DealershipForum Trivia: IRS Cash Reporting and Form 8300

[XDCX]

What percentage of Form 8300 reports actually result in identifying and prosecuting criminals?

I don't know the answer to this question and I doubt there's any government official who would provide a specific answer.

If I had to bet I'd guess that less than 1/10th of one percent of the information gathered actually helps to identify and prosecute criminals.

That said, I did smile when I read that Court Clerks are required to report any Bail Transactions that involve more than $10,000 in cash. I would imagine that anyone who goes to a Court Clerk and pays $10K+ in cash to bailout a suspect pops up on a lot of radar screens.

[XDCX]

It's been awhile since I've updated this thread so I thought I'd give it a "bump" and answer another question.

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?

For the most part, the answer to this question is: No

The only exception would be if the dealer knew in advance the series of cash flows was going to happen. An example would be selling a vehicle for $8,500 with the agreement that another $2,000 was going to be spent on accessories.

For a link to the IRS Website with their examples - click here

[XDCX]

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?

According to the IRS the transaction can be viewed as either a single transaction or two related transactions. Either way, it warrants only one Form 8300.

Here's the link to the IRS Website with their examples - click here

[XDCX]

Is it a good idea to discuss the IRS Cash Reporting Requirement and Form 8300 with your customers?

For years I've heard dealership employees should never discuss Form 8300 with their customers - in fact, it was my understanding that it was unlawful to do so.

As I've researched this topic I've never found any information that indicates it's illegal to discuss Form 8300 with a retail customers.

My guess is that it's not illegal to discuss Form 8300 with retail customers but it's not advisable because any conversations might be construed as efforts to structure a car deal to avoid Form 8300 which would be illegal.

[XDCX]

Originally Posted by XDCX

Which governmental agency conducts "sting operations" to ensure Form 8300 compliance?

.

It appears you can add the DEA to the list.....

I thought of this thread when I read a Seattle used car dealer agreed to forfeit $1.5 Million and pay and additional $250,000 fine when the Drug Enforcement Agency determined his two dealerships were not filing IRS Form 8300 for certain cash deals that involved drug dealers trying to launder their cash. Here's a link to the news report - click here

It was also interesting to read the quote from the U.S. Attorney who thought the case should serve as a warning to other business owners.

To be clear, I'm obviously opposed to drug dealers and I can understand the need for the Gov't to have tools to help identify illegal activities. That said, did anyone (the car dealer or the drug dealers) go to jail or was this all about collecting fines and forfeited funds?

[XDCX]

Which governmental agency conducts "sting operations" to ensure Form 8300 compliance?

Based on the recent raid of Luxor Auto Group in Scottsdale, AZ it appears that the IRS is at least one of the agencies that is currently conducting sting operations.

For more information concerning the Luxor Auto Group sting and the three arrests that resulted from that operation - click here

[XDCX]

Which governmental agency conducts "sting operations" to ensure Form 8300 compliance?

Here's another recent example of a sting that was conducted by IRS undercover agents - click here

According to the Sentencing Memorandum the undercover agent indicated he wanted to buy a car using cash he earned by "slinging weed and cocaine."

Here's a copy of the Sentencing Memorandum - it's only four pages long and it's a pretty interesting read: (Opens as a PDF File - Download for DealershipForum Members only.)

IRS Sting - Vancouver, WA.pdf

What I found most interesting is the used car dealer was listing his company as the lienholder on vehicles in an apparent effort to conceal that gang members were using cash to acquire assets. Additionally, it appears this tactic was being used to prevent the authorities from seizing a vehicle if the owner was arrested for a drug crime.

Additionally, I thought it was interesting that the used car dealer agreed to launder more money by taking cash up front and then issuing a $5,000 check from the dealership each month to the undercover agent with a 1099 at the end of the year. This effort was taken to legitimize cash that was acquired through illegal means.

To be clear, my only complaint with Form 8300 is that the $10,000 threshold should have been indexed to inflation. That said, I do see the need for the cash reporting law and think that the dealers who get caught up in these stings deserve the punishment they ultimately receive.

[XDCX]

Originally Posted by XDCX

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.

I thought of this thread when I was watching the recent TV Special on the History Channel that reviewed the Cooper case prior to the announcement by the FBI that they were closing the case.

The two parts of the show that I thought were most interesting was the fact that a copycat successfully hijacked a Boeing 727 and parachuted safely to the ground with $500,000 about six months after the Cooper hijacking - the suspect was captured and later killed by the FBI in a shootout.

The second part I thought was interesting is the fact that the Feds have effectively taken the Statute of Limitations off of the table. Apparently the Feds secured a Grand Jury indictment against "John Doe" and that allows them to continue the case at anytime once they determine who "John Doe" is.