Whistleblower Claims for Form 8300 Cash Reporting Failures

The Internal Revenue Service offers rewards to individuals who disclose tax fraud that leads to significant recoveries by the IRS. The IRS whistleblower law provides for two kinds of awards:

  1. If the taxes, penalties, and interest are more than $2 million, the whistleblower may be entitled to between 15 and 20% of the amount collected. “If the case deals with an individual, his or her annual gross income must be more than $200,000.”
  2. Up to 15% (up to $10 million) for recoveries below that $2 million threshold and below the $200,000 individual threshold – for valuable information. This award is discretionary.

One type of tax fraud that can be used as the basis for a whistleblower complaint is the failure to file Form 8300 for large cash payments. If a whistleblower is aware of this failure (especially if the failure is repeated), a small case may become large enough (when the large penalties are added in) to qualify for a whistleblower award.

Form 8300 requirements

The Internal Revenue Service requires that you need to file a form, form 8300, whenever your trade or business receives a cash payment of $10,000 or more from a buyer in one single transaction or multiple related transactions. The information on the form is provided to the IRS and to the Financial Crimes Enforcement Network (FinCEN) for the purpose of combatting money laundering. The IRS is concerned that money laundering is meant to hide illegal activities such as drug dealing and tax evasion.

The requirement to file form 8300 applies to:

  • An individual
  • A company
  • A corporation
  • An association
  • A trust
  • A partnership
  • An estate

Cash includes currency. It also includes bank drafts, money orders, cashier’s checks and traveler’s checks.

The form must be filed if any part of the transaction occurs in one of the 50 states, Washington DC, “or a U.S. possession or territory (American Samoa, The Commonwealth of the Northern Mariana Islands, Guam, Puerto Rico and the U.S. Virgin Islands).”

Failure to file Form 8300 can result in civil and criminal penalties. The penalties have “been increased by the Trade Preferences Extension Act of 2015.” The penalties are adjusted yearly for inflation.

Form 8300 penalties

According to Optima Tax, the penalty for failure to file Form 8300 is $100 per occurrence. Many times, especially if a company or person is trying to launder money, there may be multiple occurrences. The penalties can be as much as $500,000 annually for a business with gross receipts of $5 million or less. The penalties can be up to $1.5 million for companies with gross receipts of more than $5 million. If the failure to file form 8300 is deliberate, the penalty is $250,00 “or the actual amount of the transaction up to $100,000 for each occurrence, whichever is greater. There is no annual limit for intentionally failing to file form 8300.”

The large penalties are often what helps a whistleblower qualify for an IRS whistleblower award.

If you are aware a company, person, or entity is failing to file Form 8300; you may have an IRS whistleblower claim. To learn more about your whistleblower rights and to properly inform the IRS, call the California Law Offices of Stephen A. Danz and Associates. We understand the Form 8300 requirements. You can reach us at 877-789-9707 or fill out our online contact form to make an appointment.