- Reinstatement for the deduction of mortgage insurance premiums on itemized deductions.
- Reinstatement of the tuition and fees deduction.
- The medical expenses deduction on itemized deductions returns to 7.5% from 10% for 2019.
- Required Minimum Distribution (RMD) for IRA (Individual Retirement Accounts) age is increased from 70 ½ to 72 years of age.
- Removes the age limitation on contributions to traditional IRAs.
- The 2.3% excise tax for individuals on medical devices will be repealed starting on January 1st, 2020
Archives for December 2019
Legislative changes: These new marijuana laws take effect Wednesday, Jan. 1, some up some down but as always, the only constant is change.
Senate Bill 34 will let licensed businesses donate products for medical marijuana patients in need.
And Assembly Bill 1810 makes it illegal for passengers in limos, taxis and other commercial vehicles to consume cannabis (though they can still drink alcohol), effectively ending any hopes of cannabis party buses. Also on Wednesday, mandated industry tax hikes will hit an already struggling industry.
MANUFACTURED CANNABIS SAFETY BRANCH
Notification for Track-and-Trace System Users
External transfer functionality will be removed January 15, 2020
Notification for Track-and-Trace System Users
The Track-and-Trace system is being reconfigured to disable External Transfer and Temporary Transporter functionality. This functionality was intended to be used solely to facilitate transactions between annual or provisional licensees who had been credentialed into Track-and-Trace and temporary licensees who had not yet received system access. As there are no remaining temporary licensees in California, this feature will be removed.
Beginning on January 15, 2020, you will no longer be able to transfer cannabis or cannabis products that are not tagged and uploaded as inventory in Track-and-Trace. All manifests for movement of cannabis items will be required to be generated through the Track-and-Trace system. Any pending external transfers must be completed prior to January 15, 2020.
A detailed bulletin about this change is available to system users. To access the bulletin, please log into your Track-and-Trace account and click on the envelope in the upper left-hand corner. Licensees are required to order Package Tags within five calendar days of receiving access to the Track-and-Trace system (§40517). If you have not yet ordered Package Tags, you must do so immediately. After ordering, it takes approximately 10 business days for tags to be delivered. Once you receive your tags, you must use them to document all cannabis inventory held on your premises and record all commercial cannabis activity.
Track-and-Trace System Resources
Detailed instruction booklets for California users of the Track-and-Trace System are available on the Metrc California website, www.metrc.com/california. The California Supplemental User Guide contains the following instructions that may aid you in ordering tags and inputting inventory prior to the removal of the External Transfer functionality:
- Ordering Package Tags – page 48
- Receiving Package Tags – page 52
- Creating Packages from Existing Inventory – page 88
In addition, the California Transition Period Guide contains instructions for new users, including steps for uploading beginning inventory.
Keep these important dates in mind and close out the year with confidence.
December 30, 2019, by 5 PM PT: Last day to approve direct deposit payrolls for a 2019 pay date.
January 28, 2020, by 5 PM PT: If using the Intuit 1099 E-file service, this is the last day to submit for timely mailing of contractor 1099s.
January 29, 2020: Last day to e-file W-2 forms for processing by January 31, 2020.
January 31, 2020:
Last day to provide W-2 forms to employees and 1099-MISC forms to contractors.
|Last day to e-file 1099 forms for timely processing with the IRS.|
Did you know the IRS has released a new W-4 form? See Below about what’s changing, who it affects, and when the new form will be available in your account.
What’s changing with the Federal W-4?
Learn about the new changes to the Federal W-4 and how to enter and print a W-4 for employees.
Here are a few things you need to know about the changes:
What are the major changes to the W-4?The new changes are apart of the 2017 Tax Cuts and Jobs Act. The act made it necessary to revise the Federal W-4 form. There are a few key changes:
- Allowances that were tied to a personal exemption amount are no longer allowed by law.
- The ability for an employee to account for other income from other jobs or additional income is clearly represented leading to a more accurate calculation of withholding tax for the year.
- New filing statuses have been provided.
Do I need to ask all of my existing employees to fill out the new 2020 Form W-4?No. Employees who have submitted Form W-4 in any year before 2020 are not required to submit a new form merely because of the redesign. Employers will continue to compute withholding based on the information from the employee’s most recently submitted Form W-4.
Can I ask all of my employees to fill out a new 2020 Form W-4?You may ask, but as part of the request, you should explain two things. First, they are not required to submit a new Form W-4. Second, if they do not submit a new Form W-4, withholding will continue based on a valid form previously submitted.
What information do I enter if my employee has not provided me with a Form W-4 and their hire date is in 2020?
New employees who are required to fill out the new 2020 Form W-4 but fail to submit one must be set-up with the following entries:
- Filing Status = Single
- Multiple Jobs/Spouse Works (2c) = Not Checked
- Claim Dependent Amount = $0
- Other Income = $0Deductions = $0
- Extra Withholding = $0
How do I estimate the tax withholdings?If you need to figure out what you need to pay, get an estimate for the tax withholdings.
Enter and print a W-4 into your payroll
With Payroll, you can enter your employees’ W-4s. You can either enter their W-4 with a 2019 form or use a W-4 form with the 2020 update.
Employees that need the 2020 Form W-4 include:
- Employees hired on or after, January 1, 2020
- Employees who make changes to their withholding elections at any time in 2020 or later
- Employees who have never given you a Federal Form W-4
Note: Once you update an employee’s W-4 to the 2020 version, you’ll not be able to change back to the 2019 version.
Learn how to enter a W-4 with:
QuickBooks Online Payroll
- Select Workers, then Employees.
- Select the name of the employee.
- Select Edit ✎ beside Pay.
- Select the 2020 W-4 or later radio button.
- Enter the employee’s W-4 information into the form.
- Select Done to save.
QuickBooks Desktop Payroll
- Go to Employees, and then Employee List.Select the name of the employee.
- Select Payroll Info, and then select Taxes
- On the W-4 Form dropdown, select 2020 and Later
- Make sure your employee complies with the points on the Federal W-4 form popup, and then select OK.
- Enter the employee’s W-4 information into the form
- Select OK to save.
Intuit Online Payroll
- Select Workers and then Employees.
- Select the employee’s name.
- In the Taxes and Exemptions section, select Edit.
- Select the 2020 W-4 or later radio button.
- Enter the employee’s W-4 information into the form.
- Select Ok to Save
Print a W-4 form for an employee
You can print a W-4 form from the IRS site or from most all accounting platforms
Who fills out the W-4?
The W-4 has a series of worksheets to help employees complete the form on their own. A completed W-4 would then need to be provided to the employer so that the employer knows how much to withhold from each paycheck.
Do I have to file the W-4?
Employers do not need to file the W-4. However, the IRS does require employers to keep the W-4 in their records for at least 4 years.
What if I don’t have a W-4 for my employee?
Per the IRS guidelines, if you don’t receive a completed W-4 from an employee, withhold their tax as single with no withholding allowances.
For the complete year-end payroll checklist, see blow
Year-end checklist for Payroll
Learn how you can wrap up this year’s payroll and prepare for the next with.
December and January are important months for every business. Whether it’s filing your taxes or sending out your employees’ W-2s, there are several things you need to get done.
Go over these important dates and tasks as you plan your year-end payroll work. And you can use the links to get steps or more info on anything you’re wondering about.
December 30, 2019
Run final payroll for 2019
- Make sure employee wages and benefits are correct.
- If you use direct deposit, send off the year’s final paychecks and pay employee bonuses by 5:00 PM PT.
- Report all employee paychecks, including handwritten, commission, termination, and bonus checks.
- Add the year’s final fringe benefits to paychecks.
- Add any commissions your employees earned.
- Contribute to your employee’s retirement.
Order year-end supplies
- Order W-2 perforated forms and envelopes.
- Subscribe to our labor law compliance posters. This way you know when the law changes.
Before the first payroll of 2020
Review and update employee information
- Ask employees to review and update W-4 and state withholding forms.
- Update employee information, such as employee SSNs, legal names, and addresses.
- Review and update any changes to your federal deposit and filing schedule.
- Review vacation hours, including used and unused time.
Review and update company information
- Run reports for year-end: employee details, payroll details, taxes, and wage summary.
- Update State Unemployment Insurance rates effective January 1, 2020.
Keep an eye out for federal and state tax changes
- Review and update your state unemployment insurance (SUI) rate.
- Review and update your tax deposit schedules.
January 28, 2020
- E-file your 1099 forms on or before January 28, 2020 at 5:00 PM PT so they can be processed and postmarked to your contractors by January 31, 2020.
January 29, 2020
- E-file your W-2 forms on or before January 29, 2020, so they can be processed before January 31, 2020. State lead times may vary.
January 31, 2020
Prepare and file payroll tax forms and payments
- Send W-2s to your employees.
- E-file and send 1099-MISC forms to contractors.
- Review and file federal forms, such as Forms 941/944 or 940.
- File state forms (form names and due dates vary by state).
- Invite employees to access pay stubs, W-2s and timesheets.
Although it may seem (at least to many of us in the U.S.) that December is all about Christmas there are many holidays celebrated during this month. There are so many ways to celebrate across the world, and so many celebrations that it must be in our human makeup to thank our saviors, gift our loved ones, eat together, and make merry in the month that can seem the darkest and coldest of the year.
The Feast of St. Nicholas or Krampusnacht is celebrated in various countries in Europe on December 6th. Krampus is a hairy devil who is tasked with giving coal to naughty children, while St. Nicholas gives gifts to the good children.
Advent starts the beginning of the month and carries on all throughout until Christmas. It is a celebration getting ready for the Nativity of Jesus and is celebrated by various Christian churches all over the world.
Las Posadas is a nine day religious celebration all over Latin America and Spain beginning December 16th. It was started some 400 years ago to teach non-literate people the religious stories, including the birth of Jesus.
Buddhists celebrate Bodhi Day on December 8th. It is a celebration of the day the Buddha achieved enlightenment and so is sometimes called Enlightenment Day.
Then, of course, Winter Solstice or the Longest Night of the year usually falling on or around the 21st.
Sweden has St. Lucia Day in honor of Lucia a Christian martyr killed for her beliefs. Girls dress up in white dresses with a wreath of candles around their heads (don’t worry with modern batteries they aren’t live flame!) and bring coffee and rolls called Lussekatts to the adults in the morning.
Hanukkah we may think of as eight days of celebration of a miracle or the Festival of Lights as set on the calendar in stone. But not so. Hanukkah is celebrated on different dates throughout the world depending on country and which traditional calendar is being followed.
Another familiar sounding holiday is Yule or Yuletide, once a pagan hunting festival, has some similar customs in common with modern Christmas, such as the yule log, and yule tide singing (what we call caroling).
Kwanzaa is a week long celebration starting December 26th and is probably one of the newest festivals of the world, started in 1966 by secular humanist Maulana Karenga as an African-American holiday, borrowing from West African traditions and from other nations in the continent.
Boxing Day is on December 26th and may seem like it should be the day you throw away all the boxes from all the presents, but really it refers to the sort of donation boxes in churches in England that were opened the day after Christmas and the contents distributed to the poor. It was also a day off for servants and workers to celebrate with their families, since in Christmas they were busy taking care of the more fortunate.
One day we all agree to is New Year’s Eve. Even before the international ball drop, once most of the world adopted the Georgian calendar in the 1500’s (which made scheduling play dates sooooo much easier), we all take a moment at the end of the calendar year to reflect, celebrate in our own way, and welcome in another year.
Happy Holidays whatever you celebrate!
Taxpayers who paid too little tax during 2019 can still avoid a tax-time surprise by making a quarterly estimated tax payment now, directly to the Internal Revenue Service. The deadline for making a payment for the fourth quarter of 2019 is Wednesday, Jan. 15, 2020.
Income taxes are pay-as-you-go. This means that by law, taxpayers are required to pay most of their tax during the year as income is received. There are two ways to do this:
- Withholding from paychecks, pension payments, Social Security benefits or certain other government payments. This is how most people pay most of their tax.
- Making quarterly estimated tax payments throughout the year. Self-employed people and investors, among others, often pay tax this way.
Either method can help avoid a surprise tax bill at tax time and the accompanying penalty that often applies. If a taxpayer failed to make required quarterly estimated tax payments earlier in the year, making a payment to cover these missed payments, as soon as possible, will usually lessen and may even eliminate any possible penalty.
The IRS recommends that everyone check their possible tax liability by using the IRS Tax Withholding Estimator. This online tool allows taxpayers to see if they are withholding the right amount and find out if they need to make an estimated tax payment. Form 1040-ES, available on IRS.gov, includes a worksheet for figuring the right amount to pay as well.
This is especially important for anyone who owed taxes when they filed their 2018 return. Taxpayers in this situation may include those who itemized in the past but will now claim the increased standard deduction, as well as two wage-earner households, employees with non-wage sources of income and those with complex tax situations.
Taxpayers who owed taxes when they last filed and who did not adjust their 2019 withholding may find that they owe taxes again, and even a penalty, when they file their 2019 return next year. Making a quarterly estimated tax payment now can help.
In addition, various financial transactions, especially late in the year, can often have an unexpected tax impact. Examples include year-end and holiday bonuses, stock dividends, capital gain distributions from mutual funds and stocks, bonds, virtual currency, real estate or other property sold at a profit.
Publication 505, Tax Withholding and Estimated Tax, has additional details, including worksheets and examples, that can be especially helpful to those who have dividend or capital gain income, owe alternative minimum tax or self-employment tax, or have other special situations.
The fastest and easiest way to make an estimated tax payment is to do so electronically using IRS Direct Pay or the Treasury Department’s Electronic Federal Tax Payment System (EFTPS). For information on other payment options, visit IRS.gov/payments. If paying by check, be sure to make the check payable to the “United States Treasury.”
Though it’s too early to file a 2019 return, it’s never too early to get ready for the tax-filing season ahead. For more tips and resources, check out the Get Ready page on IRS.gov.
The Internal Revenue Service reminds taxpayers there are things they should do now to get ready for the tax-filing season ahead.
For most taxpayers, Dec. 31 is the last day to take actions that will impact their 2019 tax return. For example, those who plan to itemize deductions should know that charitable contributions are deductible in the year made. Donations charged to a credit card before the end of 2019 count for the 2019 tax year, even if the bill isn’t paid until 2020. Checks to a charity count for 2019 if they are mailed by the last day of the year.
Taxpayers who are over age 70 ½ are generally required to take distributions from their individual retirement accounts and workplace retirement plans by the end of 2019. However, a special rule allows those who reached 70 ½ in 2019 to wait until April 1, 2020, to receive them.
Most workplace retirement account contributions should be made by the end of the year, but taxpayers can make 2019 IRA contributions until April 15, 2020. For 2019, the basic limit for 401(k) contributions is $19,000, plus another $6,000 for those who are at least age 50.
For 2019, total contributions to all traditional and Roth IRAs cannot exceed $6,000, or for taxpayers age 50 and older, $7,000. Taxpayers should check IRS.gov for more information about contribution limits, as well as cost-of-living adjustments affecting pension plans and other retirement-related items for tax year 2019.
Some taxpayers may be eligible for the Retirement Savings Contributions Credit, also known as the Saver’s Credit. The income limit is $64,000 for married couples filing jointly, $48,000 for heads of household, and $32,000 for singles and married individuals filing separately for 2019.
The vast majority of taxpayers get their refunds faster by filing electronically and using direct deposit. It is simple, safe and secure. This is the same electronic transfer system used to deposit nearly 98% of all Social Security and Veterans Affairs benefits into millions of accounts.
Just as each tax return is unique and individual, so is each taxpayer’s refund. Here are a few things taxpayers should keep in mind if they are waiting on their refund but hear or see on social media that other taxpayers have already received theirs.
Different factors can affect the timing of a refund. Even though the IRS issues most refunds in less than 21 days, it’s possible a particular taxpayer’s refund may take longer. Some tax returns require additional review and take longer to process than others. It may be necessary when a return has errors, is incomplete or is affected by identity theft or fraud. The IRS will contact taxpayers by mail when more information is needed to process a return.
By law, the IRS cannot issue refunds to people claiming the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC) before mid-February. The law requires the IRS to hold the entire refund, including the portion not associated with the credits. This helps ensure taxpayers receive the refund they’re due by giving the IRS more time to detect and prevent fraud.
Taxpayers should not count on getting a refund by a certain date, especially when planning major purchases or paying other financial obligations.
Taxpayers who moved during 2019 should tell the US Postal Service, employers and the IRS. Notify the IRS by mailing IRS Form 8822, Change of Address, to the address listed on the form’s instructions. Taxpayers who purchase health insurance through the Health Insurance Marketplace should also notify the Marketplace when they move out of the area covered by their current plan.
For name changes due to marriage or divorce, notify the Social Security Administration so the new name will match IRS and SSA records. Also notify the SSA if a dependent’s name changed. A mismatch between the name shown on a tax return and SSA records often causes refund delays.
Taxpayers with expiring Individual Taxpayer Identification Numbers can get their ITINs renewed more quickly and avoid refund delays next year by submitting their renewal application soon.
An ITIN is a tax ID number used by any taxpayer who doesn’t qualify to get a Social Security number. Any ITIN with middle digits 83, 84, 85, 86 or 87 will expire at the end of this year. In addition, any ITIN not used on a tax return in the past three years will expire. ITINs with middle digits 70 through 82 that expired in 2016, 2017 or 2018 can also be renewed.
Affected ITIN holders can avoid delays by starting the renewal process now. Those who fail to renew before filing a return could face a delayed refund and may be ineligible for some important tax credits. More information, including answers to frequently asked questions, is available on IRS.gov/ITIN.
Keeping copies of tax returns is important. Taxpayers may need a copy of their 2018 return to make it easier to fill out a 2019 return. Anyone using a software product for the first time may need the Adjusted Gross Income (AGI) amount shown on Line 7 of their 2018 return to file their 2019 return electronically.
Taxpayers can also visit View Your Tax Account on IRS.gov. Anyone using the tool must verify their identity. Taxpayers can learn more about that process and electronically signing a return at Validating Your Electronically Filed Tax Return.
Connect with the IRS
The IRS uses traditional and social media tools — available in English and other languages — to share the latest information on tax changes, scam alerts, initiatives, products and services.
The IRS uses several social media tools including:
- Instagram: The IRS Instagram account will share taxpayer-friendly information on a variety of topics to help people get ready for tax season.
- YouTube: The IRS offers video tax tips in English, Spanish and American Sign Language.
- Twitter: Taxpayers can follow @IRSnews for tax-related announcements and tips. @IRStaxpros tweets news and guidance for tax professionals. Tweets from @IRSenEspanol have and the latest tax information in Spanish. @IRSTaxSecurity tweets tax scam alerts.
- Facebook: News and information for taxpayers and tax return preparers.
- LinkedIn: The IRS shares agency updates and job opportunities.
The IRS also has its own app, IRS2Go. Taxpayers can use this free mobile app to check their refund status, pay taxes, find free tax help, watch IRS YouTube videos and get IRS tax tips by email. Like Instagram, the IRS2Go app is available from the Google Play Store for Android devices, or from the Apple App Store for Apple devices. IRS2Go is available in both English and Spanish.
The IRS has a special page on IRS.gov with steps to take now for the 2020 tax filing season.
All California License Holders,
All license holders are required to conduct the commercial cannabis activity pursuant to their license within the California Cannabis Track-and-Trace (CCTT-Metrc) System. Failure to conduct your commercial cannabis activity within the CCTT system by January 6, 2020 will result in the suspension of your license.
If you have not yet completed the required Account Manager training, please register for training by visiting: California Cannabis Track and Trace Account Manager Training. Please reference your annual application number.
If you have completed the required Account Manager training, please contact Metrc support at email@example.com to complete the credentialing process.
If you are credentialed, but not yet tag enabled, please forward your existing inventory to firstname.lastname@example.org. Your inventory should contain the following information:
- Item Name
- Product Type (i.e. vape cartridge, tincture, edible)
- Weight Per Unit (i.e. 3.5 grams, 300ml, 10mg)
- Batch ID
Upon receipt and review of your inventory, the Bureau will increase your tag allotment, at which time you can log into your portal to initiate your tag order.
If you are currently credentialed and tag enabled, you are required to immediately begin working within the California Cannabis Track and Trace (CCTT) system, as well as with those annual/provisional license holders who are also working within the CCTT system.
Failure to conduct your commercial cannabis activity within the CCTT system may be grounds for disciplinary action and the suspension of your license.
But How Do It Know?
Remember the old joke where the steel worker was sitting on a ledge having his lunch and says to his co-worker, “The thermos is the greatest invention ever”, and his co-worker asks him why, to which he replies, “Because it can keep things hot or it can keep things cold”. Of course, his co-worker asks why that is so amazing and the steel worker says, “But how do it know?” Sometimes when the news reports on trade wars or new trade agreements, or tariffs being levied, one can feel a little like that steel worker. It’s important, yes, we get that, but how exactly, and do these things that are on a global scale affect us here on the ground?
Back to Basics
A few months ago we talked about the origin of the income tax in the United States. The first thing to understand about trade is the tariff. A tariff is like a tax in that it can be a percentage of the price of a good, or a flat rate per unit, or a per shipment tax. Except where a tax is meant to generate revenue for a municipality in order to cover costs, a tariff is meant to be punitive, or rather corrective.
Tariffs are often levied against a particular commodity in order to protect its industry. Take steel, as an example. Up until the early 1970’s the U.S. was the largest producer of iron and steel in the world. But, of course, other industrialized countries were producing steel and eventually began to export their steel to the U.S. Well, why on earth wouldn’t we just buy the U.S. steel since it’s right here? It comes down to price. If you are the procurement department of a motorcycle manufacturer and you can suddenly buy the same raw material for less, why wouldn’t you?
Then it becomes a snowball effect – foreign steel costs less than U.S. steel – buyers of steel buy the steel that costs them less – so buyers eventual profits increase. But what happens to the U.S. steel industry when fewer companies are buying? You got it, layoffs. Government then steps in to put a tariff on that foreign steel so that it costs the same or more than U.S. steel, thus “protecting” the U.S. steel manufacturing industry.
Why Let Them In
Shouldn’t we just protect ourselves and not allow those foreign countries to sell us their steel in the first place? Well, in theory this may sound like a good idea, but in reality we are a democracy who has a free market, meaning the government can’t really stop companies from buying goods from whomever is willing to sell them. So, on principal, we can’t protect ourselves in that way. But we can attempt to level the playing field.
Level the Playing Field
But as level as we can make it inequities will creep in, such as the trade inequity we currently have with China. The U.S. and China are the two largest economies in the world so competition is inevitable. But when the inequity starts to tip in one direction then one party loses too big. For instance, China currently sends us way more goods than we send them. But Americans have enjoyed years of low prices on all sorts of goods manufactured in China from dog food to toys to TVs. When you are looking at two equally beautiful 72” screens you are probably not going to check the label for origin, you are more likely to check the price tag. All things being equal you buy the one that is $100 less in most cases, right?
As much as we like purchasing stuff for a bargain, we do need to have jobs in order to keep buying, and the trade inequity can impact jobs if the balance tips too much. Let’s go back to our steel example. Many of us are old enough to remember the massive layoffs of the 1980’s. In the steel industry as more cheap steel came from other countries then less U.S. steel was purchased. As less U.S. steel was purchased, less workers were needed to produce that steel, and layoffs inevitably followed.
Ideally, trade goes back and forth with both sides benefiting somewhat equally. But neither benefits if the other falls completely apart. Think of a Monopoly game. When everyone has about the same number of properties the game can keep going on and on, with each charging the others rent. If one person suddenly gains a foothold and holds most of the properties then eventually everyone else will be crushed under the weight of paying out too much rent and not receiving any in return. Then the game comes to a grinding halt.
So, what is the effect of the tariffs on us? If a tit-for-tat raising of tariffs between countries goes on and on, economists predict that companies will begin to pass along the additional costs of tariffs to purchasers of their products – prices rise, trade begins to slow, and workers lose jobs. So, while that TV may still be cheaper, maybe now only by $80 instead of $100, you may not be able to buy because maybe your hours just got cut, or you lost your job altogether. Although the effects of trade disputes and tariffs may not seem to concern us quickly and directly they can have impact. Consider avocados. In an earlier spat with Mexico, the administration threatened to close the U.S./Mexico border. Economists in the know suggested that it would take America five days to completely run out of avocados if that were to happen. Imagine the number of restaurants and stores affected by that trade dispute! Most trade disputes are not as drastic and swift as that possibility was, but imagine the effect of a trade dispute or “war” as it is sometimes called, being a sort of slow-motion avocado trade – eventually something will be too expensive to buy or run out, someone won’t be able to sell, and someone will
The general rule is that you must file Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business, if your business receives more than $10,000 in cash from one buyer as a result of a single transaction or two or more related transactions.
Form 8300 – Is Your Business Filing the Proper Cash Transaction Forms?
Has your business ever received a large cash payment, and you were not quite sure what your reporting obligations were regarding that large payment? The general rule is that you must file Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business, if your business receives more than $10,000 in cash from one buyer as a result of a single transaction or two or more related transactions.
The Form 8300 provides valuable information to the Internal Revenue Service and the Financial Crimes Enforcement Network (FinCEN) in their efforts to combat money laundering. This is an important effort, since money laundering is a tool used to facilitate various criminal activities, ranging from tax evasion to terrorist financing to drug dealing, to hide the proceeds from their illegal activities.
Filing Form 8300
Generally, any person in a trade or business who receives more than $10,000 in cash in a single transaction or in related transactions must file a Form 8300. Persons includes an individual, a company, a corporation, a partnership, an association, a trust, or an estate. Persons must file a Form 8300 with the IRS if any part of the transaction occurs within any of the 50 states, the District of Columbia, or a U.S. possession or territory (American Samoa, The Commonwealth of the Northern Mariana Islands, Guam, Puerto Rico and the U.S. Virgin Islands).
If you are required to file Form 8300, you must do so by the 15th day after the date the cash transaction occurred. A person can file Form 8300 electronically or by mailing the form to the IRS at: Detroit Computing Center, P.O. Box 32621, Detroit, Michigan 48232.
In addition to filing Form 8300 with the IRS, companies need to furnish a written statement to each person whose name is required to be included in the Form 8300 by January 31 of the year following the transaction. This statement must include the name, address, contact person, and telephone number of the business filing Form 8300, the aggregate amount of reportable cash the business was required to report to the IRS from the person receiving the statement, and that the business provided this information to the IRS.
Meeting the proper filing requirement and the requirement to furnish a written statement to each person named on the Form 8300 is very important, because there are potential civil and criminal penalties for failure to file Form 8300. Penalties for violation of the Form 8300 filing and furnishing requirements have been increased by the Trade Preferences Extension Act of 2015. Increased penalties apply to Form 8300 and related notices requiring filing or furnishing after December 31, 2015. In addition, penalty amounts are now adjusted annually for inflation.
Electronic Filing for Form 8300
On Sept 19, 2012, FinCEN announced that businesses may electronically file their Form 8300 using the Bank Secrecy Act (BSA) Electronic Filing (E-Filing) System. E-filing is free, and is a quick and secure way for persons to file Form 8300. Filers will receive an electronic acknowledgement of each submission. For more information about Form 8300 e-filing, see the FinCEN news release.
The following educational products have been developed for your use in learning more about why, when and where to file Form 8300:
- IRS Form 8300 Reference Guide (PDF)
- Motor Vehicle Dealership Q&As
- IR-2019-20, IRS urges businesses to e-file cash transaction reports; It’s fast, easy and free
- FS-2019-1, Cash payment report helps government combat money laundering
Publication 1544, Reporting Cash Payments of Over $10,000 (Received in a Trade or Business) explains key issues and terms related to Form 8300. Publication 1544 can be downloaded in English or Spanish.
Form 8300 Assistance
Call 866-270-0733 (toll-free inside the U.S.) Monday – Friday, 8 a.m. to 4:30 p.m. Eastern for help in completing Form 8300 (PDF). The form is available online at IRS.gov Form 8300 (PDF) or by calling 800-829-3676. Questions regarding Form 8300 can be sent to 8300QUESTIONS@irs.gov.
Contact the BSA E-Filing Help Desk at 866-346-9478 or by email at BSAEFilingHelp@fincen.gov if you have technical questions or need assistance electronically filing Form 8300.