New Electronic Filing Requirement for the IRS Form 8300

The Internal Revenue Service (IRS) recently updated the process for filing Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business. Starting on January 1, 2024, the form must be filed electronically. While there are specific exclusions to the electronic filing requirement, most dealerships will not qualify for an exception or waiver. Let us take a moment and review the Form 8300 rules that primarily impact dealers.

What is considered cash?  

• 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.
• Any amount below the $10,000 in which the business knows the customer is trying to avoid reporting the transaction on Form 8300 should be included, along with checking the "suspicious transaction" box.
• Cash does not include:

1. Personal checks drawn on the account of the writer.
2. A cashier's check, bank draft, traveler's check, or money order with a face value of more than $10,000.

• Starting January 1, 2024, cryptocurrency transactions, in the course of business or trade, amounting to $10,000 or more will also come under this regulation.

What if the customer refuses to provide information?

• We recommend completing the form timely without the provided information using zeros in the field and checking the box as "suspicious transaction."
• Describe efforts to collect the information in the comment section.

What should you do to ensure compliance?

• Ensure you have a process to address all cash transactions.

1. The process should be in writing and made available to employees.
2. Train your F&I managers at least annually and hold them accountable for reporting all cash received to the office.
3. Train office staff at least annually about reporting large cash deposits and keep the office manager or controller apprised of any transactions.
4. All sales managers should be aware of and trained on the process.
5. The office manager or controller should ensure the form is filed timely.
6. Some DMS systems will generate 8300 reports that can be monitored weekly.

• File the form within 15 days of receiving the funds.
• The dealership must give a customer written notice by January 31 of the year following the transaction that it filed Form 8300 to report the customer's cash transaction.

1. If a dealership voluntarily files Form 8300 to report a suspicious transaction below $10,000, it should not let the customer know about the report. The law prohibits a business from informing a customer that it marked the suspicious transaction box on the form.
2. A dealership must keep a copy of every Form 8300 it files, along with any supporting documentation and the required statement it sends to customers, for five years from the date filed. Under the electronic filing process, the dealership will receive an email acknowledgment receipt when the form is filed.

• This is a critical process as penalties are significant, and we have seen several IRS audits on 8300 recently. Penalties for 2024 are as follows:

1. The penalty for negligent failure to timely file, to include all required information, or to include correct information is $310 per return in 2024. A dealership also must self-identify late returns by including the word "LATE" in the comments section of the return.
2. The penalty for intentional disregard of the requirement to timely file or to include all required information, or to include correct information is the greater of: (1) $31,520 or (2) the amount of cash received in the transaction, not to exceed $126,000 (with no calendar year limitation applicable). The penalty applies to each failure.

What should you do to get ready for the change?

• To file Forms 8300 electronically, a dealership must set up an account with the Financial Crimes Enforcement Network's BSA E-Filing System. Once approved, you will sign onto the BSA E-Filing system and complete Form 8300, just like the blank PDF. We recommend registering as soon as possible to avoid potential problems and delays.

The move to mandate electronic filing for Form 8300 is in line with the broader trend of digital transformation in governmental processes. While change can be challenging, the benefits of e-filing — accuracy, speed, and security — should ultimately provide benefits. By understanding the requirements and preparing in advance, employees and dealers can navigate this transition smoothly.

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