Posted by: khartwell85 | November 13, 2015

Forfeiture of Currency for Failure to File Form 8300 By Krista Hartwell

This post addresses the circumstances under which the government may forfeit currency for failure to file IRS Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business.

Any person engaged in a trade or business who receives $10,000 or more in cash from a transaction (in the course of their trade or business), must file Form 8300. The requirement to file Form 8300 is located in both Title 26 (Internal Revenue Code § 6050I) [1] and Title 31 (Money and Finance § 5331(a)).[2]

Section 5317(c) of Title 31 provides that property involved in a violation of Section 5313, 5316, or 5324 whether civil or criminal, may be seized and forfeited. See 31 U.S.C. § 5317(c).

Section 5313 requires domestic financial institutions to report certain currency transactions. Section 5316 places a reporting obligation on any person transporting or receiving $10,000 of monetary instruments transported into or out of the United States.

Section 5324(a) imposes a criminal penalty for structuring to avoid the requirements of Section 5313(a) and Section 5324(b) imposes a criminal penalty for causing or attempting to cause a nonfinancial trade or business to fail to file Form 8300, causing or attempting to cause a nonfinancial trade or business to file Form 8300 that contains a material omission or misstatement of fact, or for structuring or assisting in structuring or attempting to structure or assist in structuring any transaction with a nonfinancial trade or business.

Section 6050I of Title 26 and Section 5331 of Title 31 impose a requirement to file a Form 8300 when more than $10,000 of cash is received in a trade or business transaction. A failure to file Form 8300 on its own is not sufficient to permit forfeiture of currency. In United States v. Seher, 686 F.Supp. 2d 1323, the court stated, “significantly, unlike 31 U.S.C. § 5324, a violation of 31 U.S.C. § 5331 does not trigger criminal forfeiture.”  However, a violation of Section 5331 in the context of violations of Section 5313, 5316 and 5324(b) can result in forfeiture of currency.

[1] Section 6050I of the Internal Revenue Code states:

Any person—

(1) who is engaged in a trade or business, and

(2) who, in the course of such trade or business, receives more than $10,000 in cash in 1 transaction (or 2 or more related transactions),

shall make the return described in subsection (b) with respect to such transaction (or related transactions) at such time as the Secretary may by regulations prescribe.

26 U.S.C. § 6050I. The form prescribed by the Secretary is Form 8300. 26 CFR § 1.6050I-1(e)(2).

[2] Section 5331(a) of Title 31 contains language similar to Section 6050I:

Any person—

(1)

(A) who is engaged in a trade or business, and

(B) who, in the course of such trade or business, receives more than $10,000 in coins or currency in 1 transaction (or 2 or more related transactions), or

(2) who is required to file a report under section 6050I(g) of the Internal Revenue Code of 1986,

shall file a report described in subsection (b) with respect to such transaction (or related transactions) with the Financial Crimes Enforcement Network at such time and in such manner as the Secretary may, by regulation, prescribe.

The form prescribed by the Secretary is Form 8300. The FinCen website provides only IRS Form 8300 for reporting Section 5331(a) transactions. http://www.fincen.gov/forms/bsa_forms/. See also, United States v. Chaplin, Inc., 646 F.3d 846 (11th Cir. 2011) (Section 5331(a) requires any person “engaged in a trade or business” to report any transactions involving more than $10,000 in currency—i.e., to file Form 8300.); United States v. Calmes, 574 Fed. Appx. 295 (5th Cir. 2014); United States v. Sapyta, 390 F. Supp. 2d 563 (D. Tex. 2005). The instructions to Form 8300 state:

Important Reminders: Section 6050I (26 United States Code (U.S.C.) 6050I) and 31 U.S.C. 5331 require that certain information be reported to the IRS and the Financial Crimes Enforcement Network (FinCEN). This information must be reported on IRS/FinCEN Form 8300.

KRISTA HARTWELL – For more information please contact Krista Hartwell at Hartwell@taxlitigator.com or 310.281.3200. Ms. Hartwell is a tax lawyer at Hochman, Salkin, Rettig, Toscher & Perez, P.C. and represents clients throughout the United States and elsewhere involving federal and state, civil and criminal tax controversies and tax litigation. Additional information is available at http://www.taxlitigator.com.


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