Rettig Article on CTR Form 8300 and Its Context in Tax and Criminal Law Enforcement (3/11/13)

In my Federal Tax Procedure Book, I devote a short section to Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business, often referred to as a Currency Transaction Report or "CTR."  The Form is here.  The short discussion is adequate for the book that must cover so much other ground.  However, there is a lot of detail behind the summary.  Fortunately, Chuck Rettig, a prominent practitioner, provides that detail in a recent article, Form 8300: Reporting Domestic Currency Transactions (J. Tax Prac. & Proc. December 2012-January 2013).  His article is posted on his website and may be linked here.  In addition to developing the nuances relating to the CTR, Chuck's article places in the CTR in the universe of federal reporting requirements and enforcement initiatives relating to money laundering activities.  To be sure, the Form 8300 is in the Internal Revenue Code and plays a prominent role in tax enforcement.  But it also plays a more prominent role in detecting money laundering and the crimes behind money laundering.

I strongly recommend Chuck's article to the readers of this blog interested in the Form 8300 and its criminal enforcement context.

I offer the following which is my summary description of the Form from my Tax Procedure Book (footnotes omitted).

(2) Currency Transaction Reports (“CTRs”).

There are still other return reporting requirements that are designed to identify income of types that might easily escape the tax system or that might evidence nontax illegal conduct.  The broadest example is § 6050I which requires that persons involved in a trade or business who receive cash payments in excess of $10,000 in one transaction (or more than one transaction, if the transactions are related) to report the receipt to the IRS.  The report is made by Form 8300 (sometimes referred to as a currency transaction report or “CTR”), which in its latest iteration is called both IRS Form 8300 and FinCEN Form 8300.  This means that the information is available to each of those agencies and may be used for congressionally approved purposes, most specifically federal law enforcement (not just tax law enforcement).  FinCEN is the acronym for the Government’s Financial Crimes Enforcement Network which gathers information useful in investigating and prosecuting financial crimes.  As most pertinent to this class, of course, the information is available to the IRS for both civil and criminal tax purposes.  But, ultimately, the information may be most useful for money laundering enforcement in which the IRS is a principal investigative and information source.

IRS Use of Suspicious Activity Reports of Financial Institutions (11/24/12)

Financial institutions are required to file Suspicious Activity Reports with the Financial Crimes Enforcement Network (FinCEN).  31 USC § 5318(g), here; the SAR form is here; FinCEN guidance is here; see also Wikipedia entry here.  For general background, I offer the following from my Federal Tax Crimes book (footnotes omitted):

Although there is no general duty under American law to report crimes, certain financial institutions (including money services businesses and high cash businesses such as casinos) are required to file with FinCen a report, called a Suspicious Activity Report (“SAR,” but not to be confused with the Special Agent’s Report with the same acronym which we encountered earlier).  This SAR combines features of earlier reports and is in addition to the CTR if required.  The SAR is required if the financial institution “knows, suspects, or has reason to suspect the money was derived from illegal activities” or the transaction was “part of a plan to violate federal laws and financial reporting requirements (structuring).”  The financial institution is not required to investigate or confirm that a crime has been committed. The financial institution is prohibited from telling its customer of the filing of the report, even in response to a subpoena.  The financial institution is protected from liability to the customer.  The IRS may share this SAR with the IRS examination function having civil tax responsibility, but components of the IRS receiving the information are required to keep the information secure to the same extent as if received from a confidential informant.

Recently, some divisions of the IRS have released memoranda advising personnel about the control and confidentiality requirements with respect to accessing SAR information.  See e.g., a recent SB/SE Division Memorandum (SBSE-04-1012-063, dated 10/16/12), here, and an estate and gift tax memorandum dated July 13, 2012, here.  See also an earlier Memorandum of Understanding -- in Government acronym-speak, "MOU," referenced and available at IRM 4.26.14, here, Exhibit 4.16.14-2, here.  For some reason, the MOU is reviewable only on line and then on a page by page basis.