Your bank business is not always your own business: the IRS might be in on the transaction as well. In an effort to keep tabs on money gained from illegal activities, the agency requires the reporting of certain deposits and, of course, there's a form and procedures for that. Banks aren't the only ones reporting large deposits; the IRS rules apply to any transaction carried out by a business or an individual.
Cash and Form 8300
When you deposit $10,000 or more in cash at the bank, the IRS requires the bank to complete a Form 8300. This form is for reporting any transaction or series of related transactions in which the total sum is $10,000 or more; a pair of $5,000 deposits, for example, will also wind up on Form 8300. Related transactions are any transactions (such as deposits) that occur within 24 hours, or are transactions the person or business receiving the money has reason to believe are related.
If there are two or more "related" deposits within a 12-month period that result in a total deposit of more than $10,000, then the IRS requires a report. The payments must be made in the course of ordinary business and received from a single payer. The rules apply to individuals as well as banks and other kinds of business; if you sell a car on your own and accept $10,000 cash as a deposit or total payment, you are supposed to file a Form 8300. There is a 15-day deadline to file the 8300 after the deposit takes place.
Currency Transaction Reports
By the Bank Secrecy Act, federal law also requires a Currency Transaction Report for any cash transaction of more than $10,000. The CTR is filed with the Financial Crimes Enforcement Network, a division of the Treasury Department that freely shares this information with the IRS. The purpose of this law is to track cash being "laundered" through the banking system in order to evade taxation or the investigation of criminal activity. If you "structure" the deposits in amounts smaller than $10,000 to evade reporting, both you and the bank may be subject to criminal charges. The bank is required to notify you of all Form 8300s and CTRs filed on your behalf by January 31 of the following year.
Suspicious Activity Reports
Federal law also requires banks to report any suspicious or unusual activity on the part of depositors, within 30 days of the activity. This can include "structured" deposits made to evade the $10,000-or-above reporting requirements. The bank e-files a Suspicious Activity Report with the Financial Crimes Enforcement Network, which also makes it available to the IRS. The report identifies the individuals by name and Social Security number, if available, as well as any law enforcement agency the bank has contacted. The law prohibits the bank from disclosing to the individual involved that an SAR has been filed.
- IRS: FAQs Regarding Reporting Cash Payments of Over $10,000 (Form 8300)
- IRS Form 8300: Report of Cash Payments Over $10,000 Received in a Trade or Business
- BankersOnline.com: Currency Transaction Reports (CTR) and Suspicious Activity Reports (SAR): Reading With Context
- Office of the Comptroller of the Currency: Suspicious Activity Report
- Financial Crimes Enforcement Network: FinCEN Suspicious Activity Report Electronic Filing Instructions
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