Businesses who are paid in cash have a responsibility to report payments over $10,000 to IRS using form 8300. Form 8300 is similar in function to a 1099 in that services paid for from one business to another usually generate a 1099, submitted by the company who received the work and sent to the company who performed the work in question. In the case of form 8300 it is the responsibility of the payee to report the cash payment both to IRS and to the payor for his or her records.
Watch this video to learn more about who should file and what the penalties for failing to do so are.
The penalty for failing to file form 8300 is $100 per infraction. For a single transaction that fine is $200, $100 for the failure to inform the payor that you filed form 8300 with IRS and $100 for failing to file the appropriate form with IRS. So, in case of large cash transactions, be sure to fill out the correct forms and report those cash payments to IRS. Avoid red flags that might trigger not only a penalty but possibly a deeper dive into your records and an audit by IRS.
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