During its normal course of business, the IRS does not actively monitor bank accounts. There can be exceptions made for individuals or corporations that make many transactions during the year with considerable sums of money, but the IRS trusts Americans to be honest with their bank transactions under normal circumstances. However, there are instances where banks are required to report transactions to the IRS. Banks are also required to inform you of any forms the IRS needs when you are making any qualifying transactions.
Deposits Of $10,000 Or More
If you make a cash or check deposit of $10,000.00 or more in one transaction, then the bank must make you fill out and file IRS form 8300. This form is also required when any related transactions made within 24 hours of each other total $10,000.00 or more, or money transactions between two parties that total $10,000.00 or more. This law was primarily created to allow the IRS to detect money laundering by criminal elements, but it applies to anyone making these types of deposits. Form 8300 must be filed within 15 days of a single deposit or the final deposit in a related series of deposits.
12-Month Rule
If an individual receives two payments or more totaling $10,000.00 or more over the course of 12 months from the same payer, then those payments must be reported using form 8300. All of the rules that are associated with form 8300 apply to individuals, businesses, banks and any other legal entity. The bank receiving these deposits must report them to the IRS to avoid breaking a federal law. This law was created to prevent people who have $10,000.00 or more in cash from breaking that money up into smaller deposits throughout the year to avoid detection.
Suspicious Activities
There is a suspicious activities law that requires banks to report any type of suspicious account activity immediately to the IRS. Once again, this normally involves transactions of $10,000.00 or more or a series of seemingly related transactions, but it can apply to anything that a bank might consider suspicious.
Audit
If an individual or other legal entity is every audited by the IRS, then the IRS will usually require that entity’s bank to submit specific reports about their bank account. The IRS might require some or all of the activity in the account in question to be submitted, or the IRS might only request information on certain transactions.
The IRS has the legal right to request information on any bank account at any time, but generally the IRS avoids monitoring bank accounts. However, if you are dealing wit large deposits or money transfers, then you will be required to submit information to the IRS to avoid violating federal law.
Jim Treebold is a North Carolina based writer. He lives by the mantra of “Learn 1 new thing each day”! Jim loves to write, read, pedal around on his electric bike and dream of big things. Drop him a line if you like his writing, he loves hearing from his readers!