forster said.
The IRS recently pledged to use its influx of funding from the Inflation Reduction Act, passed in 2022, to add modernize its technology for more efficient return processing. The agency also pledged to crack down on rich and international tax cheats.
“High-wealth individuals and related partnerships have already noticed an increase in IRS enforcement,” Forster said.