Monday, March 11, 2013

Rettig Article on CTR Form 8300 and Its Context in Tax and Criminal Law Enforcement (3/11/13)

In my Federal Tax Procedure Book, I devote a short section to Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business, often referred to as a Currency Transaction Report or "CTR."  The Form is here.  The short discussion is adequate for the book that must cover so much other ground.  However, there is a lot of detail behind the summary.  Fortunately, Chuck Rettig, a prominent practitioner, provides that detail in a recent article, Form 8300: Reporting Domestic Currency Transactions (J. Tax Prac. & Proc. December 2012-January 2013).  His article is posted on his website and may be linked here.  In addition to developing the nuances relating to the CTR, Chuck's article places in the CTR in the universe of federal reporting requirements and enforcement initiatives relating to money laundering activities.  To be sure, the Form 8300 is in the Internal Revenue Code and plays a prominent role in tax enforcement.  But it also plays a more prominent role in detecting money laundering and the crimes behind money laundering.

I strongly recommend Chuck's article to the readers of this blog interested in the Form 8300 and its criminal enforcement context.

I offer the following which is my summary description of the Form from my Tax Procedure Book (footnotes omitted).

(2) Currency Transaction Reports (“CTRs”).
There are still other return reporting requirements that are designed to identify income of types that might easily escape the tax system or that might evidence nontax illegal conduct.  The broadest example is § 6050I which requires that persons involved in a trade or business who receive cash payments in excess of $10,000 in one transaction (or more than one transaction, if the transactions are related) to report the receipt to the IRS.  The report is made by Form 8300 (sometimes referred to as a currency transaction report or “CTR”), which in its latest iteration is called both IRS Form 8300 and FinCEN Form 8300.  This means that the information is available to each of those agencies and may be used for congressionally approved purposes, most specifically federal law enforcement (not just tax law enforcement).  FinCEN is the acronym for the Government’s Financial Crimes Enforcement Network which gathers information useful in investigating and prosecuting financial crimes.  As most pertinent to this class, of course, the information is available to the IRS for both civil and criminal tax purposes.  But, ultimately, the information may be most useful for money laundering enforcement in which the IRS is a principal investigative and information source.
This reporting requirement is designed to coordinate through the tax code with the Government's other criminal enforcement initiatives.  Thus, the drug dealer purchases an upscale Mercedes for $150,000 cash will be caught in this trap (assuming the dealer files the Form 8300 and the Government can assimilate and make useful the information on the Form 8300).  The Government really wants to discover and punish the drug dealing, although his possession of this much cash may also indicate tax crimes.  (There is a positive correlation between a illegally derived cash money and tax crimes.)  Related information cash reporting requirements found outside the Internal Revenue Code but administered in part by the IRS are (i) the reporting requirement for cash transactions with financial institutions involving in excess of $10,000 (reported on Form 4789, Currency Transaction Report and often acronymed to “CTR”) and (ii) the report on international transportation of currency or monetary instruments in excess of $10,000 (reported on From 105, Report of International Transportation of Currency or Monetary Instruments, and often acronymed to “CMIR”).
And to give Chuck his due for a very fine article, I will likely revise this discussion based his article when I find time.  It will still be a summary article, though.  For detail and nuance, read his article.

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