(To Report Cash Transactions)
I once facilitated a closing in which my clients sold a very modest home to a young couple for $10,000. What made this transaction interesting was that the couple paid for the house with cash, all in small bills. I still wonder from time to time how they acquired that cash. (They didn’t offer an explanation, and we didn’t ask!)
I’d like to think that most buyers do not walk around with that much money in their pockets. However, should your business take in more than $10,000 cash in a single transaction or in multiple related transactions, you may be surprised to know that the transaction is generally reportable to the IRS within 15 days after receipt of the cash. In addition, a written statement must be provided to the purchaser by January 31 of the following year.
Potentially stiff civil penalties attach for failure to comply with the IRS reporting requirements: $250 for each unintentional failure, and as much as $100,000 for each intentional failure. Willful failure to report can also result in criminal fines, even imprisonment.
This is just one aspect of the requirements for reporting large receipts of cash. If you think these requirements may apply to you and you don’t already have appropriate protocols in place, it’s time to touch base with your CPA or one of the attorneys at Wright Beamer.