Bulletin: NL000021

Dear Associates:

Introduction. Federal law (26 U.S.C. §6050I ) requires you to report cash received in your trade or business if the cash exceeds $10,000. You must use IRS Form 8300. We generally advise you not to accept cash payments in excess of $2,000.00 for other reasons: risk of theft, risk of counterfeit funds, and a red flag that the cash may be drug money, causing the transaction to be forfeitable.

Cash. Federal law only requires you to report if you receive over $10,000 in cash. Cash means coin or currency of the United States or any other country. It includes United States Notes and Federal Reserve Notes. Regulations do not include cashier's checks, bank drafts, travelers' checks or money orders as "cash" in real estate transactions unless you know that the "instrument" is being used to avoid reporting.

Multiple transactions and multiple payments. Any transactions conducted between you and the payer in a 24-hour period are related transactions. You must aggregate and report them if the total amount exceeds $10,000.

A transaction may be related even if it occurs over a period of more than 24 hours. You must have reason to know that the transaction is one of a series of connected transactions.

If you receive cash installment payments during the year, you must add the initial payment and subsequent payments until the total exceeds $10,000. Then you must file a report. If the subsequent payments exceed $10,000, you must report them separately in (15) fifteen days after the date they exceed $10,000.

Example: On February 10, 1993, X Title Company receives an initial cash payment of $11,000 on a contract for deed. X receives subsequent cash payments of $3,000 on March 15, 1993, $7,000 on April 20, 1993, and $4,000 on May 5, 1993. X must report the $11,000 payment by February 25, 1993. X also must report the payments totaling $14,000 by May 20, 1993.

Date of reporting. You must file the Form 8300 by the 15th day after receipt of the cash. You must keep a copy of the Form 8300 for five years from the date you file. You must provide a copy of the written statement to each person named on the form by January 31 of the year following the calendar year in which the report is made. The statement must show the name and address of the business, the total amount of reportable cash, and that you furnished the information to the IRS. You must keep a copy for your records.

Comprehensive compliance program. Unless you refuse to accept large cash payments, you should establish a written compliance program. It should state that you prohibit actions in violation of the law, it should name an officer to supervise compliance, it should contain a training program, and it should include a quality control program.