Page 5 - When Money Costs Too Much: Section 8300 Filing Requirements and Penalties

COLUMNS I Tax Practice & Procedure

is discovered, or on the earliest date only has to make another solicitation if the Statutes of Limitations
following a regular submission of cor- IRS (or, in some cases, a broker) notifies As noted above, the Form 8300
rections” (IRM 4.26.10.10.3). Significant the filer that the TIN is incorrect. [Treasury requirements are contained in both
mitigation factors include whether the Regulations section 301.6724-1(f)(1)(i)]. If the IRC and BSA. Examiners gener-
filer had previously been required to the filer is so notified, it must make the first ally conduct Form 8300 examinations
file Forms 8300, and whether the filer annual solicitation on or before December under the tax code, but for entities
otherwise has a good compliance history 31 of the year of the notification, or by that are required to have an anti-mon-
(IRM 20.1.7.12.1). January 31 of the following year if noti- ey laundering compliance program,
In addition, the taxpayer must also fied in the preceding December (IRM such as insurance companies or deal-
prove that it acted in a “responsible 4.26.10.10.3.2). ers in jewels, the Form 8300 exam-
manner” both before and after the failure ination is conducted under the BSA
occurred (IRM 20.1.7.12.1). This entails (IRM 4.26.10.11; 4.26.11.12.9).
the following: For penalties assessed under the
(i) That the filer exercised reasonable IRC, the statute of limitations is the
care, which is that standard of care that The one avenue for same as it is for other tax returns, that
a reasonably prudent person would use Tax Court review is, three years from the filing date
under the circumstances in the course or unlimited if the taxpayer never
of its business in determining its filing exists when a filed the form [IRC sections 6501,
obligations, and 6724(b)]. The IRS’s position is that
(ii) That the filer undertook sig- taxpayer did not there is no statute of limitations for
nificant steps to avoid or mitigate receive an opprtunity penalties for failure to file the annu-
the failure. [Treasury Regulations al statement (IRM 4.26.10.11). For
section 301.6724-1(d)] for Appeals reviews penalties assessed under the BSA,
As noted above, special rules apply the statute of limitations is six years
to TIN issues. In general, a filer seek- and the IRS has from the date of the transaction [31
ing a waiver for reasonable cause for issued a notice of USC section 5321(b)(1)]. Even if the
a failure resulting from a missing or an business does not file the Form 8300,
incorrect TIN will be deemed to have intent to levy. the statute still runs.
acted in a responsible manner only if
the filer satisfies the requirements of Penalties for Structuring
Treasury Regulations section 301.6724- Attempting to avoid the Form 8300
1(e), described below. requirements through structuring is also
If the TIN is missing, the filer must The business does not have to prohibited. IRC section 6050I(f)(1)(C)
make an initial solicitation, and may also make a second annual solicitation if provides that no person shall “structure
be required to make an annual solicitation. there are not reportable payments for or assist in structuring, or attempt to
The filer must make an initial solicitation that customer during the year. The structure or assist in structuring, any
requesting the TIN at the time of the annual solicitation must include a transaction with one or more trades or
transaction [Treasury Regulations section request for the TIN and a warning to businesses.”
301.6724-1(e)]. This solicitation may the customer that he or she is subject Similarly, 31 USC section 5324(b)
be made orally or in writing, such as to a $50 penalty under IRC sec- provides that no person shall, for the
on an account opening document [IRM tion 6723 for failure to provide the purpose of evading the Form 8300
4.26.10.10.3.1]. If the filer makes the ini- TIN [Treasury Regulations section reporting requirements “cause or
tial solicitation but the customer still does 301.6724-1(e)(2)]. The filer must attempt to cause a nonfinancial trade or
not provide the TIN, the business must maintain contemporaneous records business to fail to file or to file a return
make the first annual solicitation on or showing the solicitation and provide with a material omission or misstate-
before December 31 of the year in which them to the IRS upon request. If ment, or structure.” As applied, the two
the transaction occurred (for transactions the business satisfies these require- structuring prohibitions reach the same
occurring before December) or January ments, it will be deemed to have result, except that the BSA provisions
31 of the following year (for transactions acted in a responsible manner even only apply if the filer is not required to
occurring in December). Where the TIN is though the TIN was missing or incor- file a CTR (IRM 4.26.10.10.5.1).
incorrect, the filer must solicit the correct rect [Treasury Regulations section Under IRC section 6050I(f)(2), the
TIN at the time of the transaction. The filer 301.6724-1(k)(i)]. penalty for a structuring violation

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