Many attorneys are unaware of the legal requirements to report currency transactions. On one occasion, I was speaking to about 90 attorneys on the legal requirements to report currency received in the practice of law. At the beginning of my presentation, I asked how many of the audience had knowledge of currency reporting requirements. There were four lawyers who raised their hands. Each of them was or had been an Assistant United States Attorney.
What the Law Says About Currency Reporting
Legal requirements to report currency obtained in business are contained in two federal statutes. The first is Title 26 U.S.C. §6050I of the tax laws. The second statute, enacted in 2001 as part of the Patriot Act, is Title 31 U.S.C. §5331. Both statutes cover the same conduct, however, §5331 makes it easier for law enforcement agencies to share information regarding currency reporting.
Both statutes require an individual, or entity, engaged in a trade or business — not including financial institutions that are covered by separate statutes — to file with the IRS a FinCEN Form 8300 disclosing any currency transaction of more than $10,000. Florida law also requires that the FinCEN Form 8300 be provided to the State. The Federal and Florida reporting requirements are applicable to attorneys in relation to fees, trust deposits, or other currency received in the practice of law.
A firm receiving currency is required to verify the identity of the person from whom the payment is received through an examination of normally acceptable identification, such as a driver's license. If the funds are received from a third party on behalf of a client, both parties must be identified.
Currency is defined as legal tender, whether of the U.S. or a foreign country. Currency also includes the following in any amount of $10,000.00 or less:
- Cashier's checks
- Money orders
- Traveler's checks
- Bank checks
When & How You Must File a Form 8300
The obligation to file Form 8300 is triggered when the attorney receives currency in excess of $10,000 in one or more transactions, within 12 months. For example, if a client gives the attorney a cashier's check in the amount of $6,000 to be held in trust, the reporting requirement has not been triggered. If, however, within 12 months of receiving the $6000, the same client provides currency of $5,000 to be deposited in trust or for payment of fees, the reporting requirement is met and Form 8300 must be filed within 15 days of receiving the second payment, which brought the total currency received to more than $10,000 — the $6,000 cashier’s check and the $5,000 currency together total $11,000.
Additional payments in currency in excess of $10,000 made within 12 months of the filing of the original Form 8300 must be reported on a Form 8300. In the example given above, if the client provides another $5,000 in currency four months after the second currency transaction of $5,000, which triggered the initial filing of the Form 8300, a second Form 8300 must be filed. Any currency transactions within one year of the first filed Form 8300 must be reported.
Penalties for Failing to Report Currency Transactions
Failure to comply with the requirement to file the Form 8300 can result in civil and criminal penalties. There are several different penalties that apply for failure to file the 8300. Penalties can be as high as $3,000,000 depending on the number of Form 8300’s not filed in one year. Penalties can be as low as $25 for a Form 8300 that is filed but set forth an incorrect dollar amount which is less than $100 of the amount that should have been reported. In addition to potentially severe civil penalties, the willful failure to file the Form 8300 is a felony that carries a maximum penalty of five years in prison. Filing a false Form 8300 or aiding and assisting in the filing of a false Form 8300 is a felony punishable by up to three years in prison.
It is also a felony to structure currency transactions to avoid the reporting requirement. Attorneys should be aware of what may constitute structuring, and what advice given a client may be considered aiding and abetting in the structuring of currency transactions to avoid the reporting requirements. Attorneys must recognize the obligation to report currency transactions and to avoid structuring charges.
Have you been accused of structuring currency transactions in order to avoid reporting requirements or failure to file the Form 8300? The Law Offices of Horwitz & Citro, P.A. can help provide white-collar crimes defense. Call our law firm in Orlando at (407) 901-5852 today.