The 2024 tax season is drawing to a close, but one of its new rules may continue to be felt by dealerships throughout the year.
Dealerships that filed 10 or more of certain tax forms — such as employee W-2s and 1099s — had to do so electronically in 2024 for the 2023 tax year. Meeting that threshold also triggered a requirement to go digital this year with Form 8300, which retailers use to report large cash purchases.
The IRS last year lowered the threshold for mandatory e-filing for businesses from 250 information returns to 10. It also removed the exemption for corporations with fewer than $10 million in assets. The requirements took effect Jan. 1, 2024.
In August, the IRS announced the electronic filing requirement also would now apply to Form 8300. Dealerships and other businesses are required to file the form when they receive a cash payment of more than $10,000. Form 8300s must be filed within 15 days from the date of the transaction. The requirement also took effect Jan. 1.
Reaching the e-filing threshold for information returns such as W-2s means all Form 8300s filed during the calendar year must be done digitally.
“For example, if a business files five Forms W-2 and five Forms 1099-INT, then the business must e-file all their information returns during the year, including any Forms 8300,” the IRS wrote in an August news release. “However, if the business files fewer than 10 information returns of any type, other than Forms 8300, then that business does not have to e-file the information returns and is not required to e-file any Forms 8300. However, businesses not required to e-file may still choose to do so.”
Waivers are possible, including for religious objections, the IRS said.
Most businesses already have gone digital, according to the IRS, but the agency noted in February that it still received nearly 40 million paper returns in 2019.
Some dealerships might be unaware of the electronic filing mandate for cash transactions, which is a risk. Companies without an exemption that file Forms 8300 by paper are “subject to a failure to file penalty,” according to the IRS.
Shannon Robertson, executive director of the Association of Finance and Insurance Professionals, told Automotive News he was talking to a dealership employee last week who was shocked to hear about the new rule. “They were like, ‘Oh, my God, it changed?’ ” Robertson said.
Form 8300 applies to instances in which more than $10,000 in cash is spent at once, within 24 hours by the same person, or in multiple payments related to the same transaction during a 12-month period.
“Although many cash transactions are legitimate, the information on the form can help law enforcement combat money laundering, tax evasion, drug dealing, terrorist financing and other criminal activities,” the IRS wrote in its news release.
Cash is defined as U.S. or foreign currency of more than $10,000. Personal checks don’t count, nor do wire transfers.
There’s a twist to the rule in that certain forms of payment, such as a cashier’s check, don’t require a Form 8300 from the dealership; the financial institution that issued the payment would need to report it to authorities. However, those payments would trigger a Form 8300 from the dealership if they involved $10,000 or less but the customer combined that amount with some cash to make a payment of more than $10,000.
Dealerships and other businesses need to keep copies of Form 8300s, whether a paper or electronic filing, and any related documentation for five years from the filing date. The agency noted in August that merely keeping government emails that confirm receipt of the electronic forms isn’t enough to satisfy the documentation preservation rule.