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If You Deposit a Lot of Cash, Does Your Bank Report It to the Government?

Federal law governs how much cash you can deposit before a bank reports it.

The deposit rule does not cover most checks, but does include foreign currency, cashier’s checks and money orders.

Key Takeaways

  • Banks must report cash deposits of $10,000 or more.
  • Don’t think that breaking up your money into smaller deposits will allow you to skirt reporting requirements.
  • Small business owners who often receive payments in cash also have to report cash transactions exceeding $10,000.

 

Depositing $10,000 or more in cash means your bank or credit union will report it to the federal government. The $10,000 threshold was created as part of the Bank Secrecy Act, passed by Congress in 1970, and adjusted with the Patriot Act in 2002.

The law is an effort to curb money laundering and other illegal activities. The threshold also includes withdrawals of more than $10,000.

When Does a Bank Have to Report Your Deposit?

Banks report individuals who deposit $10,000 or more in cash. The IRS typically shares suspicious deposit or withdrawal activity with local and state authorities, Castaneda says.

The federal law extends to businesses that receive funds to purchase more expensive items, such as cars, homes or other big amenities. These companies are also required to report deposits.

If you want to avoid having your big cash deposit reported to the government, don’t think that you can get around the requirement by breaking up your money into smaller deposits. This is known as structuring, and the government is on the lookout for it, too.

If an individual makes cash deposits over several days that are less than but still add up to at least $10,000, that person will be reported, Castaneda says. This applies even if you spread your deposits across more than one bank.

“Suspicious activity in excess of $5,000 detected by the bank or an institution is also required to be reported,” Castaneda says.

The IRS regulation, in part, reads this way: “Structuring is illegal regardless of whether the funds are derived from legal or illegal activity. The law specifically prohibits conducting a currency transaction with a financial institution in a way to circumvent the currency transaction reporting requirements.”

“Structuring will get you in hotter water than depositing $30,000,” says Morris Armstrong, a Cheshire, Connecticut-based enrolled agent for representing taxpayers before the IRS.

Does This Rule Cover Only Cash?

While the deposit rule does not cover most checks, it does include reporting other forms of money, such as foreign currency, cashier’s checks or money orders. The law also includes investment securities, Castaneda says.

For individual cashier’s checks, money orders or traveler’s checks that exceed $10,000, the institution that issues the check is required to report the transaction to the government. The bank where an individual deposits the check doesn’t need to.

For example, if you’re depositing an $11,000 cashier’s check, your bank won’t be reporting your deposit. The bank that issued the $11,000 cashier’s check already has reported it to the government.

What if You Run a Small Business That Deals in Cash?

Small business owners who frequently receive payment for products or services in cash, such as food trucks, hair stylists and restaurants, must also report any cash transactions exceeding $10,000.

The law applies to all businesses and must be reported on IRS Form 8300. The identity of both parties and the nature of the transaction must be disclosed. Individuals who fail to file can be prosecuted.

If a client pays $1,000 each month in cash, the business owner will likely file a Form 8300 in November, after the amount has reached the $10,000 cash threshold, Armstrong says.

“If a person dropped off $10,000 as a retainer for me to handle a tax issue, I would file a Form 8300 within 15 days,” he says.

Should You Worry About Your Deposits Being Reported to the IRS?

The fact that your bank will report any cash deposits or withdrawals in excess of $10,000 isn’t necessarily cause for alarm.

The intent is to identify and monitor where the money ends up, Castaneda says.

“It should not be construed as illegal activity,” he says. “It also helps authorities to determine if one’s account has been compromised and if a series of transactions are unusual or fraudulent.”

And though the bank may report the deposit of cash you received for, say, selling your car, you don’t need to fill out a Form 8300 to record that sale because you aren’t in the car sales business. source

Yes, banks are required to report cash deposits of more than $10,000 to the federal government. This is to help the government monitor for potential financial crime. 

Why does this happen?
  • The Bank Secrecy Act of 1970 requires this reporting. 
  • The Patriot Act of 2002 adjusted the $10,000 threshold. 
  • The reporting is intended to alert the government to potential crime and fraud, including money laundering. 
What happens with the reported information? 
  • Banks file a Currency Transaction Report (CTR) to report the deposit.
  • The government uses the reported information to monitor for potential financial crime.
Who else needs to report cash transactions?
  • Businesses that receive cash payments of more than $10,000 must also report the transaction to the government. 
  • The business must complete and submit IRS Form 8300. 
Penalties for non-compliance 
  • Individuals and businesses can face fines, prison sentences, or both for not filing Form 8300.

Although many cash transactions are legitimate, the government can often trace illegal activities through payments reported on complete, accurate Forms 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business PDF. Here are facts on who must file the form, what they must report and how to report it.

Who must file

Generally, any person in a trade or business who receives more than $10,000 in cash in a single transaction or in related transactions must file a Form 8300. By law, a “person” is an individual, company, corporation, partnership, association, trust or estate. For example, dealers in jewelry, furniture, boats, aircraft or automobiles; pawnbrokers; attorneys; real estate brokers; insurance companies and travel agencies are among those who typically need to file Form 8300.

Tax-exempt organizations are also “persons” and may need to report certain transactions. A tax-exempt organization doesn’t have to file Form 8300 for a charitable cash contribution. However, under a separate requirement, a donor often must obtain a written acknowledgement of the contribution from the organization. The organization must report noncharitable cash payments on Form 8300. For example, an exempt organization that receives more than $10,000 in cash for renting part of its building must report the transaction. See Publication 526, Charitable Contributions, for details

What’s cash

For Form 8300 reporting, cash includes coins and currency of the United States or any foreign country. It’s also cash equivalents that include cashier’s checks (sometimes called a treasurer’s check or bank check), bank drafts, traveler’s checks or money orders with a face amount of $10,000 or less that a person receives for:

  • A designated reporting transaction or
  • Any transaction in which the person knows the payer is trying to avoid the reporting requirement.

Note that money orders and cashiers checks under $10,000, when used in combination with other forms of cash for a single transaction that exceeds $10,000, is defined as cash for Form 8300 reporting purposes.

A designated reporting transaction is the retail sale of tangible personal property that’s generally suited for personal use, expected to last at least one year and has a sales price of more than $10,000. Examples are sales of automobiles, jewelry, mobile homes and furniture.

A designated reporting transaction is also the sale of a collectible, such as a work of art, rug, antique, metal, stamp or coin. It’s also the sale of travel and entertainment, if the total price of all items for the same trip or entertainment event is more than $10,000.

Note that under a separate reporting requirement, banks and other financial institutions report cash purchases of cashier’s checks, treasurer’s checks and/or bank checks, bank drafts, traveler’s checks and money orders with a face value of more than $10,000 by filing currency transaction reports.

Reporting cash payments

A person must file Form 8300 if they receive cash of more than $10,000 from the same payer or agent:

  • In one lump sum.
  • In two or more related payments within 24 hours. For example, a 24-hour period is 11 a.m. Tuesday to 11 a.m. Wednesday.
  • As part of a single transaction or two or more related transactions within a 12 month period

Examples of reporting situations:

Marijuana-related businesses

These businesses must report cash receipts greater than $10,000, in a single transaction and/or related transactions. See the Frequently Asked Questions for more information about the Marijuana Industry.

New or used automobile dealers

If a husband and wife purchased two vehicles at one time from the same dealer, and the dealer received a total of $10,200 in cash, the dealer can view the transaction as a single transaction or two related transactions. Either way, the dealer needs to file only one Form 8300.

  • A dealership doesn’t file Form 8300 if a customer pays with a $7,000 wire transfer and a $4,000 cashier check. A wire transfer isn’t cash.
  • A customer purchases a vehicle for $9,000 cash. Within 12 months, the customer pays the dealership cash of $1,500 for accessories for that vehicle. The dealer doesn’t need to file Form 8300 unless the accessories purchase was related to the original vehicle purchase.

Taxi company

When lease payments made in cash by a taxi driver to a taxi company within a 12-month period exceed $10,000 in total, the taxi company needs to file Form 8300. Then, if the company receives more than $10,000 cash in additional payments from the driver, the company must file another Form 8300.

Landlords

This 12-month period also applies to landlords who need to file Form 8300 once they’ve received more than $10,000 in cash for a lease during the year. If a person uses a dwelling unit as a home and rents it less than 15 days during the year, its primary function isn’t considered rental in a trade or business, so they don’t need to report a cash receipt of more than $10,000.

Bail-bonding agent

A bail-bonding agent must file Form 8300 when they receive more than $10,000 in cash from a person. This applies to payments from persons who have been arrested or anticipate arrest. The agent needs to file the form even though they haven’t provided a service when they received the cash.

Colleges and universities

Colleges and universities must file Form 8300 if they receive more than $10,000 in cash in one or more transactions within 12 months. A Form 8300 exception applies for government entities but not for educational entities.

Contractors

Contractors must file Form 8300 if they receive cash of more than $10,000 for building, renovating, remodeling, landscaping and painting.

When to file Form 8300

A person must file Form 8300 within 15 days after the date the person received the cash. If a person receives multiple payments toward a single transaction or two or more related transactions, the person should file Form 8300 when the total amount paid exceeds $10,000. Each time payments aggregate more than $10,000, the person must file another Form 8300.

How to file

A person can file Form 8300 electronically using the Financial Crimes Enforcement Network’s BSA E-Filing System. Those who file many forms may find the batch e-filing option helpful. E-filing is free, quick and secure. Filers will receive an electronic acknowledgement of each submission.

Those who prefer to mail Form 8300 can send it to:

Internal Revenue Service
Detroit Federal Building
P.O. Box 32621
Detroit, MI 48232.

Filers can confirm the IRS received the form by sending it via certified mail with return receipt requested or by calling the IRS Bank Secrecy Act Helpline in Detroit at 866-270-0733.

Taxpayer identification number

Form 8300 requires the taxpayer identification number (TIN) of the payer using cash. If they refuse to provide it, the person should inform the payer that the IRS may assess a penalty.

If the person is unable to obtain the payer’s TIN, the they should file Form 8300 anyway and include an explanation why the form doesn’t have the TIN. The person should keep records showing they requested the payer’s TIN and provide the records to the IRS upon request.

Informing customers about Form 8300 filing

A Form 8300 filer must give each party named on the form written notice by January 31 of the year following the transaction that they filed Form 8300 to report the payer’s cash transaction. The government doesn’t offer a specific format for the payer’s statement, but it must:

  • Be a single statement aggregating the value of the prior year’s total reportable transactions.
  • Include the name, address and phone number of the person filing the Form 8300.
  • Inform the payer that the person is reporting the payments to the IRS.

A person can give a payer who only had one transaction during the year a copy of the invoice or Form 8300 as notification if it has the required information. The government doesn’t recommend using a copy of Form 8300 because of sensitive information on the form, such as the TIN of the person filing the Form 8300.

A person may voluntarily file Form 8300 to report a suspicious transaction below $10,000. In this situation, the person doesn’t let the customer know about the report. The law prohibits a person from informing a payer that it marked the suspicious transaction box on the Form 8300. source

 

]]> Federal Judge Rules Gun Ban for Weed Smokers Unconstitutional https://goodshepherdmedia.net/federal-judge-rules-gun-ban-for-weed-smokers-unconstitutional/ Fri, 17 Feb 2023 09:43:31 +0000 https://goodshepherdmedia.net/?p=11995 Federal Judge Rules Gun Ban for Weed Smokers Unconstitutional

A federal judge in Oklahoma ruled last week that a federal law that bans gun ownership by cannabis users is unconstitutional.

“For all the reasons given above, this is not a constitutionally permissible means of disarming Harrison,” Judge Wyrick ruled.
“But the mere use of marijuana carries none of the characteristics that the Nation’s history and tradition of firearms regulation supports,” said Judge Wyrick
Judge Wyrick also highlighted that under Oklahoma law, marijuana can be bought legally at more than 2,000 store fronts in the state.

A federal judge in Oklahoma City ruled last week that a federal law that prohibits cannabis users from owning firearms is unconstitutional and must not be enforced by prosecutors. Citing a ruling handed down by the U.S. Supreme Court last year that dramatically expanded gun rights, U.S. District Judge Patrick Wyrick dismissed a federal indictment charging an Oklahoma man with violating the ban, ruling that the prohibition denied the defendant of his right to bear arms guaranteed by the Second Amendment to the U.S. Constitution.

Under current federal law, people who use cannabis are prohibited from owning or purchasing firearms because they are “an unlawful user of or addicted to” a controlled substance. The ban applies to all cannabis users, including those who use marijuana products that are legal under state law and the Second Amendment, which protects the right to bear arms for all Americans.

In May 2022, Jared Michael Harrison was arrested by police in Lawton, Oklahoma after officers found marijuana and a loaded revolver in his car during a traffic stop. Harrison told police he was on his way to work at a legal medical marijuana business, although he did not have a state-issued identification card authorizing him to use cannabis medicinally. Federal prosecutors subsequently charged Harrison under the nationwide ban on gun ownership by marijuana users.

Harrison’s attorneys challenged the gun prohibition for cannabis users, arguing that the ban is not consistent with the nation’s historical tradition of regulating firearms. The challenge cited a ruling handed down by the U.S. Supreme Court last year in a case known as New York State Rifle & Pistol Association v. Bruen that set new standards for interpreting the Second Amendment. Under that ruling, gun restrictions enacted by the government must be “consistent with this nation’s historical tradition of firearm regulation.”

Judge Cites Recent Supreme Court Ruling

Wyrick, an appointee of former President Donald Trump, agreed with Harrison’s attorneys and ruled on Friday that the ban is unconstitutional, writing that “the mere use of marijuana carries none of the characteristics that the Nation’s history and tradition of firearms regulation supports.” The judge rejected the argument of federal prosecutors that Harrison’s status as a marijuana user “justifies stripping him of his fundamental right to possess a firearm” and ruled that the federal ban on gun ownership “is not a constitutionally permissible means of disarming Harrison.”

Wyrick also noted that the use of cannabis is “not in and of itself a violent, forceful, or threatening act” and that Oklahoma is one of many states that permit the medicinal use of marijuana, despite the continued illegality of cannabis at the federal. Oklahoma voters legalized medical marijuana in 2018, and the state has more than 2,000 licensed dispensaries where patients can obtain medical cannabis.

Laura Deskin, a public defender representing Harrison, said the ruling was a “step in the right direction for a large number of Americans who deserve the right to bear arms and protect their homes just like any other American.”

Brian Vicente, a founding partner of the cannabis and psychedelics law firm Vicente Sederberg LLP, said last week’s court decision in Oklahoma “is a significant expansion in the rights of cannabis consumers.”

“For decades, and across various states, medical cannabis patients have been asked to choose between participating in their state’s legal cannabis program or owning a firearm,” Vicente wrote in an email. “This federal court decision secures the rights of adults to both use cannabis and own guns and effectively removes the restriction, and associated stigma, that these adults face. This is part of a broader trend of conservative states embracing marijuana policy, with both Alabama and Mississippi establishing medical cannabis programs in 2022 and Oklahoma poised to legalize cannabis on March 7 of this year.”

Federal Court Strikes Down Gun Ban For People Who Use Marijuana, Calling Government’s Justification ‘Concerning’

 

The U.S. District Court for the Western District of Oklahoma on Friday dismissed an indictment against a man who was charged in Oklahoma in 2022 after police discovered marijuana and a handgun in his vehicle during a traffic stop. In doing so, Judge Patrick Wyrick agreed with attorneys that the statute banning “unlawful” users of cannabis from possessing firearms violates the Second Amendment of the Constitution.

This decision comes as the ban continues to be challenged in a separate federal court in a lawsuit that was raised by former Florida Agriculture Commissioner Nikki Fried (D) and several medical cannabis patients.

For this case, the Trump-appointed judge largely based his decision on an interpretation of a recent U.S. Supreme Court ruling in which the justices generally created a higher standard for policies that seek to impose restrictions on gun rights.

The ruling states that any such restrictions must be consistent with the historical context of the Second Amendment’s original 1791 ratification.

The historical analogues that the Justice Department relied on to make the case that the ban is consistent—including references to antiquated case law preventing Catholics, loyalists, slaves and Indians from having guns—”misses the mark” and “cannot provide the basis for a historical analogue,” the judge said in Friday’s ruling.

It also addressed the government’s position that people who unlawfully use marijuana are “both unvirtuous and dangerous.” Wyrick said that “because the mere use of marijuana does not involve violent, forceful, or threatening conduct, a user of marijuana does not automatically fall within that group.”

The government has made similar arguments in the Florida-based case, where medical cannabis patients are actively appealing a ruling from a federal district court that dismissed their suit against DOJ in November.

Will Hall, an attorney working that case on behalf of the plaintiffs, told Marijuana Moment on Monday that they are “aware of” the new ruling and “plan to address it in our subsequent filings.” Fried also weighed in on the decision. Though she is no longer directly involved in the related suit, and her successor has declined to join it in her stead, she tweeted on Sunday that “when you are right, you are right.”

 

The Department of Justice will likely appeal Wyrick’s ruling to a higher federal court.

Advocates have argued that the fight to end the federal ban for cannabis consumers isn’t not about expanding gun rights, per se. Rather, it’s a matter of constitutionality and public safety.

Supporters of the Florida lawsuit have argued that the Alcohol, Tobacco, Firearms, and Explosives Bureau (ATF) requirement effectively creates an incentive for cannabis consumers to either lie on the form, buy a gun on the illicit market or simply forgo a constitutional right.

In 2020, ATF issued an advisory specifically targeting Michigan that requires gun sellers to conduct federal background checks on all unlicensed gun buyers because it said the state’s cannabis laws had enabled “habitual marijuana users” and other disqualified individuals to obtain firearms illegally.  Meanwhile, a GOP congressman recently filed a bill that seeks to allow medical cannabis patients to purchase and possess firearms. The legislation was also introduced in the 116th Congress but was not ultimately enacted.

Learn More on 2nd Amendment Cases for Weed and other things you may care about:

Federal Judge Rules Gun Ban for Weed Smokers Unconstitutional Feb 2023

Another Court Strikes Cannabis Gun Control Law – United States v. Daniels Aug 2023

Fifth Circuit Strikes Down Domestic-Violence Prohibitor in United States v. Rahimi June 2023

 

Read the latest filings in the federal case on the gun ban for marijuana consumers below:

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