Other Tax Questions
Questions and comments on other topics covered in Fairmark.com, such as UTMA accounts, and any tax questions that don't fit our other categories.
Bank procedure for checks over $10000
Posted by: rrwslake, February 9, 2006 02:51PM
I have heard that banks are required by law to report any single transactions over $10000. I assume it's a red flag for possible money laundering, or possible gifts in excess of the the excluded amount for when a gift tax is required. If I want to give a relative (I want to give $36,000 for the financial help I've received over the years) am I "less likely" to raise any red flags if I give 4 checks of $9000, rather than 1 for $36000? There have been no loans or interest charged, or anything like that.
Thanks

Re: Bank procedure for checks over $10000
Posted by: DeeDee, February 9, 2006 03:38PM
I'm pretty sure that it's $10K CASH transactions that trigger special reporting requirements for banks, not checks. Maybe someone else will respond.

Re: Bank procedure for checks over $10000
Posted by: LJM, February 9, 2006 04:12PM
I believe it is any amount $10,000 or more. These days banks also have to check smaller amounts that in aggregate add up to more than $10,000 in an attempt to avoid detection. I would think you would more likely raise the flag by writing four checks for $9,000 each.

I would not worry about the bank's reporting requirements, and just do what you would normally do if big brother were not lurking.

Lewis

Re: Bank procedure for checks over $10000
Posted by: DeeDee, February 9, 2006 04:51PM
It doesn't look like a personal check is affected by this bank reporting requirement. Check this out:

[www.irs.gov]

Re: Bank procedure for checks over $10000
Posted by: LJM, February 9, 2006 05:10PM
I stand by my original comment. DeeDee's link defines BUSINESS reporting requirements. Banks have to report transactions over $10,000.
For more details see: [www.stlouisbusinesslaw.com]

Lewis

Re: Bank procedure for checks over $10000
Posted by: retaffaa, February 9, 2006 08:35PM
If you're not laundering money, you don't need to worry about it. If you're trying to avoid filing the gift tax return or not paying gift tax (if required), it's illegal.

I read in my local newspaper not 3 months ago of this very thing (multiple checks) happening in my hometown, and the IRS prosecuted and heavily fined the offender. How did they find out about it? The bank!

Why not file the gift tax return? Unless you're planning to give away more than $1,000,000 in your life time. Why not just follow the law??

Re: Bank procedure for checks over $10000
Posted by: Username, February 9, 2006 10:02PM
LJM Wrote:
-------------------------------------------------------
> I stand by my original comment. DeeDee's link
> defines BUSINESS reporting requirements. Banks
> have to report transactions over $10,000.
> For more details see:
>
> Lewis

Quotes from your link (emphasis added);
*****
How and when is a Bank required to “report” large CASH transactions?

The USA Patriot Act imposes the requirement to report certain CASH transactions to the Department of Treasury, identical to existing IRS CASH reporting requirements.

103.22 Reports of transactions IN CURRENCY.
*****

The only reference your article makes to a $10,000 reporting requirement is one "which involves a transaction IN CURRENCY of more than $10,000...."

There is nothing in your article that refers to transactions made by check other than the general requirement that ANY transaction of any size that the bank believes to be for illegal purposes needs to be reported.



Re: Bank procedure for checks over $10000
Posted by: LJM, February 9, 2006 10:23PM
Username, thanks for pointing out my error. I was under the mistaken impression that for reporting purposes a check was the same as cash.


Lewis

Re: Bank procedure for checks over $10000
Posted by: Art, February 10, 2006 04:53AM
Well, not personal checks, but certain other checks are "cash."


"What does “cash” mean for the purposes of Form 8300?


"Cash is money. It is currency and coins of the United States and any other country. Cash is also certain monetary instruments - a cashier’s check, bank draft, traveler’s check, or money order -...."

Re: Bank procedure for checks over $10000
Posted by: Username, February 10, 2006 07:54AM
But banks and similar financial institutions do not use Form 8300 (unless, by chance, they are running a very expensive gift shop in a corner of the lobby). They use Form 104 to report:
[www.fincen.gov]

From the Form 104 instructions:

Who Must File. Each financial institution (other than a
casino, which instead must file FinCEN Form 103, and
the U.S. Postal Service for which there are separate rules)
must file FinCEN Form 104 (formerly 4789) (CTR) for
each deposit, withdrawal, exchange of currency, or other
payment or transfer, by, through, or to the financial
institution which involves a transaction in currency of
more than $10,000.

Currency. The coin and paper money of the United
States or any other country, which is circulated and
customarily used and accepted as money.

Transaction in Currency. The physical transfer of
currency from one person to another. This does not
include a transfer of funds by means of bank check, bank
draft, wire transfer or other written order that does not
involve the physical transfer of currency.

Re: Bank procedure for checks over $10000
Posted by: Username, February 10, 2006 08:01AM
From the Form 8300 Instructions:

[www.irs.gov]

Cash is not required to be
reported if it is received:
● By a financial institution required to file
Form 104, Currency Transaction Report.
● By a casino required to file (or exempt
from filing) Form 103, Currency
Transaction Report by Casinos, if the
cash is received as part of its gaming
business.

Re: Bank procedure for checks over $10000
Posted by: Kaye Thomas, February 10, 2006 09:41PM
The rule is designed to flag situations where people may be moving significant dollar amounts while trying to avoid creating a paper trail. Ordinary checks create a paper trail, so they are not subject to this reporting requirement.

Kaye Thomas
Fairmark.com



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