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Small business owners beware.

The Service has issued final regulations on reporting multiple cash transfers. A person who receives more than $10,000 in cash or cash equivalents in trade or business transactions--including, but not limited to, retail sale of customer durables, collectibles and travel and entertainment activities--must report these payments to the Service and provide a statement to the payor.

Three years ago, temporary and proposed regulations prevented the use of multiple payments to circumvent the rules. The Service has now finalized these regulations with some important clarifications.

The regulations require reporting for the receipt of multiple cash deposits or cash installment payments relating to a single transaction or two or more related transactions as follow:

* If the initial payment is over $10,000, then reporting is required within 15 days. |Regulation Section 1.6050I-1(b)(2)~

* In addition, a report is required if, over the course of 12 months, payment totals exceed $10,000. The report must be made within 15 days after receiving (1) the payment in excess of $10,000 or (2) the payment causing the total amount received in the 12-month period to exceed $10,000. |Regulation Section 1.6050I-1(b)(3)~

Failure to comply with these reporting requirements will result in assessment of penalties by the Internal Revenue Service. In most cases, all businesses must comply with these reporting requirements.
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Title Annotation:Tax Talk
Author:Green, Gary L., Jr.
Publication:The National Public Accountant
Date:Sep 1, 1993
Words:222
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