Pub. 18 2019-2020 Issue 3

N E W J E R S E Y C O A L I T I O N O F A U T O M O T I V E R E T A I L E R S 29 new jersey auto retailer W W W . N J C A R . O R G the biggest targets by the IRS for Form 8300 compliance, as the sale of an automobile typically fits the criteria of a designated reported transaction. For purposes of Form 8300 reporting, cash does not include personal checks drawn on the account of the writer, or a cashier’s check, bank draft, traveler’s check or money order with a face value of more than $10,000. What about penalties? The general penalties for failure to timely file, to include all required information or to include correct information, is $100 per return. If any failure to file is corrected on or before the 30th day after the required filing date, the penalty is reduced to $30 per return. There are specific costly penalties if a dealership intentionally disregards the requirement to file a correct 8300 Form. The fines can exceed $26,000 or the amount of cash you received and were required to report. In addition to filing an 8300 Form, a written notice must be is- sued to all individuals listed on the 8300 Form no later than January 31 of the subsequent calendar year. Overall, there are many nuisances with regard to Form 8300 reportable transactions. With that said, it is imperative to have a solid understanding of requirements to file, how to file and when to file. Dealerships should develop a written policy that explains how cash transactions over $10,000 will be handled. All affected employees must be made aware of their responsibilities set forth in the policy, as well. Training and education of staff are paramount to help ensure full compliance. If employees are not properly trained and do not fully un- derstand the IRS’ definitions of cash, the risk of dealerships struggling with accurate reporting will inevitably skyrocket. In order for dealerships to protect themselves from poten- tial liability, they should have the below listed policies and procedures in place: 1. Develop a written policy, suitable to your dealership, that explains how cash transactions will be handled. a. These policies should also be in place to prevent salespeople from coaching customers on how to avoid an 8300 Form filing. 2. Conduct staff training; documenting all meetings and educational activities. Dealerships must also make sure to: 1. Maintain a Form 8300 file of all submitted forms. 2. Send the completed 8300 Forms to the IRS by certified mail. 3. Use the dealership DMS cash reporting module/report. 4. Confirm the cash receipts are being coded accurately in the DMS system. The above insights and recommendations will be a signifi- cant resource for dealers that find themselves audited by the IRS. Dealers may also consider conducting their own inter- nal audit to make sure forms are being filed properly. Lou Young is the Director of Client Services with WithumSmith+Brown, PC. He manages business practice issues, regulatory oversight issues and state tax compliance and also provides assistance with business brokering and business development. He can be reached via email at lyoung@withum.com . Energy Partners of NJ CAR & WASCO Lock in your natural gas & electricity rates with Sprague! • Greater budget certainty and price stability • Close to 150 years of energy experience • Dedicated and local Account Manager • Customized energy solutions • Outstanding Customer Care Member benefits: By participating in the energy program, you are assisting NJ CAR in protecting the interests of all franchised car and truck retailers. Take advantage of your membership benefits today! Gail Caputi, Program Manager 609.760.2043 | gcaputi@njcar.org Peter Jagodzinski, Account Manager pjagodzinski@spragueenergy.com | 732.440.0038 D.T. MURPHY & CO. 973 809-9311 • dan@dtmurphy.com • www.dtmurphy.com Dan Murphy D DAN MURPHY MATCHING BUYERSWITH SELLERS SINCE 1989 ~~~ SELLINGYOUR STORE? I HAVETHEWILLING, READY AND ABLE BUYERSYOU’RE LOOKING FOR CONFIDENTIALITY ASSURED. ~~~ WHAT’SYOUR STOREWORTH? MY COMPREHENSIVE BUSINESSVALUATION COMPLIESWITH IRS GUIDELINES FOR ESTATETAX PURPOSES & PARTNERSHIP LITIGATION . . . 973 809-9311 • dan@dtmurphy.com • www.dtmurphy.com Dan Murphy D.T. MURPHY & CO. 973 809-9311 • dan@dtmurphy.com • www.dtmurphy.com Dan Murphy .T. RP Y . 973 809-9311 • dan@dtmurphy.com • www.dtmurphy.com Dan Murphy