form 8300-compliance - smart devine

IRS Form 8300 ComplianceColleges & Universities

Reporting Cash Payments Over $10,000

IRS Compliance Recommendations for Colleges & Universities Reporting Cash Payments Over $10,000Background on IRS Form 8300 What you don’t know, can hurt your finances, which is why we prepared the following guide to help Colleges and Universities unravel the mystery of IRS Form 8300 and avoid IRS penalties on cash reporting.

When the IRS enact-ed Form 8300, it was unclear for many col-leges and universities whether their institution was exempt from this

requirement. Fast forward to 2014, through our prac-tice review, we are seeing many colleges and univer-sities with outdated practices or no best practice at all. Each person engaged in a trade or business who, in the course of that trade or business, receives more than $10,000 in cash in one transaction or in two or more related transactions, must file a Form 8300. Any transaction conducted between a payer (or its agent) and the recipient in a 24-hour period are relat-ed transactions. Transactions are considered related even if they occur over a period of more than 24 hours if the recipient knows or has reasons to know, that each transaction is one of a series of connected transactions.

The term “cash” means the following:• U. S. foreign coin and currency received in any

transaction; or

• A cashier’s check, money order, bank draft or traveler’s check having a face amount of $10,000 or less that is received in a designated reporting transaction, or that is received in any transaction in which the recipient knows the instrument is being used in an attempt to avoid the reporting of the transaction under either section 6050I or 31 U.S.C. 5331.

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Note: Cash does not include a check drawn on the payer’s own account, such as a personal check, regardless of the amount.

Information in this paper is based on the July 9, 2012, revised Form 8300 instructions.

For the latest information about developments relat-ed to Form 8300 and its instructions, such as leg-islation enacted after the initial publication, go to: www.irs.gov/form8300

Process RecommendationsIdentify students who have payments posted that qualify for the completion for Form 8300

Many vendor products provide a Form 8300 alert when a payment is to be posted. For those who utilize a vendor or customized system that does not provide this feature, a process needs to be developed to identify students who qualify.

Track cash payment types that qualify for report-ing for 365 days from the point of the first $10,000 payment. Once a student qualifies for the pay-ment, it is recommended to place a code on the student record when the Form 8300 report is filed. This code should also store the activity date it was posted.

Coding will aid in knowing when tracking needs to begin for an additional $10,000 payment. Codes can be used to create a population selection to send the students a notice through email, or a letter via the USPS to inform them of Form 8300 filing to the IRS. Institutions need to furnish each person, whose name is required to be included in the Form 8300, a written statement by January 31 of the year following the transaction.

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Process Flow for Form 8300 Cash Transaction Reporting at College and Universities

Task Process Owner of the Process

When the transaction of payment is performed

If the vendor product provides an IRS Form 8300 alert, print the screen; or

If the system utilized does not provide an alert, non-automated process recommendations are listed at the end of this chart .

Provide payer information that provides an explana-tion of the Form 8300 reporting requirements for the individual as well as the institution’s requirement to complete this form for the IRS, This information can be provided at the institution’s web site and / or provided on a sheet of paper.

Institution department accepting the payment of cash

By the end of the day the transaction takes place

Complete Form 8300 using the most recent version found at www.irs.gov/pub/irs-pdf/f8300.pdf

Majority of the time it is the Bursar’s office

By the 15th day after the transaction

Through the USPS, File Form 8300 with the IRS: Internal Revenue Service (check IRS website to confirm the following address): Detroit Computing Center P.O. Box 32621 Detroit, MI 48232


By January 31st of each year

Provide end-of-year statements to all payers who were identified on Forms 8300. Report to the IRS immediately for the preceding calendar year


For a minimum of five years from the date of filing Form 8300

Maintain a copy of the complete Form 8300 Majority of the time it is the Bursar’s office


The statement must include:• The name, address, contact person, and tele-

phone number of the business filing Form 8300;

• The aggregate amount of cash the business reported to the IRS;

• A statement that the business provided this information to the IRS.

Completing Form 8300• If the payment is made in person, it is recom-

mended to collect the following information in order to complete the Form 8300

- Take a photo copy of their driver’s license and

- Receive their Taxpayer Identification Number (TIN)

**OR**

- If they do not have a TIN ask to take a photo copy of their passport

- Ask for their date of birth

• Be certain to inform the payer why you are asking for this information as it is required to complete the Form 8300 for the IRS. At this time, it is recommended to have a pre-printed docu-ment to provide to the payer as a requirement for the institution to submit Form 8300 to the IRS.

• If the payment is provided to you through postal mail, complete the Form 8300 to the best of your ability. By the 15th day after the transaction day, and you were not able to collect all the information required, enter information in the comments field of the form in order to clarify why the information being reported may not be complete.

• Once Form 8300 is completed and signed, make a photocopy of the form for your records and attach the photocopy of the original receipt and any additional information you may have received, such as any copies of a license or passport. File this form and retain for a minimum of five years.

Form 8300 PenaltiesCash reporting is a requirement of both the Internal Revenue Code and the Bank Secrecy Act. It is import-ant that businesses comply with these laws to assist the IRS and the Financial Crimes Enforcement Net-work in their efforts to combat money laundering and to avoid potential civil and criminal penalties.

Penalties for violation of the Form 8300 filing and furnishing requirements of IRC 6050I have been in-creased by the Small Business Jobs and Credit Act of 2010, which amended IRC penalty sections 6721 and 6722.

The amendments apply with respect to Forms 8300 required to be filed and related notices required to be furnished on or after January 1, 2011.

Failure to FileIRC 6721(a)(1), describing the penalty for failure to file a timely and correct Form 8300, is amended to raise the penalty from $50 to $100. The aggregate annual limitation (ceiling) was raised in the case of businesses with gross receipts exceeding $5 million from $250,000 to $1,500,000. For businesses with gross receipts not exceeding $5 million the aggregate annual limitation has been raised from $100,000 to $500,000.

IRC 6721(b)(1), will apply when the failure is corrected on or before 30 days after the required filing date. This amendment raises the penalty from $15 to $30. The


aggregate annual limitation was raised in the case of businesses with gross receipts exceeding $5 million from $75,000 to $250,000. For businesses which correct the violation on or before 30 days after the re-quired filing date and also have annual gross receipts not exceeding $5 million, the aggregate annual limita-tion is raised from $25,000 to $75,000.

Failure to File Intentional DisregardIRC 6721(e)(2)(C), the intentional disregard penalty for failure to file a timely and correct Form 8300, provides a penalty of the greater of $25,000 or the amount of cash received in such transaction not to exceed $100,000. As of this writing, IRC 6721(e)(2)(C) has not been changed. There is still no aggregate annual lim-itation (ceiling) for intentional disregard of Form 8300.

Failure to FurnishIRC 6722, Failure to Furnish a statement to the per-sons whose names were required to be included in the Form 8300, was completely rewritten.

The Failure to Furnish penalty, 6722(a)(1), was raised from $50 to $100 per violation. The aggregate an-nual limitation has been raised from $100,000 to $1,500,000. In the case of a business having gross receipts not more than $5 million, the aggregate an-nual limitation is $500,000.

If the violation is corrected on or before 30 days after the required furnishing date, 6722(b)(1), the penalty has been reduced from $50 to $30 and the aggre-gate annual limitation was increased from $100,000

to $250,000. In the case of a business which corrects the failure on or before 30 days and has gross receipts not more than $5 million, the aggregate annual limita-tion is $200,000.

Failure to Furnish Intentional DisregardIRC 6722(e), intentional disregard of furnishing re-quirements, increased the penalty from the greater of $100 or 10 % of the aggregate amount of the items required to be reported correctly to the greater of $250 per failure or 10% of the aggregate amount of the items required to be reported correctly, with no annual aggregate limitation.

For additional information on Form 8300 penalties, please visit the IRS web site at:

• www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Form-8300-Penalties-Increase

All information in this paper is based on the most recent revised Form 8300 dated July 9, 2012.

Penalties for violation of the Form 8300 filing and furnishing requirements of IRC 6050I have been increased


A c c o u n t i n g T a x A d v i s o r y

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SMART DEVINE CAN HELP YOUMaryLynn is a Senior Manager at Smart Devine and has over 30 years of experience

in higher education, with a specific emphasis on student administration systems

processes and project management. She conducts training sessions on various aspects

of BANNER product, FERPA, Regulatory Reporting such as IPEDS and Clearinghouse

Reporting, and integrated components of the Human Resources, Alumni, Financial Aid

and Finance products. For more information, please contact MaryLynn Kudey at

267-670-7371 or [email protected] MaryLynn A. Kudey, PMP, CSM Higher Education

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