The Bank Secrecy Act, enacted around 1970, necessitates those in the U.S. who receive more than $10,000 of cash in their business to report the transaction to the U.S. Treasury using form 8300. This means that a transaction of $10,000 in cash does not have to be reported via form 8300. However, a business still needs to report if it receives installment payments that cause the total cash received within one year of the initial payment to total more than $10,000, or preciously unreported payments that cause the total cash received within a 12-month period to total more than $10,000.
The law requires that a trade or business report transactions when a customer uses cash in a single or 'related' transaction. A related transaction is a transaction between a payer and a recipient of cash that occur within a 24-hour period, or when the same payer makes two or more transactions in a 24-hour period which aggregate more than $10,000. The business that fills out Form 8300 will have to send a written statement to the customer giving them certain details, and telling them that the cash amount was reported.
There is an exception to using form 8300. Form 8300 can also be used to report suspicious transactions even if it is under a $10,000 cash transaction. A suspicious transaction is if there is a sign of possible illegal activity, and cannabis is still illegal under federal law. If Form 8300 is filled out because of suspicious activity and the transaction is under $10,000 in cash then a written statement is not required to be given to the customer.
Form 8300 is reported generally 15 days after the cash payment is received, unless the 15th day lands on a Saturday, Sunday, or a holiday. In that case the due date is the next possible date. If a payment plan is made, then if the first payment exceeds $10,000 the business must file Form 8300 within 15 days. If the first payment is less the business adds all payments made within one year of the first payment, and once the payments exceed $10,000 Form 8300 is filed.
If a business decides to not file a Form 8300 willfully, falsifies a Form 8300, tries to stop a Form 8300 from being filed, or tries to set up a transaction to avoid filing a Form 8300 can be charged criminal penalties. A company that fails to file or fails to include complete and correct information is subject to criminal sanctions as a felony. The sanctions include a fine up to $25,000 ($100,000 in the case of a corporation), possible imprisonment up to 5 years, and the costs of prosecution. Any person who willfully files a Form 8300 which is false is subject to a $100,000 fine, possible imprisonment up to 3 years, and the costs of prosecution. A business that attempts to interfere with filing a correct Form 8300 or attempts to structure the transaction in a way that filing a Form 8300 is unnecessary is also subject to the penalties described when a company fails to file.
Remember, the previous Cole memo guidance and the general assumed guidance to keeping your legal, accounting and banking contacts as well as your license requires cannabis industry player to remain compliant in all their employment, tax and associated laws including 8300 compliance. If you have questions as to your situation please feel free to contact us.