The IRS published its criminal conviction statistics for the first six months of 2008 and, according to TRAC,
Convictions over the past year are much higher than they were ten years ago. Overall, the data show that convictions [for structuring transactions to evade reporting requirements] are up 72.4 percent from the level of 29 reported in 1998 and up 355 percent from the level of 11 reported in 1988.
I’m not surprised.
Structuring Man
One of the most frequent criminal charges our firm encounters is the illegal structuring of cash transactions to evade the IRS reporting requirements of Section 6050I. Usually the taxpayers who break this law are not engaged in money laundering, the trafficking of drugs or persons or any other illegal activity. Most of our clients who are charged with a violation of 31 U.S.C 5324 erroneously believe that this fact will absolve them of any wrongdoing.
They are sadly mistaken.
If you structure transactions to avoid the $10,000.00 cash reporting requirement, you are committing a felony even if you used the money to end world world hunger or solve global warming.
In short, IRC Section 6050I requires that any person engaged in a trade or business that receives cash in excess of $10,000 in one transaction, or two or more related transactions, must file Form 8300 (PDF) within 15 days of receipt of the reportable cash. A copy of each filed Form 8300 must be retained for five years by the business.
The provisions of this statute render the intentional arrangement (called “structuring”) of deposits or payments for the purpose of evading the obligation of reporting those deposits or payments to the IRS a felony punishable as follows:
(1) In general.— Whoever violates this section shall be fined in accordance with title 18, United States Code, imprisoned for not more than 5 years, or both.(2) Enhanced penalty for aggravated cases.— Whoever violates this section while violating another law of the United States or as part of a pattern of any illegal activity involving more than $100,000 in a 12-month period shall be fined twice the amount provided in subsection (b) (3) or (c)(3) (as the case may be) of section 3571 of title 18, United States Code, imprisoned for not more than 10 years, or both.
6 responses so far ↓
1 Bruce // Sep 13, 2008 at 10:43 am
I have only had to deal with this situation once in all the time I have been preparing returns. (23 years since my first return other than my own, 11 years professionally). The part I remember the most was trying to explain to the tax payer that if they didn’t do this then they were committing a felony. I found Form 8300 to be simple enough to fill out, and opted not to charge the client very much for doing it.
He insisted that I was full of dung and opted not to complete the form. The next year the IRS came down on him pretty hard. He tried to find some leniency by informing the Agent in charge of his case that I did tell him he needed to complete the form. I think it back fired on him. I helped him through the mess and then informed him that I could no longer prepare his returns for him. I just knew that I’d continue having issues with him in regards as to what is and needs to be. It is hard to work for a client that can’t follow the advice or be trusted to tell you (as a preparer) everything.
2 Peter // Sep 13, 2008 at 3:36 pm
Hi Bruce, believe me, I know the feeling. I’ve even had clients accuse me of being in cahoots with the IRS merely because I told them they had to report the cash they received from their businesses.
You were right to drop the dude. I guarantee you once he found himself in real trouble he’d throw the tax guy’s tax butt right under the bus.
3 Tax Crimes and IRS Criminal Referrals: What to Look Out For // Feb 16, 2009 at 12:59 am
[...] Structuring transactions to avoid information reporting requirements [...]
4 Don’t Structure Your Deposits to Avoid Cash Reporting! // Apr 15, 2009 at 11:04 am
[...] IRS Criminal Convictions 2008: Structing Transactions to Eavade Cash Reporting Requirements [...]
5 Ruth // Jan 31, 2012 at 12:54 am
During my divorce in 2011, my ex withdrew $40k over 10 days. He kept the amounts right under $10k per transaction eg he wrote a $9600 check for cash then walked to the ATM and withdrew $300. the other withdrawals were similar, keeping it right under $10k. Is this illegal? Can I get in trouble if I don’t report this to the IRS?
6 Peter // Jan 31, 2012 at 2:14 am
Ruth,
That’s not that many transactions so he probably won’t be investigated for structuring although an investigator could make the argument. If he didn’t give the money to you, you don’t have a reporting requirement. Also, was that money already taxed? If it was, there really isn’t anything to hide. But I have seen fed investigators go after people for structuring even when they weren’t committing tax evasion.
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