This subsection provides information on responsibilities of the BSA examiner when conducting Form 8300 examinations.

Refer to IRM 4.26.1, Bank Secrecy Act, Introduction and Program Structure, for the authority for the Bank Secrecy Act.

IRC 6050I, Returns Relating to Cash Received in Trade or Business, etc., requires the filing of Form 8300 when a trade or business receives cash, or cash equivalents, in excess of $10,000.

IRC 6721, Failure to File Correct Information Returns, provides a penalty for failure to file correct information returns.

IRC 6722, Failure to Furnish Correct Payee Statements, provides a penalty for failure to furnish correct payee statements.

IRC 6724, Waiver; definitions and special rules, provides reasonable cause waiver, definitions of information returns, and special rules.

The term information return means any statement, form, or return as described in IRC 6724(d), Definitions, or 26 CFR 301.6721-1(g), Definitions, and 26 CFR 301.6722-1(d), Definitions.

Director, Examination – Specialty Policy is the executive responsible for BSA Examination policy and procedures.

Director, Examination – Specialty Examination is the executive responsible for BSA examination operational compliance.

Chief, BSA Policy is responsible for ensuring general information about basic BSA examiner responsibilities and IRM sections is communicated to and carried out by BSA examiners.

The following table contains acronyms, and their definitions, used throughout this IRM:

The following table contains terms, and their definitions, used throughout this IRM:

The BSA program is required to follow all Servicewide examination procedures and those set forth in SBSE examining process IRMs. However, the following material provides additional information relating to the processing and examination of Form 8300 information returns:

Education is an ongoing process and a critical part of a Form 8300. Based on responses received from the business during the initial interview, the examiner should discuss:

The examiner should offer the trade or business:

All educational outreach activities must be documented in the workpapers. This information should include:

During this time, the following information should also be obtained:

Lead sheets are a summary and index of the workpapers. They should be as brief as possible. Detailed calculations and descriptions should be contained in the workpapers.

Lead sheets contain the general audit steps required by the IRM. Specific audit steps are left to the professional judgment of the examiner and must be documented in the workpapers. Each lead sheet is self-contained; it includes all facts, law, conclusions, and entity position for that issue.

Lead sheets for the review of AML compliance programs are in the Title 31 Lead Sheets Folder. Reviews of AML programs are done during Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business, examinations conducted under 31 USC 5331, Reports Relating to Coins and Currency Received in Nonfinancial Trade or Business, not during Form 8300 examinations that are conducted under Title 26 (that is, not during examinations to check for compliance with IRC 6050I, Returns Relating to Cash Received in Trade or Business, etc.

Administrative and issue lead sheets serve as an index and summary for supporting workpapers and provide the following benefits:

IRM 4.10.9.6, Lead Sheets, has information that applies to all SB/SE examiners.

Workpapers are required in every examination case. Workpapers should include all evidence gathered by the examiner to show the work performed, audit techniques followed, law relied on, and conclusions reached. Supporting workpapers must be prepared when necessary to fully document all issues and conclusions. These supporting workpapers must be attached to the appropriate lead sheet.

Workpapers support the information included on the lead sheets and, when applicable, should reflect:

At a minimum, the workpapers should explain why the issue was examined, how a sample size was determined (when applicable), and what documents were requested and inspected.

Many customers will use the case file; therefore, the quality and legibility of the workpapers is very important. They should provide subsequent examiners a clear audit trail and scope of the prior examination.

Workpapers are the link between examination work and the examination report.

IRM 4.10.9.7, Workpapers, has information that applies to all SB/SE examiners.

Anyone reviewing the case file must be able to follow the audit steps in the workpapers to arrive at the same conclusion reflected on the lead sheet. Conclusions not supported by the workpapers will not be sustained in Appeals or in court.

The workpaper tools numbering system is:

A summary memorandum must be prepared and labeled #215 for the case file detailing the results of the Form 8300 examination. The summary memorandum must briefly summarize the facts and circumstances concerning violations identified and the steps the trade or business has agreed to take to correct the violations.

A workpaper reference number is required when comments or calculations are made on a separate lead sheet or workpaper.

When planning the examination, use Lead Sheet # 105, Administrative Plan to Close Lead Sheet, which outlines the steps in the Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business, examination. Those steps are:

These steps on the Administrative Plan to Close Lead Sheet are designed to:

The first section on the Administrative Plan to Close Lead Sheet is pre-plan.

A quality Form 8300 examination begins with a thorough pre-plan. The examiner should follow the steps outlined in Lead Sheet #110, Pre-Plan Analysis, which can be found in the Lead Sheet Package. The techniques presented in lead sheet #110 are intended to be used as a guide and are not all-inclusive.

Lead Sheet #110 guides the examiner through the exam pre-plan. In conducting the exam pre-plan, the examiner will:

Review of income tax return data, via IDRS, should be conducted if the Form 8300 examination is conducted under Title 26. The review should include the following steps:

IDRS identifies control by BOD code and Client code in the INOLES printout. Freeze codes can be identified in the BMFOLI printout. Freeze codes may prevent the initiation of an examination.

Criminal Investigations (CI) - If CI freeze code "Z" is identified in the IDRS printout (BMFOLI), examiner must inform their group manager before continuing the examination. Normally, cases with the "Z" freeze are not built by ECS and sent to the group. The status of the case may change. To confirm if the status has changed on Title 26 exams, a new BMFOLI can be pulled to determine if a "Z" freeze is present.

Large Business & International (LB&I) If IDRS (BMFOLI) shows an (-L) Freeze code, examiner needs to also look at the IDRS (AMDISA) printout to determine current status of the case. Examiner may see one of the following codes:

If (-L) freeze code is identified and the case is in status 10 or 12, the examiner must notify their manager. BSA group manager will then notify the applicable LB&I team manager five days prior to initiating the BSA Form 8300 examination. If BSA group manager does not hear back from LB&I within 5 days, the BSA manager will notify examiner and examiner will notate in the activity record the attempt to contact. BSA making contact to LB&I is made as a courtesy. LB&I likely will not be working the same examination period as BSA. The examiner may continue with their BSA examination.

If contact is made, LB&I Analyst and SBSE Specialty Exam BSA Policy 8300 Analyst will be the designated contacts regarding general questions about Form 8300 examinations conducted on LB&I controlled entities.

If there is a conflict between LB&I and BSA IRM sections, the BSA IRM section will supersede the LB&I IRM. If the LB&I Case Manager and SBSE Specialty Exam BSA Group Manager are unable to reach a mutually agreeable solution to any issues concerning IRC 6050I activities, the disputed issue will be submitted to the next higher level of management in each function for resolution.

Indian Tribal Government (ITG): Review IDRS to determine if the entity is an ITG entity. ITG entities can be identified on IDRS by BOD code "TE" and client code "I" . Examiners must notify their manager prior to initiating any Form 8300 examination on an ITG entity or any other entity if known to be operating on tribal reservations or tribal lands. Managers are required to utilize the Specialist Referral System (SRS) prior to initiating any BSA examination activity for entities owned by Indian Tribal Governments. The ITG manager will assist examiners in addressing proper protocol for contacting (appointment letter addressee), interacting and executing agreements with tribal government officials and representatives. ITG field personnel, with BSA staff agreement, may assist examiners. The type of assistance may include contacting the appropriate tribal representative regarding any pending actions and accompanying the examiner on visits to the tribe. ITG field personnel will not participate in the actual examination unless requested to do so by the examiner.

A case being worked under Title 31 may have dual requirements under Title 31 and Title 26. If a Title 26 issue is identified during the Title 31 exam (8300 filing requirements), the examiner would cite the Form 8300 violation on the Letter 1112 and close out the case. The group manager would then request ECS to build the same case under Title 26 to capture the violations and associated penalties for non-compliance of IRC 6050I. In these type of cases, the IRS has compliance obligations for both Title 31 and Title 26.

The examiner will review the historical material contained in the case file noting names of relevant individuals and related entities, prior examination findings, and the date of the last IRS contact.

The examiner will review and analyze data from the FinCEN Query (FCQ) system to determine the following:

The examiner will review IRC 4.26.10, Form 8300 History and Law, and IRM 4.26.12, Examination Techniques for Form 8300 Industries, for additional Form 8300 examination methods and techniques.

The examiner will conduct additional research as needed, such as the internet and contracted research sites. The examiner should become familiar with the common industry practices of the trade or business prior to the start of a Form 8300 examination. Reviewing the business website and electronic trade publications is recommended.

The examiner will utilize the information found in IRM 4.26.11.7.3.1 to determine the scope and depth of the examination. The examiner will, as part of the pre-contact analysis, prepare a preliminary risk analysis following the steps detailed in IRM 4.26.11.7.3.3.

The examiner will develop and document an examination plan tailored to the entity to be examined. The mandatory lead sheets will be utilized by the examiner to develop the examination. The examination plan may change as the examination is conducted. Adjustments to the initial plan may be made after the initial appointment as additional information is secured.

During the pre-plan development, the examiner will request that Form 8300 correspondence from BSA Compliance Department, Detroit be stopped for the entity to be examined. This is to ensure CTR Ops does not send out any notices while a field examination is in process. The form used to stop correspondence is located on the BSA Policy SharePoint located at: https://organization.ds.irsnet.gov/sites/SbseFraudBSA/BkSecAct/8300/Forms%20Documents/Forms/AllItems.aspx

Determine the scope and depth of the examination. See IRM 4.26.11.7.3.1. Prepare a preliminary risk analysis using the information available in the pre-plan. See IRM 4.26.11.7.3.3.

Develop an initial examination plan. This involves:

After the pre-plan, the examiner will utilize Lead Sheet #130, Initial 8300 Entity Contact Check Sheet.

The examiner must use the Initial 8300 Entity Contact Check Sheet when:

This workpaper reminds the examiner to:

The initial contact for a Form 8300 compliance examination must be made by mailing to the business entity Letter 2277, Form 8300 Appointment Letter, with the scheduled date and time for the examination.

The following documents must be mailed to the business with the appointment letter:

If the entity fails to respond to the initial contact letter within 14 calendar days, then phone contact can be made.

If the taxpayer responds by providing a valid specific use Form 2848 or Form 8821, Tax Information Authorization, (not recorded on the Centralized Authorization File), a copy of the initial contact letter will be mailed to the representative with Letter 937, Transmittal Letter for Power of Attorney.

The examiner must document the initial conversation on #130, Initial 8300 Entity Contact Check Sheet. The lead sheet will assist the examiner in conducting the initial conversation with the entity.

Communications with the business, authorized representatives, and third parties must be made in a timely fashion and in a firm, businesslike, and professional manner.

The examiner should ensure that all written correspondence is professional and appropriate for the issues addressed. Communication should be clear, concise, and reflect a courteous tone and appearance. It should also be neat, legible, and grammatically correct.

All written correspondence sent to and received from the taxpayer must be maintained as part of the case file.

Section 3705 of the Internal Revenue Service Restructuring and Reform Act (RRA 98) requires that all oral and written communication with the business being examined or authorized representative must include the name, telephone number and the unique identifying number (such as, Smart-ID badge number) of the IRS employee. This requirement will ensure that the business is able to contact the appropriate employee to address any further questions they may have about their examination.

The examiner will document on Form 9984 to show that the entity and/or representative were provided with the required identifying information during oral communications.

For information regarding the use of pseudonyms by employees see IRM 10.5.7, Use of Pseudonyms by IRS Employees.

Whether the taxpayer or representative responds to the initial appointment letter, or the examiner contacts the taxpayer by telephone after 14 calendar days have expired since the initial letter was mailed, during the initial telephone conversation examiners must:

Examiners must not attempt contacts with the entity before 8:00 a.m. or after 6:00 p.m. (entity’s time zone) as prescribed by the Fair Debt Collection Practices Act.

Prepare and provide the appropriate appointment letter and include the initial Form 4564.

The appointment letter should be mailed to the last known address confirmed during pre-plan.

A copy of the letter must be retained in the case file.

Examiners should confirm the appointment with the entity several days prior to the scheduled appointment date to ensure that the entity is prepared for the appointment. This will reduce the potential lost time traveling to an appointment when the entity is not prepared for the examination or may not be available.

The examiner’s initial request for information and documentation should be clear and concise and cover all issues identified through the pre-plan.

Requests for information should include a response date, such as a specific date or reference to a specific timeframe (such as, "by May 24, 2021" or "within three weeks from the date on this request" ). Requests for information should include the manner in which the entity is to submit the documents to the examiner (such as "mailed in" or "at the initial appointment" .

The examiner should discuss the expected receipt date with the entity or authorized representative and there should be a "meeting of the minds" for example, a mutually agreed upon date, if possible. The receipt date should be reasonable to ensure the examination proceeds efficiently and with consideration for the time frames found in IRM 4.26.6.5.3.23, National Standard Time Frames.

Subsequent document requests should be clear and concise with established response deadlines.

The examiner should prepare the initial Form 4564 using the information discovered during the pre-plan. Form 4564 can be found on the BSA Policy SharePoint at https://organization.ds.irsnet.gov/sites/SbseFraudBSA/BkSecAct/SitePages/Home.aspx or the Forms/Pubs/Products Repository at: http://publish.no.irs.gov/catlg.html.

Form 4564 must be tailored to request records common to the business being examined. Form 4564 is numbered in the upper right-hand corner (Request Number).

The initial Form 4564 should be mailed with the appointment letter.

A copy of all Forms 4564 must be retained in the case file.

The examiner should use Lead Sheet # 135, Initial Appointment Agenda, as a guide for the information to be given and the questions to be asked during the initial interview.

This agenda reminds the examiner of the points to cover in the initial appointment. The examiner should:

Lead Sheet # 205, Initial Interview Questions and Notes, is a blank page which can be used to record the initial interview questions and the examiner’s notes related to it. For example, the demeanor of the person interviewed may be noted, as can inconsistencies between information provided by different persons interviewed.

The interview questions should be developed before the interview based on the considerations in the pre-plan information, initial contact information and IRM 4.26.12, Examination Techniques for Form 8300 Industries. Sample initial interview questions are sometimes provided during on the job training, but these are not a one-size fits all proposition and the examiner must develop the interview questions based on the specific business being examined.

Examiners are required to ask the business if it ever had a Form 8300 examination and document the answer. If the case file information does not reflect a prior examination, but the business indicates that there was one, the examiner should request copies of the correspondence related to the prior exam. Examiners should also ask about the facts and circumstances surrounding the prior examination. For example, were penalties asserted and what changes to internal controls were made as a result of the prior examination?

During the interview, the examiner should ascertain and/or verify:

Education is a critical part of a Form 8300 examination. The examiner must discuss with the owner/officer and the person responsible for cash transactions:

The interview and inspection of records must be solely for the purpose of the Form 8300 examination. No inquiries should be made as to the filing of other returns required by Title 26 or whether a specific item is reported on any such returns. The latter inquiries could result in the inadvertent opening of an income tax examination.

The examiner should explain the examination process and specifically state that a Form 8300 examination is NOT an income tax examination. The examiner should advise the trade or business that information obtained during the examination may be used for any tax matter permitted by the Internal Revenue Code.

The interview, tour of the business, and documents provided regarding business operations should identify:

Overview of the systems related to Form 8300 specific issues should:

The flow of transactions must be documented following these steps:

Deficiencies in the business’ policies, procedures, and internal controls must be discussed with the responsible parties.

Immediately following the interview, the examiner should use their notes to prepare a memorandum or summary of the interview. The memorandum or summary of the interview should not duplicate the interview notes. Use index #200 for this workpaper.

IRM 4.10.3.3, Interviews: Authority and Purpose, may be used for additional information on interviews.

The examiner should work with the entity/representative to establish a MCD and determine the number of expected field visits. Record the MCD on the Form 4318, Examination Workpapers Index. The MCD must be reasonable and attainable.

The examiner should consider the following factors when determining a MCD:

Notify the group manager if there is a need to change the MCD by more than 30 days and document it in the case activity record.

Lead Sheet #300, Form 8300 Lead Sheet, lists the examination steps for determining if the business has been compliant. The techniques listed there are not intended to be all-inclusive and are not mandatory. Judgment should be used in selecting techniques appropriate to the business. IRM 4.26.12, Examination Techniques for 8300 Industries, provides techniques for specific types of businesses.

Upon completion of the interview, conduct a random sample of transactions, tracing the customer’s payment through the banking and accounting records. The review of sample transactions should be used to confirm the information given in the interview about the records and to test that the records for review are complete and include all sales. Note any discrepancies.

The examiner should use the books and records to determine if there were:

The following steps are recommended:

The examiner should be alert to transactions that appear to have been made in to avoid the Form 8300 reporting requirements, that is, structured transactions. See IRM 4.26.13, Structuring. These transactions may be:

There may be a need, on a case by case basis, to interview customers to obtain all the facts needed to develop the issues.

If a computerized system is utilized, the examiner must perform testing to ensure its integrity before relying upon such records for the Form 8300 examination.

Depending on the initial findings of the Form 8300 examination, the examiner may need to expand the scope and/or depth to include additional periods. See IRM 4.26.11.9.6 for additional information.

When recording potential cash transactions, it is important to note:

For any transaction the examiner believes was reportable and a Form 8300 was not filed, the examiner should copy the receipts, contracts, and any other supporting documentation needed to sustain the position. The examiner should record the location of the original records pertaining to these transactions.

The scope of the examination should be set from the top down. It must be adequate to determine if the business has developed policies, procedures, and internal controls to identify reportable transactions and ensure that they are reported and that annual notification statements are sent. Appropriate policies, procedures, and internal controls depend on the risk of noncompliance.

The examiner must assess the policies, procedures, and internal controls of the entity. This must be documented on the Policies, Procedures, and Internal Controls Lead Sheet, #140. Use of this lead sheet is mandatory and requires that a conclusion be documented. The updated risk assessment which results from this lead sheet forms the basis for the continued scope and depth of the examination.

The risk of Form 8300 violations by the business may be analyzed in the first instance by requesting a copy of the business’ own risk assessment and discussing it with the business. The examiner should document whether a written risk assessment was completed by the business. The examiner should review and document if the business:

The examiner should prepare a risk assessment if no written document exists. This assessment should be developed using the preliminary risk assessment, updated throughout the examination process, and completed at the close of the examination. A copy should be given to the business.

If this business is subject to an AML program requirement under Title 31 and the Form 8300 examination is being conducted under Title 31, the examination must cover all Title 31 issues. Complete the AML Compliance Program Lead Sheet – Title 31, # 140 and any other appropriate lead sheets for the financial services offered.

Occasionally it will be necessary to expand the scope-depth of an examination outside the initial 12-month examination period. The examiner should use the Risk Analysis Workpaper (#120) to document expanding/contracting the scope and depth of the examination. It must be approved by the group manager.

Consider "Is it worthwhile to examine this issue?" The examiner should compare the potential benefits to be derived from expanding the scope and depth of an examination to the resources required to perform the examination, and the potential outcome generated from expanding/contracting the scope.

The objective is to focus the examination on issues of merit. The examiner should consider whether identifying additional violations would promote compliance or change the conclusion of the examination. The examiner should consider such factors as the seriousness of the violations identified and any internal control weaknesses that may result in increased risk for noncompliance or money laundering activities when considering changes to the scope and depth of the examination.

GS-12 examiners and below are required to use lead sheet #125, Group Manager Concurrence Meeting (GMCM). GS-13 examiners are encouraged to utilize a GMCM to provide updates on cases and obtain guidance from managers.

The GMCM must occur within 30 calendar days after completion of the initial appointment meeting. The examiner should schedule the concurrence meeting as soon as the date of the initial appointment is set. A GMCM is not required, if the case is closed to the manager within 30 calendar days of the initial appointment.

The examiner should be prepared to discuss:

The GMCM must be documented on Lead Sheet #125.

During a Form 8300 examination the examiner may find that a business failed to file Form 8300. The examiner should solicit a written explanation from the business for the failure(s). The examiner must document verbal explanations for the failures if unable to obtain a written explanation.

The examiner must determine if failure to file Form 8300 was due to reasonable cause. Penalties imposed by IRC 6721, Failure to file correct information returns, and IRC 6722, Failure to Furnish Correct Payee Statements, will not be applied if reasonable cause exists. See IRM 4.26.10, Form 8300 History and Law, for an explanation of the applicable Form 8300 law. Additional information is available in IRM 20.1.7, Penalty Handbook, Information Return Penalties, and 26 CFR 301.6724-1, Reasonable Cause. The business is required to prove reasonable cause, not the examiner. The examiner reviews the facts and circumstances, and applies the regulations, to determine if reasonable cause exist.

If the examiner is considering whether any violation was due to intentional disregard or is considering referring the case to CI, the examiner should not request delinquent Form 8300 returns before consulting with the group manager and determining if a criminal referral is warranted.

The examiner is to secure delinquent returns and review forms to ensure all fields are filled out. If form is incomplete, examiner will return the form to the taxpayer to complete. The examiner is to inform the taxpayer that the forms are required to be completed accurately in their entirety. Failure to do so, can subject the taxpayer to penalties. Completed delinquent forms will then be processed through the examination process by the examiner.

The examiner must inquire about the extent of the entity's knowledge of electronic filing (e-file) process. The examiner is to educate the entity of the benefits of e-file. The examiner is also to provide all the necessary information the entity needs to e-file their Form 8300. The examiner will request the entity's e-file forms. If the entity agrees to e-file, the examiner is to obtain confirmations of delinquent filings from the e-file portal prior to the conclusion of examination. Confirmations are to be included in the case file for support documentation that delinquent forms have been processed. Penalties associated with delinquent forms are processed during the examination. The examiner is to solicit payment during the examination. If taxpayer refuses to pay at the time of examination, they will be billed for the assessed penalties.

Taxpayers currently still have the option to paper file Form 8300. However, e-file is currently under consideration for Form 8300. Until mandatory e-file is finalized, entities may choose how to file. If entities choose to paper file, the examiner must collect and process delinquent forms. Examiner must notate in red on the top of the form, "Delinquent Return Secured by Examination" and include the date received. The examiner must make copies of the forms, then mail the original delinquent paper Form 8300 directly to the BSA Compliance Department, CTR Operations located on the 8th floor of the Detroit Federal building in Detroit. The most current address is available on the BSA Policy SharePoint. Examiners must copy the original delinquent forms and identify them in the case file by writing or stamping "COPY" . Copied Forms must be kept in the case file.

During a Form 8300 examination, the examiner should determine if a separate FBAR examination is warranted. Document these actions on Lead Sheet #305, The Form 8300 FBAR Lead Sheet.

If relevant to the Form 8300 examination under Title 26, probe for foreign financial accounts during the initial interview. Take care, however, not to cross the line into a Title 31 examination for FBAR, for example, do not ask if the entity filed an FBAR.

Research FinCEN Query for any FBARs filed by the entity in previous years.

Upon identification of a potential FBAR violation in furtherance of a Title 26 violation that warrants further investigation, the examiner will prepare the Form 13535, Report of Foreign Bank and Financial Accounts Related Statute Memorandum.

Lead Sheet #405, Fraud Awareness Lead Sheet, fulfills the requirement to make a comment on fraud in every case. This is a mandatory lead sheet, however if it is determined that there are no fraud indicators, examiners do not need to print. Check the appropriate box on Form 4318 and initial.

Final referral procedures depend on the underlying nature of the violation identified and if it is a civil or criminal referral.

To make a judgment on fraud, the examiner must assess knowledge and intent. Acquiring information regarding knowledge and intent occurs during the entire examination.

Statements made during Form 8300 interviews can demonstrate the entity’s knowledge. The degree of knowledge may be determined by asking the following questions during the initial interview:

Knowledge can also be shown through interviews of salespersons and employees in the accounting department, regarding procedures and training on Form 8300 reporting requirements.

A key point in demonstrating knowledge and intent is the date of the first filed Form 8300. Subsequent failures to file Form 8300 may indicate intentional failures on the part of the trade or business.

To confirm indications of fraud, it is important to establish not only knowledge of the requirements but intentional/willful determination not to comply with those requirements. Indicators of intent include:

The examiner should follow the guidelines on the Fraud Awareness Lead Sheet for any person involved in a transaction who had sufficient knowledge of the Form 8300 filing requirement but who willfully failed to file, filed a form with false information, or attempted to cause a Form 8300 not to be filed. The following steps should be followed:

If the FEA agrees that indications of fraud exist, the examiner will prepare Form 13639, Fraudulent Intent Referral Memorandum (FIRM). The instructions are attached to the memorandum.

If firm indications of fraud are present, the FEA will recommend the preparation of Form 2797. This decision is memorialized on the FIRM.

Fraud resources include:

If the examiner has determined that a penalty is applicable per IRC 6721, Failure to File Correct Information Returns, or IRC 6722, Failure to Furnish Correct Payee Statements, the penalty will be assessed if it is determined that the reasonable cause criteria for the violation has not been met.

The examiner will document the consideration of a reasonable cause waiver using Lead Sheet #415, Reasonable Cause Check Sheet – Form 8300. This workpaper lists the action items and requirements needed for a reasonable cause waiver to be applied. In addition to this lead sheet checklist, the examiner is to refer to the full penalty relief criteria contained in IRM 20.1.1.3.2, Reasonable Cause (Introduction and Penalty Relief), and IRM 20.1.7.12.1, Reasonable Cause (Information Return Penalties), prior to making a final determination. If criteria for a reasonable cause waiver are met or even if they are not, the examiner will include Lead Sheet #415 in the case file and explain findings in the Facts section and acknowledge there was manager concurrence.

The examiner will secure written documentation of review and approval by the Group Manager to assess or waive a penalty prior to presenting penalty proposal to taxpayer. (IRC 6751(b), Approval of Assessment)

The examiner will determine if penalty was due to willful neglect? If a penalty is determined to be a result of willful neglect reasonable cause may not be considered to waive the penalty. (26 CFR 301.6724-1(a)(1), Waiver of the Penalty -General rule)

The examiner will waive a penalty for reasonable cause if the entity establishes the following criteria: (26 CFR 301.6724-1(a)(2), Waiver of the penalty - Reasonable cause defined)

The examiner will consider significant mitigating factors as defined by 26 CFR 301.6724-1(b), Significant Mitigating Factors. The factors include:

The examiner will consider events beyond the entity’s control as defined by 26 CFR 301.6724-1(c), Events Beyond the Filer's Control. Events beyond the filer’s control may include:

The examiner will determine if the entity was acting in a responsible manner when TINs are missing. The examiner will follow IRM 20.1.7.12.2.1, Missing TINs & 26 CFR 301.6724-1(e), Acting in a Responsible Manner - Special Rules for Missing TINs, when making the determination of responsible manner. The criteria include:

The examiner will determine if the entity was acting in a responsible manner when incorrect TINs are included on filed forms. The examiner will follow IRM 20.1.7.12.2.3, Incorrect TINs, & 26 CFR 301.6724-1(f), Acting in a Responsible Manner - Special Rules for Incorrect TINs, when making the determination. The criteria include the following:

Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business, cases selected for examination may be surveyed any time prior to assignment to an agent, or after assignment to an agent, but before receipt or review of any records. Once records are received or reviewed, the return may not be surveyed.

BSA Form 1900, BSA Survey Form, must be used to survey all Form 8300 cases. The examiner and group manager must complete BSA Form 1900 to document the reasons for surveying a case and both must sign and date the form. It can be used regardless of the title under which the examination was assigned. It can be used for surveys both before and after assignment. The BSA Form 1900 to be used for Form 8300 examinations can be found at: https://organization.ds.irsnet.gov/sites/SbseFraudBSA/BkSecAct/8300/Forms%20Documents/Forms/AllItems.aspx.

Valid reasons for surveying a case include, but are not limited to:

Invalid reasons for surveying a case include, but are not limited to:

If a Form 8300 case is received in the field and the manager and examiner, prior to contacting the entity, concur that the examination should be initiated using Title 31 procedures see IRM 4.26.11.12.9.

Survey cases do not require IDRS prints.

The BSA Form 1900, which identifies the package as a Form 8300 survey must be included in the case file that is closed to the BSA Compliance Department, Detroit.

If, after the interview and review of records for the selected six months, it appears that the reportable transactions are minimal or that there are no deficiencies in the internal controls resulting in incorrectly filed or unfiled Form 8300 and if:

Both letters may be completed electronically.

As with all BSA letters, the group manager must sign the letter prior to issuance.

Provide the letter to the business either in person or by mail.

Complete lead sheet #400 which provides spaces for reasons for non-assertion of a penalty as well as for penalty approval.

The No Issue case file is assembled as follows:

When closing the case on ERCS, the PX record will be updated to status "41" and disposal code "02" .

The case file is sent to the Detroit Federal Building, BSA Compliance Department, Attention 8300 Penalty Team. The most current mailing address is available on the BSA Policy SharePoint.

If the BSA 8300 Penalty Team does not receive the case file within 20 days of being put into status "41" , the ERCS record will be returned to group in status "12" . For this reason, the group manager should ensure the closed case files are timely shipped to the Detroit Federal Building, BSA Compliance Department. The case is not considered closed until it reaches status "90" on ERCS.

When CTR Operations receives the case from the field and if case is in order, the case status will be changed from status "41" to status "90" . When a case has been in status "41" for over 20 days, case is subject to be returned to status "12" . CTR Ops Penalty Team will contact the group manager, prior to returning the case to status "12" , to determine if there is any resolution to be able to get case into status "90" . If case needs rework, the case will be returned to the group and case will be put back in status "12" by CTR Operations. It is the responsibility of the group manager to ensure case is complete and sent timely to CTR Operations when case is closed out of the group.

Form 8300 civil penalties are applied under IRC 6721 and IRC 6722. These penalties may apply to negligent or intentional disregard conduct but will not apply in the case of reasonable cause. To determine reasonable cause, see IRC 6724, Waiver; Definitions and Special Rules, 26 CFR 301.6724-1, Reasonable Cause, and IRM 20.1.1.3.1, Unsigned or Oral Requests for Penalty Relief.

IRC 6721 provides for a penalty when an information return is not timely and/or correctly filed by the due date of the return.

IRC 6722 provides for a penalty when a payee statement is not timely and/or correctly furnished.

Additional information on penalties may be found in IRM 20.1, Penalty Handbook.

Case file assembly in this section is for cases that involve a penalty assessment under IRC 6721, Failure to File Correct Information Returns, and/or IRC 6722, Failure to Furnish Correct Payee Statements, or that involve intentional disregard where there is no pre-assessment appeal by the entity.

On the outside of the folder:

To the inside left of the case folder, staple:

Loose inside the folder include:

The examined closed case files must be shipped to the Detroit Federal Building, Attention 8300 Penalty Team. The most current address is available on the BSA Policy SharePoint. The following procedures will be used:

All Form 8300 cases must remain in their original yellow folders.

Intentional disregard penalties are the only penalties that BSA proposes that have pre-assessment appeal rights. Guidance on appealing penalties can be found in IRM 20.1, Penalty Handbook. Entities are required to receive a Letter 4596, Form 8300 Intentional Disregard 30 Day Letter, advising them of their appeal rights prior to assessing the intentional disregard penalty under section IRC 6721(e), Penalty in Case of Intentional Disregard. Otherwise, entities receive Letter 4595, Form 8300 No Intentional Disregard 30 Day Letter, that advises them of their post-assessment appeal rights.

All unagreed cases are to be closed within twenty days from the earlier of the date:

The examiner must prepare a rebuttal to the appeal within seven days of receipt. A BSA Policy analyst will review the case within ten days of receipt for completeness and technical and procedural accuracy.

If a business contests the proposed intentional disregard penalty and IRS does not agree with their position, the business is entitled to a pre-assessment appeal hearing and the case files must be sent to Appeals. The BSA examiner must prepare a rebuttal to the appeal, and the group manager must approve both the rebuttal and the adequacy of the proposed penalty. The examiner is required to receive an opinion from local Area Counsel as to whether they would support the proposed intentional disregard penalties.

BSA groups will update the PX record on ERCS to Status "15" and send their Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business, intentional disregard Appeals cases to the BSA Policy Analyst at the most current address available on the BSA Policy SharePoint found at: https://organization.ds.irsnet.gov/sites/SbseFraudBSA/BkSecAct/SitePages/Home.aspx.

The BSA Policy Analyst will review the statute of limitations and e-mail the group manager to update the statute on ERCS as needed. The default statute should be January 1 (01-01-XX) three years from the tax period examined or the regular statute of three years from the first filed Form 8300.

BSA Policy will review the case within ten days of receipt for completeness and technical and procedural accuracy during which time the case remains in Status "15" .

If the entity responds to the 30-day letter by requesting an Appeals conference, examiners must follow the applicable procedures in this subsection.

To be considered "adequate" , a formal written protest and a small case request must contain all information required by Pub 5 (with exceptions noted in the table below). Adequacy of a protest is generally not determined based on its substantive content, such as whether the protest contains enough facts or legal support.

When a taxpayer requests an Appeals conference, examiners must follow the applicable procedures in the following table:

Form 3198 and Form 8278 are mandatory closing documents for Form 8300 cases closed under Title 26. Form 3244-A is mandatory for Form 8300 cases when payment is received.

Form 3198 must be completed for all examined Form 8300 cases.

Form 8278 is an adjustment document used for the manual assessment or abatement of miscellaneous civil penalties that are not subject to deficiency procedures. The form is available on the forms repository or BSA Policy SharePoint and is a mandatory closing document for Form 8300 cases closed under Title 26.

Form 3244-A must be prepared for each year in which payment is received.

The identification of potential income tax, employment tax, and ATAT referrals is required as part of the examination process. In addition, a Form 8300 examination may uncover other information which should be referred to other business units. The examiner charges time to the case for identifying and submitting these referrals.

Form 5346, Examination Information Report, must be completed when a related return should be considered for an examination. Instructions for completion appear with the form. Transactions may or may not have been reported on a Form 8300.

Form 14242, Reporting Abusive Tax Promotions and/or Promoters, must be completed to refer information to the Lead Development Center (LDC). Follow similar procedures as for Form 5346 above. If approved by the group manager, Form 14242 and attachments should be emailed to the appropriate BSA Policy Analyst. If Form 14242 cannot be emailed, then mail or fax it to the BSA Policy Analyst with a copy to BSA ECS and a copy retained in the administrative file. The analyst name and address are available on the BSA Policy SharePoint.

When it is determined the case does not meet the local criminal referral requirements, and BSA and the FEA believe the information should be shared with CI, the following actions will be taken:

Form 3949, Information Report Referral, is used to record and control information items or tips provided by informants (whistleblowers) in connection with violation of the Internal Revenue Code. Form 3949-A, Information Referral, is completed by an informant who does not want an award. Instructions are on the reverse of the Form. A mailing address is provided for the completed form. If an award is requested, Form 3949 is completed by the examiner receiving the information and accompanied by Form 211, Application for Award for Original Information. Detailed procedures for these forms are given in IRM 25.2.1, General Operating Division Guidance for Working Whistleblower Claims. Routing is determined by the amount of the unreported income and criminal potential. BSA forwards the information to Fraud using the Form 15221 for assistance in determining criminal potential. If approved, a Form 2797 is completed and forwarded to the SAC at the appropriate CI Field Office with a copy retained in the administrative file.

Form 2797 is used by Compliance function personnel to refer potential criminal fraud cases to CI for appropriate action. It is used after a Form 15221 has been forwarded to OFE and approved. For additional information about the FIRM and the Form 2797 refer to IRM 4.26.8.6, Coordination with a Fraud Enforcement Advisor.

Intentional Disregard Form 8300 penalty cases are sent to the BSA Policy analyst for review, at the address shown on the BSA Policy SharePoint. Refer to IRM 4.26.11.11.2.

All other closed case files are mailed to CTR Operations located in the Detroit Federal Building, Attention: BSA 8300 Penalty Team. The address can be found on the BSA Policy SharePoint.

Penalty cases that warrant a re-examination will require for examiner to create a zip file that will be sent to ECS by the group manager. Examiner, with manager consent, will determine if case needs to be revisited in one year from the date the case is closed or in two years. Risk factors of the case to be considered when making date determination.

The following naming convention to be used when creating the zip file (Last four of TIN of the Business_Group Number_Follow up date) (for example xxxx_Group 1604_06-05-23. Zip file to contain the following files:

Naming convention for letters (Letter Type_Last four of EIN_Group_Closure Date) (Example: L4595_XXXX_1609_12-15-21).

Form 2848, Power of Attorney and Declaration of Representative, is effective for Form 8300 examinations worked under Title 26 or under Title 31.

See IRM 20.1.7.4, Powers of Attorney for Civil Penalties, and IRM 4.11.55, Power of Attorney Rights and Responsibilities.

Before issuing any summons, the Form 8300 examiner should prepare Form 4564, Information Document Request, listing the specific documents needed to perform a Form 8300 examination. A summons may be needed if the business fails or refuses to comply or if records are needed from a third-party record keeper, such as a bank, which requires a summons. The summons used depends upon whether the Form 8300 examination is being conducted under Title 26 or Title 31.

In a Title 26 examination, the examiner issues IRS Form 2039, Summons. See your manager for assistance when issuing summonses. Title 26 summonses are discussed in the Summons Handbook beginning at IRM 25.5.1, Summons, Introduction. If the subject of the examination is an attorney, see IRM 4.26.12, Examination Techniques for Form 8300 Industries.

The Title 31 summons is FinCEN Form 113, BSA Summons. It is available on the BSA Policy SharePoint. The income tax summons (IRS Form 2039) is not used in a Title 31 examination. Title 31 summons procedures are set out in the instructions attached to the BSA Summons. They are discussed in IRM 4.26.8, Special Procedures. A parallel discussion is found in IRM 25.5.11, Title 31 Bank Secrecy Act Summons.

There are several instances when third parties may be needed to testify or provide records. These may include:

Third-party notification, as required by IRC 7602(c)(1), Notice of Contact of Third Parties, is applicable to Form 8300 examinations conducted under Title 26. See IRM 4.11.57, Examining Officers Guide (EOG), Third Party Contacts. If the subject of the examination is an attorney, see IRM 4.26.12, Examination Techniques for Form 8300 Industries.

Effective August 15, 2019, Pub 1 no longer satisfies the advance notice requirement of IRC 7602(c)(1), Notice of Contact of Third Parties.

IRC 7602(c)(3) contains 3 exceptions to the above requirements. The exceptions are:

IRC 7602(c)(3)(A) which is if the taxpayer authorizes the contact, we do not need to provide notice or record the contact. If the taxpayer authorizes a contact with a specific third party, then notice, (Letter 3164-S) is not required nor is recording (Form 12175). This applies only to the third parties that are specifically named in the authorization (Form 12180).

In all cases involving third-party contact notices provided after August 15, 2019, or in which contacts with third parties will occur after August 15, 2019, a notice meeting the new requirements must be provided. Employees may not contact a third party until the 46th day following the date of the notice.

Employees may reissue notices yearly, if necessary.

Letter 3164-S (Rev 7-2019) has been updated to reflect new requirements.

Contact with third party can be made immediately and examiner does not have to wait 45 days if Form 12180 has been approved and received from the taxpayer.

When conducting a Form 8300 examination under Title 26, the examiner should not inquire about Title 31 requirements, such as FBAR requirements. During a Form 8300 examination under Title 26, information may be identified that indicates that a potential civil or criminal violation of Title 31 has occurred. When a related statute determination has been made, the information evidencing the violation may be used in the Title 31 case. Refer to IRM 4.26.14, Disclosure, for an in-depth discussion. The examiner must involve the group manager in any related statute determination.

Some BSA examinations of Form 8300 are started under Title 31. This is generally true when the Form 8300 entity also has anti-money laundering program requirements under Title 31. For Title 31 examinations, FinCEN's Re-Dissemination Guidelines govern disclosure. See IRM 4.26.14 for an in-depth discussion.

Use of a CAS must be considered on Form 8300 examinations if:

Procedures for requesting CAS assistance are the same for Title 26 and Title 31 cases.

All inquiries, correspondence, and so on, pertaining to any of the materials in IRM 4.47, Computer Audit Specialist, or the Computer Audit Specialist Program, should be directed to the office of the CAS National Program Manager. (IRM 4.47.2, CAS Technical and Procedural Information)

The examiner may access the BSA Policy SharePoint site at https://organization.ds.irsnet.gov/sites/SbseFraudBSA/BkSecAct/SitePages/Home.aspx, to obtain the most current BSA program information and documents. The BSA Policy SharePoint site is a controlled access site; only BSA employees have access. The group manager can request access for a BSA employee who needs to be added to the access group.

The examiner should contact the group manager with any technical questions pertaining to Form 8300 or for procedural assistance. Questions for BSA Policy Analysts or Technical Advisors must go through the group manager. Examiners should not contact technical advisors directly.

Examiners must request to stop Form 8300 correspondence so that BSA Compliance Department, Detroit does not send a penalty letter to a filer that has already been examined by a field examiner.

To request the BSA Compliance Department, Detroit, to stop correspondence related to Form 8300 the examiner must complete Form 8300 Request to Stop 8300 Correspondence available on the BSA Policy SharePoint.

Examiners must include the beginning date and the ending date of the examination period on their Request to Stop Correspondence. This ensures the documents filed during the examination period are excluded from CTR penalty runs. The restart date will follow the end date of the examination period. The full 12-month examination period should be included in the request.

The examiner must use secured e-mail to forward the request to the 8300 Penalty Team using the stop correspondence e-mail address *SBSE 8300 Stop Correspondence (organizational mailbox). The examiner will receive a reply from the mailbox that the request has been received for processing. The request will be assigned and processed within 48 hours.

If an examiner needs assistance on the Form 8300 Stop Correspondence procedures the examiner may send an e-mail to *SBSE 8300 Stop Correspondence or utilize the CTR Contacts on BSA Policy SharePoint.

The examiner must document the request to stop correspondence in the Activity Record and place the requests and any e-mail responses from the BSA Compliance Department, Detroit in the "Miscellaneous" section of the workpapers.

The Team Lead in Detroit or the assigned tax examining technician will process the request. An acknowledgement response is generated from the organizational mailbox or the assigned processor.

BSA examinations generally take place at the place of business. If the neighborhood or circumstances at the place of business cause the examiner to have a safety concern, the examiner should:

Another option is to request an armed escort.

The IRS has two Servicewide employee safety programs designed to warn employees of taxpayers who have been designated as potentially dangerous and or should be approached with caution:

See IRM 4.2.1.2, Potentially Dangerous Taxpayer (PDT) and Caution Upon Contact (CAU) Indicators, for more information.

Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business, is a dual-reporting form. The report is required to be filed with the Internal Revenue Service (IRS) by IRC 6050I, Returns Relating to Cash Received in Trade or Business, etc. (Title 26) and the Financial Crimes Enforcement Network (FinCEN) under 31 USC 5331, and 31 CFR 1010.330, Reports Relating to Currency in Excess of $10,000 Received in a Trade or Business. Only one form is required to be filed for a transaction subject to both sections of the law.

Trades or business with an anti-money laundering program requirement should be opened and started under Title 31. Violations of their AML program requirements and the Form 8300 requirements will be determined during the Title 31 examination. Violations of the AML program requirements are cited on the Letter 1112. Violations associated with a Form 8300 requirement are assessed by IRS under Title 26 after the Title 31 examination is closed.

FinCEN delegated to the IRS the authority under 31 USC 5318(a)(3), Compliance, Exemptions, and Summons Authority, and 31 USC 5318(b), Limitations on Summons Power, to examine "any" nonfinancial trades or businesses for compliance with the Form 8300 requirements of the BSA and to investigate possible civil violations of these requirements. This enables the IRS to share the results of Title 31 examinations with FinCEN and other federal and state governmental agencies, for purposes consistent with the BSA, without disclosure issues. Even though examined under Title 31, violations associated with a Form 8300 requirement are, in most circumstances, assessed by IRS under Title 26 after the Title 31 examination is closed.

Form 8300 penalties asserted under Title 26 IRC 6721, Failure to File Correct Information Returns, and IRC 6722, Failure to Furnish Correct Payee Statements, are assessed and collected by the IRS. Form 8300 penalties asserted under 31 USC 5321, Civil Penalties, are assessed by FinCEN and collected through the court system.

Form 8300 penalties for causing or attempting to cause a business to fail to file a return or to file a return with a material omission/misstatement or structuring asserted under IRC 6050I(f)(2), Penalties, are the same as those under IRC 6721 or IRC 6722. Structuring penalties under Title 31 found in 31 USC 5321(4), Structured Transaction Violation, are different.

When a business has requirements under both Title 31, such as the AML program requirement, and Titles 26 and Title 31 to file a Form 8300 , the examinations should be started under Title 31. This allows the examination to cover not only the determination of whether their AML program is adequate but to secure any delinquent Form 8300. In the majority of cases, the Title 31 examination will be closed citing AML program violations and a separate case file will be built under Title 26 to assess penalties on violations of the Form 8300 and determining compliance with the annual reporting statements required under IRC 6050I.

For procedures see IRM 4.26.8.9, Nonfinancial Trade or Business Examination Initiated Under Title 31, IRM 4.26.8.7, Trade or Business Examined under Title 31, and IRM 4.26.8.8, Trade or Business Examined with AML Program Requirements.

If a Title 26 Form 8300 case is received in the field and the BSA manager and examiner, prior to contacting the entity, concur that the examination should be initiated using Title 31 procedures, the examiner should survey the Title 26 Form 8300 case, return it to the group manager who will then return it to ECS.

The statute of limitations if the Form 8300 case is pursued under Title 26, is limitless in the case of an unfiled Form 8300. See IRM 4.26.10.12, Authority. Under IRC 6724(b), Payment of Penalty, and IRC 6671(a), Penalty Assessed as Tax, penalties relating to information returns "shall be paid on notice and demand by the Secretary in the same manner as taxes" . Thus, the statute of limitations found in IRC 6501, Limitations on Assessment and Collection, applies to any Form 8300 which has been filed.

No statute of limitations applies to non-filed returns. Penalties may be assessed at any time. See IRC 6501(c)(3), No Return.

For missing or incorrect information on a filed information return, the penalties must be assessed within three years after the due date of the return or the date filed, whichever is later. See IRC 6501(a), General Rule.

There is no statute date for failure to notify under Title 26 IRC 6722.

There is no form designed to accommodate an extension of the statute of limitation on IRC 6721 or IRC 6722 penalties.

Form 872, Consent to Extend the Time to Assess Tax, is used to extend the statute of limitations on IRC 6721 penalties. Line (1) of the extension form is completed as follows for "the kind of tax" :

See IRM 25.6.22, Statute of Limitations, Extension of Assessment Statute of Limitations by Consent, for additional information.