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9
Connecticut CPA
g
January/February 2014
However, other businesses that receive
"cash or cash equivalents" greater
than $10,000 are also required to file
CTRs and SARs. Many, however, are
realizing they do not understand the
rules properly when they receive the
8300 BSA Exam Notice by the IRS.
Worse, many businesses and their tax
representatives do not realize what a
BSA exam is until it is too late. The
BSA audit correspondence is institut-
ed by the IRS, but is not for a Title 26
Income Tax Exam, but rather a Title 31
Bank Secrecy Act/Anti-Money Laun-
dering Exam. Because the exam is not
under Title 26, the Form 2848, Power
of Attorney and Declaration of Repre-
sentative, does not apply. The repre-
sentative needs to obtain a power of
attorney form under state law to repre-
sent the taxpayer.
The focus of a BSA exam is very spe-
cific. The BSA examiner will request
documentation of the following:
The business has a Bank Secrecy
Act/Anti-Money Laundering (BSA/
AML) policy in place;
That there is a compliance officer
familiar with the law and policies;
That training has been provided to
those employees involved;
The company is following the pro-
gram and filing the proper reports.
Any Form 8300, Report of Cash Pay-
ments Over $10,000 Received in a
Trade or Business, that has been filed
will be reviewed, as well as other trans-
actions exceeding $10,000 that were
not reported. Businesses frequently fail
to file a Form 8300 when they receive
$5,000 in cash and a money order for
$6,000, under the theory that the cash
was less than $10,000. The CTR/8300
must be filed for "cash or cash equiva-
lents," which include money orders,
cashier's checks, or traveler's checks
if they are worth less than $10,000.
For those cash equivalents larger than
$10,000, the financial institution that re-
leased/sold it is required to file the CTR
reporting it, so the recipient business
does not have to report its receipt.
The failure of the business to meet the
requisite standards may include civil
penalties ranging from $50 for failure
to file a timely Form 8300 to a penalty
for willful disregard, which is the great-
er of $25,000 or the amount of cash
received (limited to $100,000)
6
, per
violation. Criminal prosecution may in-
clude fines of up to $250,000 and five
years in jail.
7
Practitioners and their clients need to
be familiar with the rules and forms
required when owning/running a cash
money business, and take steps to
make sure that a BSA/AML policy is in
place and being followed. Failure to
do so may result in a taxpayer running
afoul of the BSA and anti-money laun-
dering laws not out of criminal intent
but simple ignorance.
Practitioners should take steps to help
educate clients about this issue, ad-
vise them to implement a BSA/AML
policy, and train their employees on
the proper filing of documents. There
are a number of companies around the
country that provide BSA/AML proto-
type policies, very similar to prototype
benefit policies, which can help the cli-
ent get a written policy in place.
Criminal enforcement is up significant-
ly in this area by the IRS,
8
and clients
that demonstrate the effort to comply
with the BSA can stave off serious civil
penalties and possible criminal refer-
ral, which may make all the difference
in the world to both their business and
themselves.
Eric L. Green is a
partner with Green
& Sklarz, with of-
fices in New Ha-
ven and Stamford.
The focus of his
practice is civil
and criminal taxpayer representa-
tion. He is currently chair of the
Connecticut Bar Association's Tax
Section, serves as a columnist for
CCH's Journal of Practice & Proce-
dure, and is the author and lecturer
of CCH's Certificate Program in IRS
Representation. He can be reached
at egreen@gs-lawfirm.com.
6
IRC 6721(e)(2)(c)
7
31 U.S.C. 5322
8
www.irs.gov/uac/Examples-of-Money-Laundering-
Investigations-Fiscal-Year-2013
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