As usual with most government rules, the rules governing a reportable transaction should be taken upon with seriousness, and you should always consult your financial advisors as to the process and advisability to accept cash as a payment more than $10,000.
Why should I report the transaction? Because the law requires that you report the transaction and the penalties for intentionally disregarding the requirement to file is the greater of $25,000 or the cash received up to $100,000. The IRS also has a category of Willful failure to file form 8300 for an individual can be fined up to $250,000 or 5 years in prison or both and corporations can be fined up to $500,000.
Who must report?
The first criteria for determining whether you have a reportable transaction is, did the transaction take place in the context of a trade or business. A trade or business can include rental properties. Second, did a reportable transaction occur for more than $10,000. The $10,000 amount may not necessarily be only one transaction and the rules can be complex on the aggregation requirements of multiple transactions. Care should be taken to evaluate those rules.
How do you report the transaction?
Complete form 8300 and get the proper identification number from the purchaser. You have 15 days from the receipt of the cash to file to the address stated in the instructions or file electronically (required in 2024 if you file at least 10 information returns). You must provide the purchaser a copy of the form by January 31 of the year following the transaction.
If you have any questions regarding your responsibilities, please contact our trusted advisors at John B Lane CPA.