I was recently speaking with a someone who entered into a Letter of Intent to sell their cultivation and processing license for tens of millions of dollars. The buyer’s due diligence team determined that the company had not been filing Form 8300. In total, the seller should have filed over 250 Forms 8300. The seller has since filed all the missing Form 8300 and is anxiously awaiting the next steps with the buyer, if any.
Form 8300 is an IRS/FinCEN Form that reports cash payments received over $10,000 in a trade or business. This includes the sale of goods or services. According to the IRS, cash includes coins and currency in the United States and a foreign country. Cash may also include cashier’s checks, bank drafts, traveler’s checks, and money orders with face value of $10,000 or less. This does not include checks over $10,000 or personal checks because the financial institution issuing the monetary instrument is required to report the transaction by filing FinCEN Currency Transaction Report (CTR).
The law requires trades or businesses report transactions via Form 8300 when customers use cash in a single transaction or related transactions. Related transactions include any transactions that occur within a 24-hour period. Money launderers typically structure multiple transactions under $10,000 to make it seem unnecessary to file Form 8300. Upon a business becoming suspicious about transactions, the business should report the activity by checking the “suspicious transaction” box (box 1b) on the top line of Form 8300. This may include a person trying to prevent the filing of Form 8300 or signs of possible illegal activity. The business may voluntarily file Form 8300 where the transaction(s) are less than $10,000 and are suspicious.
Additionally, Form 8300 should be filed within 15 days after receipt of the cash and the documentation should be kept for at least five years from the date filed.
Businesses may be subject to civil and criminal penalties for noncompliance with the law, e.g. willfully failing to file Form 8300, failing to file timely, or failing to include complete and correct information, is a felony under IRC Section 7203. Criminal penalties include:
- Fines up to $25,000 ($100,000 in the case of a corporation) per transaction;
- Imprisonment up to five years; and
- Additional prosecution costs.
Furthermore, any person who willfully files Form 8300 which is false in a material matter may be fined up to $100,000 ($500,000 in a case of a corporation) and/or may face imprisonment up to three years, plus the costs of prosecution, according to IRC Section 7206(1).
Avoiding the criminal penalties and keeping the IRS off your back is simple, and it will pay for itself!
Bridge West has been helping cannabis clients deal with Form 8300 filings and specific questions for years. For more information about Form 8300 or to schedule a confidential consultation, contact Cory Parnell, CPA, Chief Operating Officer, Bridge West LLC at firstname.lastname@example.org.