(1) Reportable
transactions.
(i) In general. Any person (solely for purposes of section 5331 of title 31, United
States Code and this section, “person” shall have the
same meaning as under 26 U.S.C.7701(a)(1)) who, in the course of a
trade or business in which such person is engaged, receives currency
in excess of $10,000 in 1 transaction (or 2 or more related transactions)
shall, except as otherwise provided, make a report of information
with respect to the receipt of currency. This section does not apply
to amounts received in a transaction reported under 31 U.S.C. 5313
and sections 1010.311, 1010.313, 1020.315, 1021.311 or 1021.313 of
this chapter.
(ii) Certain financial transactions. Section
6050I of title 26 of the United States Code requires persons to report
information about financial transactions to the IRS, and 31 U.S.C.
5331 requires persons to report the same information to the Financial
Crimes Enforcement Network. This information shall be reported on
the same form as prescribed by the Secretary.
(2) Currency received for the account of another. Currency in excess
of $10,000 received by a person for the account of another must be
reported under this section. Thus, for example, a person who collects
delinquent accounts receivable for an automobile dealer must report
with respect to the receipt of currency in excess of $10,000 from
the collection of a particular account even though the proceeds of
the collection are credited to the account of the automobile dealer
(i.e., where the rights to the proceeds from the account are retained
by the automobile dealer and the collection is made on a fee-for-service
basis).
3-1702.71
(3) Currency received by agents.
(i) General rule. Except as provided in paragraph
(a)(3)(ii) of this section, a person who in the course of a trade
or business acts as an agent (or in some other similar capacity) and
receives currency in excess of $10,000 from a principal must report
the receipt of currency under this section.
(ii) Exception. An agent who receives currency from a principal and uses all of
the currency within 15 days in a currency transaction (the “second
currency transaction”) which is reportable under section 5312
of title 31, or 31 U.S.C. 5331 and this section, and who discloses
the name, address, and TIN of the principal to the recipient in the
second currency transaction need not report the initial receipt of
currency under this section. An agent will be deemed to have met the
disclosure requirements of this paragraph (a)(3)(ii) if the agent
discloses only the name of the principal and the agent knows that
the recipient has the principal’s address and taxpayer identification
number.
(iii) Example. The following example illustrates
the application of the rules in paragraphs (a)(3)(i) and (ii) of this
section:
Example. B, the principal, gives D,
an attorney, $75,000 in currency to purchase real property on behalf
of B. Within 15 days D purchases real property for currency from E,
a real estate developer, and discloses to E, B’s name, address,
and taxpayer identification number. Because the transaction qualifies
for the exception provided in paragraph (a)(3)(ii) of this section,
D need not report with respect to the initial receipt of currency
under this section. The exception does not apply, however,
if D pays E by means other than currency, or effects the purchase
more than 15 days following receipt of the currency from B, or fails
to disclose B’s name, address, and taxpayer identification number
(assuming D does not know that E already has B’s address and
taxpayer identification number), or purchases the property from a
person whose sale of the property is not in the course of that person’s
trade or business. In any such case, D is required to report the receipt
of currency from B under this section.
(1) Initial payment
in excess of $10,000. If the initial payment exceeds $10,000,
the recipient must report the initial payment within 15 days of its
receipt.
(2) Initial payment of $10,000 or less. If
the initial payment does not exceed $10,000, the recipient must aggregate
the initial payment and subsequent payments made within one year of
the initial payment until the aggregate amount exceeds $10,000, and
report with respect to the aggregate amount within 15 days after receiving
the payment that causes the aggregate amount to exceed $10,000.
(3) Subsequent payments. In addition to any
other required report, a report must be made each time that previously
unreportable payments made within a 12-month period with respect to
a single transaction (or two or more related transactions), individually
or in the aggregate, exceed $10,000. The report must be made within
15 days after receiving the payment in excess of $10,000 or the payment
that causes the aggregate amount received in the 12-month period to
exceed $10,000. (If more than one report would otherwise be required
for multiple currency payments within a 15-day period that relate
to a single transaction (or two or more related transactions), the
recipient may make a single combined report with respect to the payments.
The combined report must be made no later than the date by which the
first of the separate reports would otherwise be required to be made.)
(4) Example. The following example illustrates
the application of the rules in paragraphs (b)(1) through (b)(3) of
this section:
Example. On January 10, Year
1, M receives an initial payment in currency of $11,000 with respect
to a transaction. M receives subsequent payments in currency with
respect to the same transaction of $4,000 on February 15, Year 1,
$6,000 on March 20, Year 1, and $12,000 on May 15, Year 1. M must
make a report with respect to the payment received on January 10,
Year 1, by January 25, Year 1. M must also make a report with respect
to the payments totaling $22,000 received from February 15, Year 1,
through May 15, Year 1. This report must be made by May 30, Year 1,
that is, within 15 days of the date that the subsequent payments,
all of which were received within a 12-month period, exceeded $10,000.
(1) Currency. The term currency means—
(i) The
coin and currency of the United States or of any other country, which
circulate in and are customarily used and accepted as money in the
country in which issued; and(ii) A cashier’s check (by whatever
name called, including “treasurer’s check” and “bank
check”), bank draft, traveler’s check, or money order
having a face amount of not more than $10,000—
(A) Received in
a designated reporting transaction as defined in paragraph (c)(2)
of this section (except as provided in paragraphs (c)(3), (4), and (5) of this
section), or
(B) Received
in any transaction in which the recipient knows that such instrument
is being used in an attempt to avoid the reporting of the transaction
under section 5331 and this section.
(2) Designated reporting transaction. A designated
reporting transaction is a retail sale (or the receipt of funds by
a broker or other intermediary in connection with a retail sale) of—
(i) A consumer durable,
(ii) A collectible, or
(iii) A travel or entertainment activity.
3-1702.74
(3) Exception for certain loans. A cashier’s check, bank draft,
traveler’s check, or money order received in a designated reporting
transaction is not treated as currency pursuant to paragraph (c)(1)(ii)(A)
of this section if the instrument constitutes the proceeds of a loan
from a bank. The recipient may rely on a copy of the loan document,
a written statement from the bank, or similar documentation (such
as a written lien instruction from the issuer of the instrument) to
substantiate that the instrument constitutes loan proceeds.
(4) Exception for certain installment sales. A cashier’s check,
bank draft, traveler’s check, or money order received in a designated
reporting transaction is not treated as currency pursuant to paragraph
(c)(1)(ii)(A) of this section if the instrument is received in payment
on a promissory note or an installment sales contract (including a
lease that is considered to be a sale for Federal income tax purposes).
However, the preceding sentence applies only if—
(i) Promissory
notes or installment sales contracts with the same or substantially
similar terms are used in the ordinary course of the recipient’s
trade or business in connection with sales to ultimate consumers;
and
(ii) The total
amount of payments with respect to the sale that are received on or
before the 60th day after the date of the sale does not exceed 50
percent of the purchase price of the sale.
(5) Exception for certain down payment plans. A cashier’s
check, bank draft, traveler’s check, or money order received
in a designated reporting transaction is not treated as currency pursuant
to paragraph (c)(1)(ii)(A) of this section if the instrument is received
pursuant to a payment plan requiring one or more down payments and
the payment of the balance of the purchase price by a date no later
than the date of the sale (in the case of an item of travel or entertainment,
a date no later than the earliest date that any item of travel or
entertainment pertaining to the same trip or event is furnished).
However, the preceding sentence applies only if—
(i) The
recipient uses payment plans with the same or substantially similar
terms in the ordinary course of its trade or business in connection
with sales to ultimate consumers; and
(ii) The instrument is received more
than 60 days prior to the date of the sale (in the case of an item
of travel or entertainment, the date on which the final payment is
due).
3-1702.75
(6) Examples. The following examples illustrate
the definition of “currency” set forth in paragraphs (c)(1)
through (c)(5) of this section:
Example 1. D, an
individual, purchases gold coins from M, a coin dealer, for $13,200.
D tenders to M in payment United States currency in the amount of
$6,200 and a cashier’s check in the face amount of $7,000 which
D had purchased. Because the sale is a designated reporting transaction,
the cashier’s check is treated as currency for purposes of 31
U.S.C. 5331 and this section. Therefore, because M has received more
than $10,000 in currency with respect to the transaction, M must make
the report required by 31 U.S.C. 5331 and this section.
Example 2. E, an
individual, purchases an automobile from Q, an automobile dealer,
for $11,500. E tenders to Q in payment United States currency in the
amount of $2,000 and a cashier’s check payable to E and Q in
the amount of $9,500. The cashier’s check constitutes the proceeds
of a loan from the bank issuing the check. The origin of the proceeds
is evident from provisions inserted by the bank on the check that
instruct the dealer to cause a lien to be placed on the vehicle as
security for the loan. The sale of the automobile is a designated
reporting transaction. However, under paragraph (c)(3) of this section,
because E has furnished Q documentary information establishing that
the cashier’s check constitutes the proceeds of a loan from
the bank issuing the check, the cashier’s check is not treated
as currency pursuant to paragraph (c)(1)(ii)(A) of this section.
Example 3. F,
an individual, purchases an item of jewelry from S, a retail jeweler,
for $12,000. F gives S traveler’s checks totaling $2,400 and
pays the balance with a personal check payable to S in the amount
of $9,600. Because the sale is a designated reporting transaction,
the traveler’s checks are treated as currency for purposes of
section 5331 and this section. However, because the personal check
is not treated as currency for purposes of section 5331 and this section,
S has not received more than $10,000 in currency in the transaction
and no report is required to be filed under section 5331 and this
section.
Example
4. G, an individual, purchases a boat from T, a boat dealer, for
$16,500. G pays T with a cashier’s check payable to T in the
amount of $16,500. The cashier’s check is not treated as currency
because the face amount of the check is more than $10,000. Thus, no
report is required to be made by T under section 5331 and this section.
Example 5. H,
an individual, arranges with W, a travel agent, for the chartering
of a passenger aircraft to transport a group of individuals to a sports
event in another city. H also arranges with W for hotel accommodations
for the group and for admission tickets to the sports event. In payment,
H tenders to W money orders which H had previously purchased. The
total amount of the money orders, none of which individually exceeds
$10,000 in face amount, exceeds $10,000. Because the transaction is
a designated reporting transaction, the money orders are treated as
currency for purposes of section 5331 and this section. Therefore,
because W has received more than $10,000 in currency with respect
to the transaction, W must make the report required by section 5331
and this section.
3-1702.76
(7) Consumer
durable. The term consumer durable means an item of tangible
personal property of a type that is suitable under ordinary usage
for personal consumption or use, that can reasonably be expected to
be useful for at least 1 year under ordinary usage, and that has a
sales price of more than $10,000. Thus, for example, a $20,000 automobile
is a consumer durable (whether or not it is sold for business use),
but a $20,000 dump truck or a $20,000 factory machine is not.
(8) Collectible. The term collectible means an item described in
paragraphs (A) through (D) of section 408 (m)(2) of title 26 of the
United States Code (determined without regard to section 408 (m)(3)
of title 26 of the United States Code).
(9) Travel or
entertainment activity. The term travel or entertainment activity
means an item of travel or entertainment (within the meaning of 26
CFR 1.274-2(b)(1)) pertaining to a single trip or event where the
aggregate sales price of the item and all other items pertaining to
the same trip or event that are sold in the same transaction (or related
transactions) exceeds $10,000.
(10) Retail sale. The term retail sale means any sale (whether for resale or for any
other purpose) made in the course of a trade or business if that trade
or business principally consists of making sales to ultimate consumers.
(11) Trade or business. The term trade or business
has the same meaning as under section 162 of title 26, United States
Code.
3-1702.77
(12) Transaction.
(i) Solely for purposes
of 31 U.S.C. 5331 and this section, the term transaction means the
underlying event precipitating the payer’s transfer of currency
to the recipient. In this context, transactions include (but are not
limited to) a sale of goods or services; a sale of real property;
a sale of intangible property; a rental of real or personal property;
an exchange of currency for other currency; the establishment or maintenance
of or contribution to a custodial, trust, or escrow arrangement; a
payment of a preexisting debt; a conversion of currency to a negotiable
instrument; a reimbursement for expenses paid; or the making or repayment
of a loan. A transaction may not be divided into multiple transactions
in order to avoid reporting under this section.
(ii) The term related transactions means
any transaction conducted between a payer (or its agent) and a recipient
of currency in a 24-hour period. Additionally, transactions conducted
between a payer (or its agent) and a currency recipient during a period
of more than 24 hours are related if the recipient knows or has reason
to know that each transaction is one of a series of connected transactions.
(iii) The following
examples illustrate the definition of paragraphs (c)(12)(i) and (ii)
of this section:
Example 1. A person has a tacit agreement
with a gold dealer to purchase $36,000 in gold bullion. The $36,000
purchase represents a single transaction under paragraph (c)(12)(i)
of this section and the reporting requirements of this section cannot
be avoided by recasting the single sales transaction into 4 separate
$9,000 sales transactions.
Example 2. An attorney agrees to represent a client in a criminal
case with the attorney’s fee to be determined on an hourly basis.
In the first month in which the attorney represents the client, the
bill for the attorney’s services comes to $8,000 which the client
pays in currency. In the second month in which the attorney represents
the client, the bill for the attorney’s services comes to $4,000,
which the client again pays in currency. The aggregate amount of currency
paid ($12,000) relates to a single transaction as defined in paragraph
(c)(12)(i) of this section, the sale of legal services relating to
the criminal case, and the receipt of currency must be reported under
this section.
Example
3. A person intends to contribute a total of $45,000 to a trust
fund, and the trustee of the fund knows or has reason to know of that
intention. The $45,000 contribution is a single transaction under
paragraph (c)(12)(i) of this section and the reporting requirement
of this section cannot be avoided by the grantor’s making five
separate $9,000 contributions of currency to a single fund or by making
five $9,000 contributions of currency to five separate funds administered
by a common trustee.
Example 4. K, an individual, attends a one day auction and purchases
for currency two items, at a cost of $9,240 and $1,732.50 respectively
(tax and buyer’s premium included). Because the transactions
are related transactions as defined in paragraph (c)(12)(ii) of this
section, the auction house is required to report the aggregate amount
of currency received from the related sales ($10,972.50), even though
the auction house accounts separately on its books for each item sold
and presents the purchaser with separate bills for each item purchased.
Example 5. F, a coin
dealer, sells for currency $9,000 worth of gold coins to an individual
on three successive days. Under paragraph (c)(12)(ii) of this section
the three $9,000 transactions are related transactions aggregating
$27,000 if F knows, or has reason to know, that each transaction is
one of a series of connected transactions.
3-1702.78
(13) Recipient.
(i) The term recipient means the person receiving the currency. Except as provided in paragraph
(c)(13)(ii) of this section, each store, division, branch, department,
headquarters, or office (“branch”) (regardless of physical
location) comprising a portion of a person’s trade or business
shall for purposes of this section be deemed a separate recipient.
(ii) A branch that
receives currency payments will not be deemed a separate recipient
if the branch (or a central unit linking such branch with other branches)
would in the ordinary course of business have reason to know the identity
of payers making currency payments to other branches of such person.
(iii) Examples. The following examples illustrate
the application of the rules in paragraphs (c)(13)(i) and (ii) of
this section:
Example 1. N, an individual, purchases
regulated futures contracts at a cost of $7,500 and $5,000, respectively,
through two different branches of Commodities Broker X on the same
day. N pays for each purchase with currency. Each branch of Commodities
Broker X transmits the sales information regarding each of N’s
purchases to a central unit of Commodities Broker X (which settles
the transactions against N’s account). Under paragraph (c)(13)(ii)
of this section the separate branches of Commodities Broker X are
not deemed to be separate recipients; therefore, Commodities Broker
X must report with respect to the two related regulated futures contracts
sales in accordance with this section.
Example 2. P, a corporation, owns and
operates a racetrack. P’s racetrack contains 100 betting windows
at which pari-mutuel wagers may be made. R, an individual, places
currency wagers of $3,000 each at five separate betting windows. Assuming
that in the ordinary course of business each betting window (or a
central unit linking windows) does not have reason to know the identity
of persons making wagers at other betting windows, each betting window
would be deemed to be a separate currency recipient under paragraph
(c)(13)(i) of this section. As no individual recipient received currency
in excess of $10,000, no report need be made by P under this section.
