Cash Payment Reporting Regs

 [4830-01]

 ACTION: Final regulations.

 SUMMARY: This document contains final regulations that require a person who currently must report the receipt of cash in excess of $10,000 with respect to a transaction to make a report each time that cash payments received within any 12-month period with respect to the same transaction or a related transaction total more than $10,000. These regulations enable the Internal Revenue Service to ascertain the magnitude of large transfers of cash with respect to the same transaction. The regulations affect trades or businesses that are currently required to report large receipts of cash.

 EFFECTIVE DATE: June 21, 1993.

 FOR FURTHER INFORMATION CONTACT: Philip Scott, 202-622-4960 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

PAPERWORK REDUCTION ACT

The collection of information contained in this final regulation has been reviewed and approved by the Office of Management and Budget in accordance with the requirements of the Paperwork Reduction Act (44 U.S.C. 3504(h)) under control number 1545-0892. The estimated annual burden per respondent varies from 11 minutes to 26 minutes, depending upon individual circumstances, with an average of 18 minutes.

 These estimates are an approximation of the average time expected to be necessary for a collection of information. They are based on such information as is available to the Internal Revenue Service. Individual respondents may require greater or less time, depending on their particular circumstances.

 Comments concerning the accuracy of this burden estimate and suggestions for reducing this burden should be directed to the Internal Revenue Service, Attn: IRS Reports Clearance Officer T:FP, Washington, DC 20224, and to the Office of Management and Budget, Attention: Desk Officer for the Department of the Treasury, Office of Information and Regulatory Affairs, Washington, D.C. 20503.

BACKGROUND

 On July 9, 1990, the Internal Revenue Service published in the Federal Register a notice of proposed rulemaking by cross-reference to temporary regulations (55 FR 28061) and temporary regulations (55 FR 28021) amending the Income Tax Regulations (26 CFR part 1) under section 6050I of the Internal Revenue Code (Code).

 Written comments responding to the notice were received. One request for a public hearing was received, but that request was withdrawn. After consideration of all comments, the temporary regulations are adopted as final regulations without substantive change by this Treasury Decision. However, some clarifying changes and changes in organization have been made.

EXPLANATION OF PROVISIONS

IN GENERAL

 As amended by this Treasury decision, the regulations require a person engaged in a trade or business who receives, in the course of that trade or business, multiple cash payments with respect to a transaction (or two or more related transactions) to make a report each time that the person receives more than $10,000 in cash in any 12-month period. Thus, a person must make a report each time that the person receives a single cash payment of more than $10,000 and each time that the person receives a cash payment of $10,000 or less that, combined with all previously unreportable cash payments received with respect to the same transaction (or a related transaction) within the preceding 12-month period, exceeds $10,000. The regulations apply to amounts received after December 31, 1989.

COMMENTS

 One commentator suggested that aggregation of payments of $10,000 or less for purposes of reporting under section 6050I should be based on a calendar year to facilitate recordkeeping by recipients. The Service is concerned, however, that such an aggregation rule might enable some persons to avoid reporting. Therefore, the suggestion has not been adopted.

 Other comments addressed matters that pertain to portions of the existing regulations under section 6050I that do not relate to multiple payments and, therefore, are not pertinent to this document. The Service will consider those comments in the context of its continuing review of the rules promulgated under section 6050I and will provide additional guidance where necessary or appropriate.

SPECIAL ANALYSES

 It has been determined that these rules are not major rules as defined in Executive Order 12291. Therefore, a Regulatory Impact Analysis is not required. It has also been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) and the Regulatory Flexibility Act (5 U.S.C. chapter 6) do not apply to these regulations, and, therefore, a Regulatory Flexibility Act Analysis is not required. Pursuant to section 7805(f) of the Code, the notice of proposed rulemaking for the regulations was submitted to the Administrator of the Small Business Administration for comment on their impact on small business.

DRAFTING INFORMATION

 The principal author of these regulations is Philip Scott of the Office of Assistant Chief Counsel (Income Tax and Accounting), Internal Revenue Service. However, personnel from other offices of the Service and Treasury Department participated in their development.

LIST OF SUBJECTS

26 CFR part 1

 Income taxes, Reporting and recordkeeping requirements.

26 CFR part 602

 Reporting and recordkeeping requirements.

ADOPTION OF AMENDMENTS TO THE REGULATIONS

Accordingly, 26 CFR parts 1 and 602 are amended as follows:

PART 1 -- INCOME TAXES

Paragraph 1. The heading for part 1 is revised to read as set forth above.

Par. 2. The authority citation for part 1 is amended by removing the entry for "Section 6050I-1T". The authority citation for part 1 continues to read in part as follows:

Authority: 26 U.S.C. 7805 * * *

Section 6050I-1 also issued under 26 U.S.C. 6050I. * * *

Par. 3. Section 1.6050I-1 is amended by revising paragraphs (b) and (e)(1) to read as follows:

SECTION 1.6050I-1 RETURNS RELATING TO CASH IN EXCESS OF $10,000 RECEIVED IN A TRADE OR BUSINESS.

* * * * *

(b) MULTIPLE PAYMENTS. The receipt of multiple cash deposits or cash installment payments (or other similar payments or prepayments) on or after January 1, 1990, relating to a single transaction (or two or more related transactions), is reported as set forth in paragraphs (b)(1) through (b)(3) of 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 cash 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.) A report with respect to payments of $10,000 or less that are reportable under this paragraph (b)(3) and are received after December 31, 1989, but before July 10, 1990, is due July 24, 1990.

(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, 1991, M receives an initial cash payment of $11,000 with respect to a transaction. M receives subsequent cash payments with respect to the same transaction of $4,000 on February 15, 1991, $6,000 on March 20, 1991, and $12,000 on May 15, 1991. M must make a report with respect to the payment received on January 10, 1991, by January 25, 1991. M must also make a report with respect to the payments totalling $22,000 received from February 15, 1991, through May 15, 1991. This report must be made by May 30, 1991, 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.

* * * * *

(e) TIME, MANNER, AND FORM OF REPORTING -- (1) TIME OF REPORTING. The reports required by this section must be filed with the Internal Revenue Service by the 15th day after the date the cash is received. However, in the case of multiple payments relating to a single transaction (or two or more related transactions), see paragraph (b) of this section.

* * * * *

Par. 4. Section 1.6050I-1T is removed.

PART 602 -- OMB CONTROL NUMBERS UNDER THE PAPERWORK REDUCTION ACT

Par. 5. The authority citation for part 602 continues to read as follows:

Authority: 26 U.S.C. 7805.

Par. 6. Section 602.101(c) is amended by removing from the table "1.6050I-1T . . . 1545-0892".