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Old 12-20-2012, 10:46 AM   #1
XDCX
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Default DealershipForum Trivia: IRS Cash Reporting and Form 8300

The thread on Estate Taxes got me thinking about the IRS Cash Reporting requirement and Form 8300 so I thought I'd create a DealershipForum Trivia thread to spark some conversation.

Some of these questions I know the answer to and others I don't. I'll add posts to this thread with the information I know from time to time and I hope others will jump in and share their knowledge.

Here are the IRS Cash Reporting and Form 8300 Trivia questions:
  1. When was the IRS Cash Reporting Requirement implemented?
  2. How many Form 8300 reports does the IRS receive each year?
  3. What percentage of Form 8300 reports actually result in identifying and prosecuting criminals?
  4. What would the $10,000 Cash Reporting Requirement be in today's dollars if the IRS adjusted for inflation?
  5. How does the IRS Cash Reporting Requirement relate to D.B. Cooper?
  6. Who was D.B. Cooper?
  7. Which governmental agency conducts "sting operations" to ensure Form 8300 compliance?
  8. Is a seller required to notify the buyer that a Form 8300 is going to be submitted to the IRS?
  9. If a dealer sells a used car for $9,500 but the total amount of cash collected exceeds $10,000 due to sales tax does the dealer need to file a Form 8300?
  10. If a husband and wife buy two cars from a dealership at the same time and the total cash collected from both transactions is $10,200, how many Form 8300 reports need to be submitted?
  11. If a dealer sells a used car for $8,500 in cash and the customer returns to the dealership within 12 months and pays $2,000 in cash for a transmission repair, is a Form 8300 required?
  12. Are there any instances where a dealer could collect less than $10,000 in cash but still be required to submit a Form 8300?
  13. Is it a good idea to discuss the IRS Cash Reporting Requirement and Form 8300 with your customers?
If you have questions you'd like to add to this thread simply post a thread and I'll add them to this post. If you'd rather send me a PM, that's OK too. .
.

Last edited by XDCX; 12-20-2012 at 03:29 PM. Reason: Added numbers to the bullet points to make the thread easier to follow
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Old 12-20-2012, 10:53 AM   #2
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Default Who was D.B. Cooper?

I'm not sure if D.B. Cooper is a household name throughout the country but in the Pacific Northwest both he and his crime are legendary.

Here's a Wikipedia entry for those who may not be familiar with D.B. Cooper - click here
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Old 12-20-2012, 02:09 PM   #3
conn02
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question 8 no
question 9 yes
question 10 yes (related transactions)
question 11 yes
question 12 yes (if transaction is suspicious)
question 13 no
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Old 12-20-2012, 03:27 PM   #4
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Quote:
Originally Posted by conn02 View Post
question 8 no
question 9 yes
question 10 yes (related transactions)
question 11 yes
question 12 yes (if transaction is suspicious)
question 13 no
I like your idea - I'll edit my post and number the bullet points so they're easier to reference.
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Old 12-20-2012, 03:33 PM   #5
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Quote:
Originally Posted by conn02 View Post
question 8 no
question 9 yes
question 10 yes (related transactions)
question 11 yes
question 12 yes (if transaction is suspicious)
question 13 no
This should be an interesting thread because I think there's going to be some debate concerning your answers.

That said, props for being the first one to respond and share your thoughts.
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Old 12-21-2012, 09:21 AM   #6
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When was the IRS Cash Reporting Requirement implemented?
While the Bank Secrecy Act of 1970 required banks and financial institutions to file reports on certain cash transactions over $10,000 it wasn't until January 1, 1985 that the requirement extended to most retail businesses.

The Tax Reform Act of 1984 established the requirement that businesses, real estate agents, attorneys and other professionals had to complete a Form 8300 for any cash transactions over $10,000. Here's a link to a newspaper report from January 1, 1985 that reminds us that Form 8300 was controversial from the very beginning - click here
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Old 12-21-2012, 09:42 AM   #7
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What would the $10,000 Cash Reporting Requirement be in today's dollars if the IRS adjusted for inflation?
Based on The Inflation Calculator the value of $10,000 in 01/01/85 dollars would be $20,569 in today's dollars.

Did Congress forget to adjust the $10,000 requirement for inflation or was it their intention that the Cash Reporting requirement would become increasingly invasive as time passed? You can probably guess my opinion....
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Old 12-24-2012, 10:19 AM   #8
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Which governmental agency conducts "sting operations" to ensure Form 8300 compliance?
This is one of those questions where I'm not 100% sure about the correct answer.

Here's a excerpt from a report in the Tribune Business News from El Paso, TX: (For the full report - click here)
The IRS also might have stepped up audits of El Paso area businesses to determine whether they are complying with requirements to report $10,000-plus cash transactions.

Gerald Miller, general manager of El Paso Honda, said the dealership went through a Form 8300 audit by the IRS about two months ago. It was the first time in his 15 years of managing the East Side dealership that it has had such an audit, he said.

The IRS agent told Miller that the agency is "spot-checking" auto dealers, furniture stores and other sellers of high-ticket items for compliance with Form 8300 filings "because money laundering is being more of an issue these days," Miller said.
While it seems clear that the IRS is handling the audits I'm not clear which governmental agency handles the "sting operations."

I remember hearing about a number of Form 8300 "sting operations" that took place in Hawaii in the early 1990s and I believe they were coordinated by the FBI, but I could be mistaken.
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Old 12-24-2012, 10:33 AM   #9
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How does the IRS Cash Reporting Requirement relate to D.B. Cooper?
Apparently there's no connection at all.....

I remember watching something on TV (I think it was Pawn Stars) where they tied D.B. Cooper's hi-jacking as justification for Congress to pass Cash Reporting requirements. The TV show explained that Congress passed the Cash Reporting Requirement so it would be easier for law enforcement to capture and arrest criminals, like D.B. Cooper, who stole large amounts of cash.

While the story seems logical, the dates don't line up. The Bank Secrecy Act was passed before D.B. Cooper's hi-jacking and the Tax Reform Act of 1984 was passed 13 years after the hi-jacking. I guess you can's always trust what you see on TV...

That's not to say D.B. Cooper didn't leave a legacy. Apparently the FAA required all U.S. Commercial Airlines to install a "Cooper Vane" on their Boeing 727s. The "Cooper Vane" was designed to prevent the 727's rear staircase from opening while the airplane was in-flight.
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Old 12-24-2012, 11:56 AM   #10
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Quote:
Originally Posted by XDCX View Post
I remember watching something on TV (I think it was Pawn Stars) where they tied D.B. Cooper's hi-jacking as justification for Congress to pass Cash Reporting requirements.
Well, it wasn't Pawn Stars.....

I just did a quick Google Search and watched the episode where Rick bought one of the $20 Bills recovered from the D.B. Cooper hi-jacking and there was no mention of the IRS Cash Reporting Requirements.

Here's a link to the Pawn Stars episode - click here
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Old 12-27-2012, 10:24 AM   #11
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Is a seller required to notify the buyer that a Form 8300 is going to be submitted to the IRS?
I would have lost money on this bet, but the correct answer is: Yes

Here's an excerpt from the IRS website:
Must a business notify its customer that the business has filed a Form 8300 regarding the cash transaction with the customer?

Yes, a business must notify its customer, in writing, by January 31 of the subsequent calendar year.
Here's a link to the IRS website - click here

I've always heard that dealership employees were never allowed to discuss Form 8300 with their customers so the fact a dealership is required to notify a customer that a Form 8300 was filed with the IRS was quite a surprise.
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Old 01-03-2013, 08:43 AM   #12
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Went through an 8300 form audit a few times in my career. The very first one back in the late 80's or early 90's the agent told me we were to notify the customer of the form being filed by Jan. 31st. Of course the agent also told me that we didn't need proof that they had been notified (wink, wink, nod, nod). Now I believe you need to do certified mail with return receipt signature card. sigh.............
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Old 01-03-2013, 09:50 AM   #13
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Quote:
Originally Posted by zohpy View Post
Went through an 8300 form audit a few times in my career. The very first one back in the late 80's or early 90's the agent told me we were to notify the customer of the form being filed by Jan. 31st. Of course the agent also told me that we didn't need proof that they had been notified (wink, wink, nod, nod). Now I believe you need to do certified mail with return receipt signature card. sigh.............
Thanks for sharing your experience.

Like you, I've always sensed a vibe that the IRS didn't want anyone in the dealership discussing Form 8300 with their customers but I haven't seen anything in print from the IRS to substantiate that point.

I'm guessing part of that vibe is the concern that a dealership employee could be subject to prosecution if they are caught "structuring" a deal to avoid the Form 8300 requirement. In that case, the safest strategy is to conform to the law and not say anything to your customer that could be interpreted as counseling them about the law.
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Old 01-04-2013, 01:51 PM   #14
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If a dealer sells a used car for $9,500 but the total amount of cash collected exceeds $10,000 due to sales tax does the dealer need to file a Form 8300?
I would have lost money on this bet too, but the correct answer is: No

Here's an excerpt from the IRS website:
If an item (an automobile, for example) sells for $9,950 but the buyer pays $10,650 (sales price plus state and local taxes). Would this be considered a designated reporting transaction (retail sale of a consumer durable) requiring the definition of cash to be expanded to include monetary instruments?

No. In determining a designated reporting transaction, a consumer durable is defined as tangible personal property that is generally suited for personal use, is expected to last at least one year under ordinary use, and has a sale price of more than $10,000 (exclusive of sales tax). If the sales price is less than $10,000, then the tangible personal property would not be a consumer durable regardless of any taxes.
Here's a link to the IRS website - click here

If it were me, I'd probably report the $9,500 transaction on Form 8300 just to be safe but it seems clear that the law does not require it.
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Old 01-08-2013, 10:48 AM   #15
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How many Form 8300 reports does the IRS receive each year?
When Form 8300 was first implemented in 1985 there were fewer than 1,000 forms filed. The most recent estimate I was able to find (from 2010) indicates the IRS receives over 170,000 Form 8300 filings per year. (For the source - click here)

While 170,000 filings has the scent of "Big Brother" (Which, ironically, is a reference to Orwell's book 1984 - the year mass-use of Form 8300 was passed by Congress) it pales in comparison to the 14.8 Million transactions that banks file with the IRS based on deposits, withdrawals and cashier's check purchases each year.

It makes me wonder - what's the IRS doing with all of this data?
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