The Internal Revenue Service's Buffalo District has launched a full-scale effort to insure that businesses and trades are complying with cash transaction reporting requirements.
Part of the Tax Reform Act of 1984 and the Anti-drug Abuse Act of 1988, the law requires that an IRS Form 8300 be filed if, within one year, any person in a business receives currency in excess of $10,000 from one buyer in a single or related transactions.
"We believe that there are a number of businesses in the Buffalo District which are not aware of their responsibilities under the law," said Donald Mitgang, district director, speaking this morning to reporters. The district includes 32 Central and Western New York counties.
"We hope to make businesses aware of the reporting requirements through seminars, the media and through compliance reviews," he said. Form 8300 compliance has been in effect for about 18 months.
Seminars on compliance will be held in Buffalo, Utica, Binghamton, Olean, Syracuse and Rochester. The Buffalo program is slated for Tuesday, Dec. 18, at the Buffalo and Erie County Library's Lafayette Square facility. Business owners are encouraged to call 1-800-829-1040 for more information on reporting requirements.
Five specially trained two-person compliance teams will fan out in the Buffalo, Binghamton, Rochester, Syracuse and Watertown areas, calling on various businesses to make sure they are aware of the reporting requirements and are complying.
"We're not trying to catch anyone who is not complying with the law," Mitgang said. "We want to help them comply." All visits will be preceded by telephone notification and a written information request.
Among the businesses more prone to dealing with large sums of cash are automobile and boat dealerships, jewelers, furriers, attorneys, accountants, stockbrokers and insurance companies. Mitgang said many of these kinds of businesses will be visited by the compliance teams.
While he couldn't estimate how many district businesses are not complying with the law, Mitgang said there definitely are firms not conforming.
"We have a database of currency transaction reports filed by financial institutions on their deposits," Mitgang said. "There are discrepancies between these reports and the number of 8300 forms filed."
The nationwide impact of noncompliance is immense. It is estimated that between $40 billion and $80 billion in taxes are lost in the so-called underground economy. Not all of the noncompliance is illegal, but much is, as drug dealers and smugglers use large cash payments to "launder" money from illegal activities.
For those who don't comply, civil and criminal penalties can be assessed, ranging from $50 to $100 per transaction, to, in the case of a person willfully failing to file Form 8300, a $25,000 fine ($100,000 for a corporation), a jail sentence of up to five years, or both.