The IRS continues to conduct Form 8300 audit programs and compliance sweeps in the region. The IRS normally conducts what is called a compliance audit. Typically, all the retail businesses in a particular area are audited to determine whether or not they are complying with the cash reporting laws. The local IRS office contacts the dealership by phone or letter and requests that it make available certain records – cash receipts, journals, bank deposit slips, and copies of Form 8300 – that have been filed for a particular year.
For purposes of reporting, cash or cash equivalent means (1) United States and foreign currency in excess of $10,000, and (2) cashier’s checks (by whatever name called, including treasurer’s check and bank check), bank drafts, traveler’s checks or money orders having a face amount of not more than $10,000. Cashier’s checks, bank drafts, traveler’s checks or money orders in this category are considered reportable when 2 or more (as well as cash) are presented to a dealership and the total amount exceeds $10,000. Under the IRS regulations, personal checks, checks drawn on the account of a business, certified personal and business checks, and amounts charged to credit cards are not considered cash.
Dealerships should develop a written policy that explains how cash transactions over $10,000 will be handled in the dealership. Make sure that all affected employees (salespeople, managers, office staff) are aware of, and fully understand, their responsibilities set out in the policy statement. The policy statement should include a statement instructing salespeople not to discuss the cash reporting law with customers at any time or for any reason. All cash reporting inquiries should be referred to a designated person (i.e., the dealer, the general manager) who fully understands all aspects of the cash reporting laws.
You should always be prepared for some type of cash reporting audit in the future. Fines can reach $25,000 per violation. Develop policies and procedures that will help your dealership comply with the cash reporting laws and educate your employees as to their responsibilities under the regulations. Training Dealership staff is the most important way to stay current with the requirements of the Law. Withum offers in house training for 8300 reporting to the sales, F&I and office staff that are the front line in assuring that the forms are properly transmitted and controlled.
