Pop quiz: What counts as more than $10,000 in cash in the eyes of the Internal Revenue Service and must be reported on Form 8300?
Those in dealership F&I offices are often confused on this point, according to Shannon Robertson, executive director of the Association of Finance and Insurance Professionals.
“This is a common area that we find in AFIP that is misunderstood, misapplied,” he told the Ethical F&I Managers Conference last month.
Robertson said that it’s possible for one of his training classes to spend as much as 45 minutes on the topic “just because of the amount of questions that get asked.”
Form 8300 is a joint IRS-Financial Crimes Enforcement Network requirement meant to alert officials to criminals and tax evaders. Businesses receiving more than $10,000 in cash often must fill out the document, the agency said.
“Although the cash reporting requirements apply to many types of businesses, auto dealerships frequently receive cash in excess of $10,000 and are required to comply with the filing requirements,” the IRS states in a dealership-focused online Q&A F&I professionals might want to use as a reference.
Robertson advised dealerships not to bombard the IRS with Form 8300s as a hedge.
“The rule ‘when in doubt, fill it out’ doesn’t apply every time,” Robertson said. “ ’When in doubt, fill it out’ comes into play when we have a possible suspicious transaction.”
Otherwise, act accordingly based on what does and doesn’t count as reportable cash, Robertson said.
Overall, the broad strokes of the classification are fairly straightforward, based on Robertson’s presentation. (The IRS Q&A might help in other circumstances not discussed here.)
Personal checks, loan proceeds and wire transfers are never cash, “regardless of the dollar amount,” Robertson said.
Cash — be it U.S. dollars or foreign currency — is always cash, according to Robertson.
Any cashier’s check, money order, bank draft or traveler’s check in excess of $10,000 would not count as cash obligating a dealership to fill out a Form 8300, he said. “The bank files the 8300,” Robertson said.
However, if one of those four instruments comes in an amount $10,000 or less, it does count as cash.
Add up all of the individual items in a transaction that would be considered cash, Robertson said. If the total exceeds $10,000, the dealership must file a Form 8300.