We frequently get asked the question of what to do with the receipt of cash. The thought that there’s kind of this magical $10,000 in cash which triggers certain filing requirements is indeed true.
What we’re seeing particularly in California with the growing legal cannabis and related industries is this is becoming more and more of a prolific issue. The main one that we’ve discuss and advise clients on is the obligations for businesses that receive the cash. It’s important to know and understand that they have certain obligations under the law to report receipt of cash.
There are a few elements and things to consider. The first is to understand the dollar threshold. It’s somewhat of a misnomer to many people, but it’s $10,000 in a transaction or a series of transactions. The law generally looks as the transactions, the cash receipts in one of two different ways. One is that if its cash receipts in any 24-hour period, it’s deemed to be a singular transaction. The other is if those receipts of cash exceed the 24-hour period, then the question becomes “did the recipient of the cash know or should they have known that this was all part of a singular type of transaction?” It wouldn’t make a difference if the individual making the cash payment gave you $6,000 on Day One, $4000 on Day Four and another $1,000, all of that would be deemed a singular transaction triggering the reporting requirement.
The reporting requirement itself is Form 8300. It is required by law not only by the IRS, but also the Bank Secrecy Act. It requires the recipient to fill out certain information about the payor’s identification, the date of the transaction et cetera, and file it with the IRS.