Financial institutions are required to report certain cash deposits to the Internal Revenue Service. This reporting is mandated by the Bank Secrecy Act.
Deposits exceeding $10,000 in a single day trigger a report. Banks must file IRS Form 8300 within 15 days of the transaction. They also submit FinCEN Form 104, known as a Currency Transaction Report.
The $10,000 threshold exists to detect money laundering. The Department of the Treasury imposes these requirements on banks to combat illegal financial activities. Institutions must also report suspicious transactions that could indicate tax evasion or other crimes.
The IRS does not publicly detail its process for handling these reports. Agency documents state the reports may assist examiners in several ways.
They can help decide if additional auditing is necessary. They aid in questioning sources of income not subject to withholding tax. They generate leads for potential unreported income and tax avoidance schemes.
The IRS uses Currency Transaction Reports for more than identifying money laundering. The agency looks for potential tax evasion through them.
For deposits below $10,000, reporting is generally not required. However, policies can vary between financial institutions. Customers can ask their bank directly about specific reporting procedures.
The IRS's primary duty is collecting taxes. The agency may scrutinize transactions or income sources during audits or if back taxes are owed. Unexplained cash deposits, especially those not matching reported professions, can prompt inquiries.
If a person refuses to provide records by a deadline, the IRS may request bank records directly from the financial institution. While the IRS cannot access accounts directly, it can obtain records for investigations.
A $20,000 check deposit requires Form 8300 and FinCEN Form 104. A $2,000 cash deposit typically does not reach the reporting threshold but could raise concerns if part of a pattern.
The amount one can receive without reporting varies. Self-employment income under $400 may not require reporting. Cash deposits over $10,000 always require reporting.