Form 8300 is for reporting cash transactions over $10,000.
That is the simple definition. The form must be filled out and either e-filed or mailed within fifteen days of the transaction.
The Form 8300 is an IRS form, but the audits and administration of the 8300 activity is under the control of the U.S. Treasury Department and FinCen, not the IRS. The auditor that conducts the audit is an employee of the IRS.
Cannabis is known to have a lot of businesses that do not have bank accounts. Cannabis is a bigger ticket transaction, so it fits that Cannabis businesses are a target for these audits.
Let’s start with the Form 8300 form itself.
- Part I asks for information about the specific individual who is handling the cash.
- Part II is the business that is involved with the cash payment.
- Part III is the method of payment: size of bills or coins and the purpose of the transaction.
- Part IV is the information about the business receiving cash.
So, let’s do a transaction. Here is the setup:
A retail shop buys flowers for resale from a distributor. The retailer drives to the distributor to pick up the flowers. The transaction is for $24,000. The driver of the van pays $24,000 to the distributor.
Let’s fill out the form.
- The driver is supposed to fill out Part I: his name, home address, SSN, DOB, and some identifying document, like a driver’s license. He fills out his name, shows his driver’s license and that is it.
- Part II is already known because that info is a part of the invoice for the sale.
- Part III is fine and can be filled out.
- Part IV is the company that sold the product and is getting the money, so that is fine.
It is Part I that is a stickler. Without a social security number, this part is incomplete. It cannot be processed.
This is an ongoing battle between the buyer and seller of cannabis for these transactions. Eventually, the product buyer must provide enough information to complete the form.
We are active in preparing SOPs for this area as well as actively handling audits for clients. Please reach out to us at Info@CannabisCPA.Tax or call 818-225-8022.