If you are self-employed and deal in a lot of cash, you are at a much greater risk of facing an IRS audit. The IRS is on the lookout for business owners who do not report all of their income. As a result, if your business deals frequently in cash, you may face an IRS tax problem sooner rather than later.
5 Tips About Cash Businesses and Issues With the IRS
For business owners dealing in cash, it is important to understand the IRS’s goals and rules relating to cash businesses and tax issues. The following are five helpful tips:
- The government is currently undergoing a campaign to crack down on the underground economy.
- The law requires that cash and cash-equivalent business transactions amounting to more than $10,000 be reported to the IRS on Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business.
- Form 8300 is also known as a Currency Transaction Report, or a CTR.
- Taxpayers who do not file Form 8300 are at risk of being fined, audited, or even facing criminal investigation.
- Even if you file Form 8300, if your business deals in a lot of cash, the IRS may suspect that you are skimming cash off of your receipts. Examples of businesses that deal in a lot of cash are bars, restaurants, vending machines, and laundromats.
Unfortunately, most people do not seek advice relating to taxes until they are already facing a tax problem. The good news, however, is that there are potential solutions available. For example, you may be able to obtain an offer in compromise. To learn more about how we can help you deal with the IRS, we encourage you to check out our client testimonials today.