Bank deposits reported to irs

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I've been lurking here for at least a year - I appreciate all the good deals and financial info you all share.

A friend of mine needs a bank check from a local bank. They use Netbank. Anyway, she wants me to deposit her $10,000 check into my account then get a bank check for that amount. I thought that banks had to report all deposits over a certain amount to the IRS. I clearly don't want anything of mine reported to them.

Does anybody know what the amount is?

I believe that it is any amount OVER $10,000. Also, technically it is a federal offense to try and get around the reporting requirement (i.e, breaking it into two $5000 checks).

They may also report if it's close; ie, $9800.

It's cash transactions that trigger the reporting. cash

Banks are also required to report certain suspicious amounts that people usually transfer to avoid being reported to IRS. For example, $9,999. I don't have a full list of those suspicious amounts, but I wouldn't be surprised if one of them was $9,900.

You are referring to the Currency Transaction Report and the Suspicious Activity Report (filed with the IRS). These reports are filed by banks as well as Money Service Businesses (check cashers, currency exchanges, etc.). The CTR is filed when a transaction consists of $10,000 or more (In or OUT of the bank - yes, withdrawals count too). The SAR is filed when the amounts are lower, but there is reason to believe that the customer is engaged in illegal activity. Structuring transactions to evade currency transaction reporting (say, splitting a $10,000 transaction into two, or conducting a transaction just below the reporting threshold) can also be a criminal act.

There are also reporting requirements for other businesses, such as auto dealers, boat dealers, aircraft dealers, casinos, etc., when large amounts of cash are involved.

Note that ALL these requirements are for CASH transactions. There are no reporting requirements if you deposit $10,000 in checks and then purchase a $10,000 bank check. Keep in mind though that your bank will hold the deposited funds until they clear before they will let you withdraw certified funds in the form of a bank check. This could take up to ten days.

Apparently some banks and credit unions don’t always follow the rules.

I recently paid for some real estate with a certified bank check made out to an individual, based on funds already deposited in my “savings” account. It was for an amount considerably larger than $10,000 and I made no attempt to conceal it from Uncle Sam. I was very surprised to learn that this transaction would not be reported to the IRS, or anyone else, precisely because it was a cash transaction. At least according to the credit union branch manager. There were no recent deposits into this account, by the way. Admittedly, this is strange, but it wouldn’t hurt to ask about the bank’s policy.

Basically, it boils down to the bank's discretion. Having worked on financial issues before Congress, I was subjected to many a letter, phone call and visit from bank managers wanting the reporting regulations made less abstract. I got the sense that banks report more post-9/11 because they want to avoid even the slightest appearance of their having allowed anything untoward to go through. So, as a whole, I'd expect them to err on the side of reporting something that could appear suspicious.

The Patriot/Bank Secrecy Act may have changed the requirements:

The Bank Secrecy Act requires institutions to verify a customer's identity and record certain information before issuing or selling bank checks or drafts, cashier's checks, money orders, and traveler's checks (monetary instruments) with currency in amounts between $3,000 and $10,000.


Full document at Compliance Headquarters: http://www.complianceheadquarters.com/AML/AML_QA_Archive/bank_secrecy_act.html

To underscore--

I just read in our local newspaper last week that cash transactions (purchase of money order, for instance)
over $3000 THREE THOUSAND (not $10,000) must now be reported.

A bank check for 10k will DEFINITELY trigger a SAR and possibly a CTR.

Every record of deposit or withdraw of 3k and over (cash or equivilant such as bank, cashiers check, and MOs) will get an SAR, and I would highly suspect that a 10k bank check that is not consistant with your normal history will get additional reports like a CTR.

Remember that in most cases they wont tell you about these reports and if you ask about them to a manager, that is insuring you will get one.

Netbank accounts have a high rate of fraud and identity theft. My guess is that this 10k is somehow illgotten.

I would tell her to get a local account of her own and only deposit 2k or so in and out at a time if she wishes to avoid attention for whatever reason

cga said:

<< Apparently some banks and credit unions don’t always follow the rules.

I recently paid for some real estate with a certified bank check made out to an individual, based on funds already deposited in my “savings” account. It was for an amount considerably larger than $10,000 and I made no attempt to conceal it from Uncle Sam. I was very surprised to learn that this transaction would not be reported to the IRS, or anyone else, precisely because it was a cash transaction. At least according to the credit union branch manager. There were no recent deposits into this account, by the way. Admittedly, this is strange, but it wouldn’t hurt to ask about the bank’s policy.
>>



This was not a CASH transaction. If you withdrew funds from your account in the form of a bank check, no reporting would be required.

TheJollyGreenGiant said:

<< Basically, it boils down to the bank's discretion. >>



If the transaction exceeds the thresholds, the bank has no discretion. If the amounts are below the thresholds but the bank thinks you are up to something, then they can report at their discretion.

So what if it triggers a SAR and CTR? What are the consequences?

The IRS can't come after me if I am using the money doing totally legit things, right?

Or will they trigger an audit or something like that?

No offense, but these alerts to the Gov. are primarily to monitor and catch criminals and terrorists and such. Innocent citizens would seemingly have nothing to worry about. There have to be many good reasons for handling large sums of cash, such as yours.

the bank can do a SAR for any amount... I know of SARs being filled out for sub-$1k deposits that were suspicious for various reasons.

I have a similiar question:

I paid for my parent's house repair (roofing job) with my credit card because I have the credit limit and we want the protection of paying it with a credit card. They will write me a check (slightly over $10k) to cover it. I can't possibly think that what we are doing is illegal, so what is the implication of doing this now that I learned it might be reported to IRS?

lostdude said:

<< I have a similiar question:

I paid for my parent's house repair (roofing job) with my credit card because I have the credit limit and we want the protection of paying it with a credit card. They will write me a check (slightly over $10k) to cover it. I can't possibly think that what we are doing is illegal, so what is the implication of doing this now that I learned it might be reported to IRS?
>>



Folks, I think we are "manufacturing" a problem where non exists (for honest, innocent, citizens). There will be no implications, unless you stole the money, sold drugs to get the money, earned the money without reporting it on your tax returns, etc, etc, etc.

lostdude said:

<< I have a similiar question:

I paid for my parent's house repair (roofing job) with my credit card because I have the credit limit and we want the protection of paying it with a credit card. They will write me a check (slightly over $10k) to cover it. I can't possibly think that what we are doing is illegal, so what is the implication of doing this now that I learned it might be reported to IRS?
>>



Off topic but...Lostdude.. make sure you keep the info on this transaction safe and stored for a loooong time. If your parents end up going into a nursing home the state will look back several years to make sure they didn't improperly dispose of assets to be eligible for public payment and this giving you $10K will definitely need to be explained.

I think the problem is that there are a lot of people here on FW that do business on fleabay and don't report any of the income. They're afraid that a SAR might lead to an audit.

Crazytree said:

<< I think the problem is that there are a lot of people here on FW that do business on fleabay and don't report any of the income. They're afraid that a SAR might lead to an audit. >>



I think you are correct. Maybe the thread title should be, "How to launder $10,000?"

lostdude said:

<< I have a similiar question:

I paid for my parent's house repair (roofing job) with my credit card because I have the credit limit and we want the protection of paying it with a credit card. They will write me a check (slightly over $10k) to cover it. I can't possibly think that what we are doing is illegal, so what is the implication of doing this now that I learned it might be reported to IRS?
>>



Folks, transactions like this are NOT reported to the IRS! The CTR's and SAR's are for CASH transactions! CASH. CURRENCY. The GREEN stuff (okay, so the new twenties aren't green anymore, but you get the point).

As others have said, this information is used to find people who are up to no good, laundering money from illegal activities like selling drugs or weapons of mass destruction.

I'm not actually trying to launder money here. My friend is trying to pay her contractor who is doing her kitchen on the side. Friends bank is Netbank and contractor needs a check that he can go to that bank and cash. So I was putting the money in my account and giving him a bank check from there.

I just didn't want to attract the attention of the IRS. I'm self employed and report every penny of my income (its a daycare and the parents all report what they pay to me with my SS number on their taxes anyway)

Thanks for all the replies.

She can get a certified check directly from netbank. I've been using netbank for over 7 years now (Yes i signed up in 1996) and have received several certified checks from them.

There's a small charge ~ 5.00 or less and they will send it right out via fedex.

trs23 said:

<< She can get a certified check directly from netbank. I've been using netbank for over 7 years now (Yes i signed up in 1996) and have received several certified checks from them.

There's a small charge ~ 5.00 or less and they will send it right out via fedex.
>>



She did that before, and the guy said he had to go to the bank it was from to get it cashed. He doesn't want to deposit it into his account.

Seems to me that she's going through a lot of hoops just to get this guy his payment. I would tell the guy that here's my payment, if you don't like it sue me.

Chances are the guy is trying to avoid paying income taxes on this money and doesn't want a record of it. Not good for your friend if there's any dispute in the future or for future sales of the property (improvements raise the cash value)

trs23 said:

<< Seems to me that she's going through a lot of hoops just to get this guy his payment. I would tell the guy that here's my payment, if you don't like it sue me.

Chances are the guy is trying to avoid paying income taxes on this money and doesn't want a record of it. Not good for your friend if there's any dispute in the future or for future sales of the property (improvements raise the cash value)
>>



Not necessarily. The contractor needs certified funds drawn on a local bank so he can walk in to that bank and cash the check. Then he can purchase materials, make payroll, etc. If he REALLY wanted to evade taxes, he would be asking for payment in cash to begin with.

Many people don't know that just because you have a "bank check" or "certified check" or a "cashier's check", the funds are not guaranteed payable. It is possible to stop payment on these instruments in the event of theft or fraud, although it is more difficult and usually requires posting a bond.

So if the contractor took the Netbank cashier's check, he would still not be able to walk into his own bank and cash the check unless he had a good relationship with the bank or a balance high enough to cover the check, which most contractors do not! That is why he wants a cashier's check drawn on a local bank.

How does he not evade taxes on a check payment?

I mean how can the IRS tell if it is a check paid to his person or to his business? Usually one goes to the bank to "cash" a check paid to his person. Did he want this check to be paid to his person?

And why can't he deposit the check into his bank account if he is not trying to hide something? Most banks have a 5-day holding period for out-of-state check deposits. After that he can withdraw as much as he wants. So he can refuse to work or buy material until the check clears. That would sound more resonable to me.

Edit: by "he" I mean the contractor not the OP, in case there is misunderstanding.

Oh my God --

CASH transactions trigger reporting. If the funds are from a check, the transfer is traceable. If the certified, cashier's or other bank check is over a certain amount, they are reuquired to check your identity to issue the check. The transaction is not reportable. The transaction is traceable.

That's the key here, folks. If you pay your criminal defense attorney $11,000 for your charges of alleged money laundering, the attorney will have to file the IRS form for transactions over $10,000 IN CASH. If you give him a personal check, credit card, cashier's check, etc. it is NOT REQUIRED to be reported to the IRS. Those transactions are traceable via the cashflow through the banks. CASH is not. Hence the reporting requirement.

SARs (Suspicious Activity Reports)are filed ANY time there is suspicous activity, cash, check, wire, etc. -- it does not matter. Structuring transactions to avoid reporting, unusual wire activity to/from foreign countries that seem non-routine or out of normal ranges for the type and purpose of the account, etc. are triggers for such a report regardless of the amounts involved. Personal checking account all of a sudden receiving lots of cash and money orders... that is common. So, you opened an eBay business and are getting tons of money orders? OK. No demonstrable legit business? Now you may have problems.....

One report goes for taxes, the other goes towards fraud and illegal activities. They are unrelated by themselves, but one can trigger the other depending.....

DC Wilbur said,

<< ... this information is used to find people who are up to no good, laundering money from illegal activities like selling drugs or weapons of mass destruction. >>



Or ultraconservative, rich radio talk show hosts in "chronic pain".

Just couldn't resist. Can't stand him.

I did some research, it turns out any deposit or withdraw of cash equivilants over 3k generates a fairly routine report. Not an SAR though so it isnt as serious, and it certainly doesnt generate anything that goes to the IRS. Just puts an extra note of tracking into the system

However, since he will be cashing this check for his friend, that 10k in cash will certainly generate an SAR and a couple other reports. Even if you do like 5k on seperate days or just withdraw $9800 and then $200 a couple days later or something similar. Thats what the Patriot Act and the original Bank Secretcy act want. To track laundering.

What will come of it? Most likely nothing unless you are of Middle Eastern decent. Racist, but it's true. The IRS might take note of it and wonder where the cash is from and who it was for. In that case you could explain the situation and I dont think you'd be in any trouble. Just doing a favor for a friend because they didnt have a local bank.

i have a question. i sold my car for 8k$ before, but i only reported to dmv as 4k$ as my buyer's request. will they know that? the buyer's dad paid me by cashier check.

He obviously paid you $4,000 for the car and $4,000 to repay some debt he had to you that was unrelated to the car. Just happened to be in the same check. <img src="i/expressions/face-icon-small-wink.gif"border=0>

Yes, just like when I sold my car for $1, but had (in)appropriate shipping and handling charges tacked on.

kbiekert said:

<< He obviously paid you $4,000 for the car and $4,000 to repay some debt he had to you that was unrelated to the car. Just happened to be in the same check. <img src="i/expressions/face-icon-small-wink.gif"border=0> >>



Of course, if the car's book value is $6,000 (Fair trade value), that's what his registration fee will be based on.

Let the flames begin...

cantstop, did you know that there are 50 states? Why would you make such a statement as if all 50 states have uniform laws? MD will base the excise tax on the notarized bill of sale. VA just asks the sales price was last I looked. Cars wreck, engines blow, value gets diminished, cars are legitimately traded for less than book value.

cantstop said:

<< kbiekert said:

<< He obviously paid you $4,000 for the car and $4,000 to repay some debt he had to you that was unrelated to the car. Just happened to be in the same check. <img src="i/expressions/face-icon-small-wink.gif"border=0> >>





<< Of course, if the car's book value is $6,000 (Fair trade value), that's what his registration fee will be based on.

Let the flames begin...
>>



If it's in Texas, then it's based upon the "actual sales price" the seller fills in. You should see how many cars are sold here, outside dealerships, for $1.00. Heck, if it's left blank most clerks automatically fill in $1.00.

Woo-hoo. $0.07 tax!

..and in PA it's a flat $36 per car.

Related info about cash transactions that are subject to MTL's, CTRC
and SAR (particularly in NV casinos)

1) all cash transactions that exceed $3000 are logged on a
Multiple Transaction Log (MTL)

2) if a single transaction or series of same type transactions in
a 24-hour period exceeds $10,000, your identification is obtained and a Currency Transaction Report by Casinos (CTRC)is prepared. You can't cash out until you present identification.

3) A SAR is initiated if a suspicious activity conducted or attempted by, at, or through a casino and involves or aggregates at least $5,000 in funds or other assets, and the casino knows, suspects or has reason to suspect that the transaction or a pattern of transactions of which the transaction is a part).

SUSPICIOUS ACTIVITY
1) funds are derived from illegal activities
2) is designed to willfully evade any requirements of MTL
and CTR including structuring
3) has no apparent business or lawful purpose
and
4) if it involves use of the casino to facilitate criminal activity

Hope that helps.

Also, your identification should be legit. You'll get in trouble if its not and you're caught.

Palador said:

<<
Netbank accounts have a high rate of fraud and identity theft. My guess is that this 10k is somehow illgotten.

I would tell her to get a local account of her own and only deposit 2k or so in and out at a time if she wishes to avoid attention for whatever reason
>>



I was thinking the same thing. It seems odd to me that she would ask you to procure the bank check for her instead of a simple solution like opening an account at a local bank. Suggest that to her and save yourself the hassle.

Skipping 10 Messages...
I work in a bank. The actual law is that any CASH deposit or withdrawal $10000.01 or more has to be reported. Again, only cash deposit or withdrawal.



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