IRS is WATCHING YOU! (Long) 31 CFR 103+
Jay James
************************************************************
Fellow USENETers. Enclosed is some juicy stuff (WARNING: LONG
POST, 20 PAGES) I scanned from the local law library. The relevant
portions can be found in Title 31 of the "Code of Federal
Regulations" Part 103 (FINANCIAL RECORDKEEPING AND REPORTING OF
CURRENCY AND FOREIGN TRANSACTIONS).
This is believed to be a current copy of the law, as it exists in
1994, notwithstanding the dates of 1988, etc. that appear
throughout. The law is amended every year it appears, with the old
law usually remaining in place.
The following is of course only to be used for academic purposes
and scholarly review, but feel free to distribute this data (no
credit required. Sheez, I don't need to be audited, not that I'm
doing anything wrong). Of particular interest is how closely the
Government forces banks to spy and report on their customers
(though stock brokerages and casinos are also subject to
regulations, albeit less stringent it appears).
Especially interesting is the instruction in the "examples" below,
where the Bank is instructed by Treasury to "Know Your Customer" so
that the bank may inform the IRS of any irregularities (like
currency transactions or moving money between accounts in excess of
$10,000 a day. Or a series of apparently related transactions that
total in excess of $10,000. Or a single transaction of $9,999, as
it turns out, from an example not included below.).
Amusing are the 1-800 toll free telephone numbers that are
published along with the rules so bank tellers may turn in their
customers. The best one I thought was "1-800-Be-Alert".
Here's one for the IRS: '1-800-EAT-SHIT'!
Also, in the Code portion of the Regulations themselves, (the below
are just examples found in the Appendix) it is recited how banks,
stock brokerages and casinos must be able to reconstruct ALL
account activities from between 2 years (minimum) to 5 years or
more (more if there is fraud present); how rewards of up to a
maximum of $150,000 (or 25% of the disputed monies, whichever is
less) are offered to informants to turn in suspected violators (if
the amount in dispute is over $50k); how innocent violators can
still be fined up to $1,000 or put in jail for 1 year, while
willful violators can go to jail for 5 years and be fined $250,000.
The below is an abbreviated list, just to give a flavor of how
extensive the regulations are, but I have not edited anything, just
deleted extraneous examples [WITH MY COMMENTS IN CAPS. I COULDN'T
RESIST--IT'S MY POST, SO MY SOAPBOX!]. Deleted are examples
dealing with cash producing businesses, which typically get a
waiver from their bank in order to deposit an amount above $10,000
per day. But note that even excessive deposits from these exempted
businesses can trigger a red flag with the IRS.
Also note how internal auditors for banks are encouraged to report
unusual account transactions. Next time you get a friendly call
from your bank inquiring as to a certain transaction, be careful in
what you say to them--they are working for the IRS. Anybody have
any good stories they care to share about this?
It makes you wonder whether in fact we now live in a police state,
with the IRS and Treasury being the police.
***************************************************************
PS--sorry about any weird line feeds or carriage returns, but
formatting is such a problem on internet, especially when your
dealing with different machines. Update: it appears O.K.
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APPENDIX-ADMINISTRATIVE RULINGS
88-1 (June 22, 1988)
Issue
What action should a financial institution take when it
believes that it is being misused by persons who are intentionally
structuring transactions to evade the reporting requirement or
engaging in transactions that may involve illegal activity such as
drug trafficking, tax evasion or money laundering?
Facts
A teller at X State Bank notices that the same person comes
into the bank each day and purchases, with cash, between $9,000
and $9,900 in cashier's checks. Even when aggregated, these
purchases never exceed $10,000 during any one business day. The
teller also notices that this person tries to go to different
tellers for each transaction and is very reluctant to provide
information about his frequent transactions or other information
such as name, address, etc. Likewise, the payees on these
cashier's checks all have common names such as "John Smith" or
"Mary Jones." The teller informs the bank's compliance officer that
she believes that this person is structuring his transactions in
order to evade the reporting requirements under the Bank Secrecy
Act. X State Bank wants to know what actions it should take in
this situation or in any other situation where a transaction or a
person conducting a transaction appears suspicious.
Law and Analysis
As it appears that the person may be intentionally structuring
the transactions to evade the Bank Secrecy Act reporting re-
quirements, X State Bank should immediately telephone the local
office of the Internal Revenue Service ("IRS") and speak to a
Special Agent in the IRS Criminal Investigation Division, or should
call 1-800-BSA-CTRS, where his call will be referred to a Special
Agent.
Any information provided to the IRS should be given within the
confines of SS 1103(c) of the Right to Financial Privacy Act. 12
U.S.C. 3401-3422. Section 1103(c) of that Act permits a financial
institution to notify a government authority of information
relevant to a possible violation of any statute or regulation.
Such information may consist of the names of any individuals or
corporate entities involved in the suspicious transactions; account
numbers; home and business addresses; social security numbers; type
of account; interest paid on account: location of the branch or
office where the suspicious transaction occurred: a specification
of the offense that the financial institution believes has been
committed; and a description of the activities giving rise to the
bank's suspicion. S. Rep. 99-433, 99th Cong., 2d Sess., pp. 15-16.
Additionally, the bank may be required, by the Federal
regulatory agency which supervises it, to submit a criminal
referral form. Thus, the bank should check with its regulatory
agency to determine whether a referral form should be submitted.
Lastly, under the facts as described above, X State Bank is
not required to file a Currency Transaction Report ("CTR") because
the currency transaction (i.e. purchase of cashier's checks) did
not exceed $10,000 during one business day. If the bank had found
that on a particular day the person had in fact used a total of
more than $10,000 in currency to purchase cashier's checks, but had
each individual cashier's check made out in amounts of less than
$10,000, the bank is obligated to file a CTR, and should follow the
other steps described above.
Holding
If X State Bank notices that a person may be misusing it by
intentionally structuring transactions to evade the BSA reporting
requirements or engaging in transactions that may involve other
illegal activity, the bank should telephone the local office of the
Internal Revenue Service, Criminal Investigation Division, and
report that Information to a Special Agent, or should call 1-800-
BSA-CTRS. In addition, the Federal regulatory agency which
supervises X State Bank may require the bank to submit a criminal
referral form. All disclosures to the Government should be made
in accordance with the provisions of the Right to Financial Privacy
Act.
Facts
A customer walks into B National Bank ("B") with $15,000 in cash
for deposit into her account. As is required, the bank teller
begins to fill out a Currency Transaction Report ("CTR", IRS Form
4789) in order to report a transaction in currency of more than
$10,000. While the teller is filling out the CTR, the customer
mentions to the teller that she has just received the money in a
letter from a relative in France. Should the teller also file a
CMIR, either on the customer's behalf or on the bank's behalf?
Law and Analysis
B National Bank should not file a CMIR when a customer deposits
currency in excess of $10,000 into her account, even if the bank
has knowledge that the customer received currency from a place
outside the United States . 31 CFR 103.23 requires that a CMIR be
filed by anyone who transports, mails, ships or receives, or
attempts, causes or attempts to cause the transportation, mailing,
shipping or receiving of currency or monetary instruments in
excess of $10,000, a place outside the United States.
The obligation to file the CMIR is solely on the person who
transports, mails, ships or receives, or causes or attempts to
transport, mail, ship or receive. No other person is under any
obligation to file a CMIR.
[NOTE HOW THE OBLIGATION FALLS ON THE INDIVIDUAL MAKING THE
DEPOSIT. SO IF THE POOR PERSON FORGETS OR DOES NOT KNOW TO FILE A
REPORT, IT'S A TECHNICAL VIOLATION, ALTHOUGH AS EXPLAINED BELOW THE
BANK HAS A DUTY TO TELL YOU THAT YOU HAVE TO FILE, IF YOU APPEAR TO
BE UNAWARE. BUT IF YOU APPEAR WISE, THE BANK IS ENCOURAGED TO
BECOME INFORMATANTS AND REPORT YOU TO THE IRS, SEE BELOW]
Holding
A bank should not file a CMIR when a customer deposits currency or
monetary instruments in excess of $10,000 into her account even if
the bank has knowledge that the currency or monetary instruments
were received or transported from a place outside the United
States. 31 CFR 103.23. The same is true if the bank has knowledge
that the customer intends to transport the currency or monetary
instruments to a place outside the United States. However, the
bank is required to file a CTR if it receives in excess of $10,000
In cash from its customer, and is strongly encouraged to inform the
customer of the CMIR requirement. In addition, if the bank has
knowledge that the customer is aware of the CMIR reporting
requirement and is nevertheless planning to disregard it or if the
transaction is otherwise suspicious, the bank should notify the
local office of the United States Customs Service (or 1-800-Be
Alert) of the suspicious transaction. Such notice should be made
within the confines of the Right to Financial Privacy Act, 12
U.S.C. 3403(c). [YEA, SOME 'RIGHT'--WITH MORE HOLES THAN SWISS
CHEESE. I LIKE THE VAGUENESS OF THE PHRASE 'OTHERWISE SUSPICIOUS'
ABOVE.]
88-3 (June 22, 1988)
Issue
Whether a bank may exempt "cash-back" transactions of a
customer whose primary business is of a type that may be exempted
either unilaterally by the bank or pursuant to additional authority
granted by the IRS.
Facts
The ABC Grocery ("ABC"), a retail grocery store, has an
account at the X State Bank for its daily deposits of currency.
Because ABC regularly and frequently deposits amounts ranging from
$20,000 to $30,000, the bank has properly granted ABC an exemption
for daily deposits up to a limit of $30,000.
Recently, ABC began providing its customers with a
check-cashing service as an adjunct to its primary business of
selling groceries. ABC's primary business still consists of the
sale of groceries. However, the unexpectedly heavy demand for
ABC's check-cashing service has required ABC to maintain a
substantially greater quantity of cash in the store than was
necessary, for the grocery business in the past. To facilitate the
operations of its check-cashing service, ABC is presenting the bank
with large numbers of checks in "cash-back" transactions, rather
than depositing the checks into its account and withdrawing cash
from that account. X State Bank has just been presented with a
"cash-back" transaction wherein an employee of ABC is exchanging
$15,000 worth of checks for cash. How should the bank treat this
transaction?
Law and Analysis
A cash back transaction is one where one or more checks or
other monetary instruments are presented in exchange for cash or a
portion of the checks or monetary instruments are deposited while
the remainder is exchanged for cash. "Cash back" transactions can
never be exempted from the Bank Secrecy Act reporting requirements.
Thus, the bank must file a Currency Transaction Report on IRS Form
4789 reporting this $15,000 "cash back" transaction, even though
-the customer's account has been granted an exemption for daily
deposits of up to $30,000. This is because SS 103.22(b)(i)
permits a bank to exempt only "(d)eposits or withdrawals of
currency from an existing account by an established depositor who
is a United States resident and operates a retail type of business
in the United States" (emphasis added). As "cash-back"
transactions do not constitute either a "deposit or withdrawal of
currency" within the meaning of the regulations, the bank must
report on a CTR any "cash-back" transaction that results in the
transfer of more than $10,000 in currency to a customer during a
single banking day, regardless of whether the customer has properly
been granted an exemption for its deposits or withdrawals.
Moreover, because "Cash back" transactions are never
exemptible, the bank may not unilaterally exempt "cash-back" trans-
actions by ABC, or seek additional authority from the IRS to grant
a special exemption for ABC's "cash-back" transactions. Instead,
the bank must report ABC's "cash back" transaction on a CTR,
listing it as a $15,000 "check cashed" transaction.
Holding
A bank may never grant a unilateral exemption, or obtain
additional authority from the IRS to giant a special exemption to
the "cash-back" transactions of a customer. A "cash back"
transaction is one where one or more checks or other monetary in-
struments are presented in exchange for cash or a portion of the
checks or monetary instruments are deposited while the remainder is
exchanged for cash. If a bank handles a "cash-back" transaction
that results in the transfer of more than $10,000 to a customer
during a single banking day, it must report that transaction on IRS
Form 4789, the Currency Transaction Report, as a "check ,,-Shed"
transaction, regardless of whether the customer has been properly
granted an exemption for daily deposits or withdrawals.
Issue
If a bank has exempted a single account of a customer into
which multiple establishments of that customer make deposits, must
the bank list all of the establishments on its exemption list or
may the bank list only the SS 103.22(f) information of the
customer's headquarters or its principal business establishment on
its exemption list?
Facts
A fast food company operates a chain of fast-food restaurants
in several states. In New York, the company has established a
single deposit account at Bank A, into which all of the company's
establishments in that area make deposits. In Connecticut, the
company has established ten bank accounts at Bank B; each of the
company's ten establishments in Connecticut have been assigned a
separate account into which it makes deposits. Banks A and B have
properly exempted the company's accounts, but anner in which now
seek guidance on the manner in which they should add these
accounts to their ex emption lists. All of the company's estab-
lishments use the same taxpayer identification number ("TIN").
Law and Analysis
Under the regulations, the bank must keep "in a centralized
list", SS 103.22(f) information for "each depositor that has en-
gaged in currency transactions which have not been reported because
of (an) exemption * * * "
[ADDITIONAL MATERIAL DELETED]
Issue
Under SS 103.22 of the BSA regulations, may a bank
unilaterally grant one exemption or establish a single dollar
exemption limit for a group of existing accounts of the same
customer? If not, may a bank obtain additional authority from the
IRS to grant a single exemption for a group of exemptible accounts
belonging to the same customer?
Facts
ABC Inc. ("ABC"), with TIN 12-3456789, owns five fast food
restaurants. Each restaurant has its own account at the X State
Bank and each restaurant routinely deposits less than $10,000 into
its individual account. However, when the deposits into these five
accounts are aggregated they regularly and frequently exceed
$10,000. Accordingly, the bank prepares and files one CTR for ABC
Inc., on each business day that ABC's aggregated currency
transactions exceed $10,000. X State Bank wants to know whether it
can unilaterally@ exempt these five accounts having the same TIN,
and, if not, whether it can obtain additional authority from the
IRS to grant a single exemption to the group of five accounts
belonging to ABC.
Law and Analysis
Under SS 103.22(b)(2) (i) and (ii) of the Bank Secrecy Act
("BSA") regulations, 31 CFR part 103, only an individual account of
a customer may be unilaterally exempted from the currency
transaction reporting provisions. The bank may not unilaterally
grant one exemption or establish a single dollar exemption limit
for multiple accounts of the same customer. This is because SSSS
103.22(b)(2)(i) and 103.22(b)(2)(ii) of the BSA regulations only
permit a bank to unilaterally exempt "[d]eposits or withdrawals of
currency from an existing account by an established depositor who
is a United States resident and operates a retail type of business
in the United States." 31 CFR 103.22(b)(2) (i) and (ii).
Section 103.22(e) of the BSA regulations provides, however,
that "[al bank may apply to the * * * [IRS] for additional au-
thority to grant exemptions to the reporting requirements not
otherwise permitted under paragraph (b) of this section - - -" 31
CFR 103.22(c). Therefore, under this authority, and at the request
of a bank, the IRS may, in its discretion, grant the requesting
bank additional authority to exempt a group of accounts when the
following conditions are met:
(1) Each of the accounts in the group is owned by the same
person and has the same taxpayer identification number,
(2) The deposits or withdrawals into each account are made
by a customer that operates a business that may be either unilater-
ally or specially exemptible and each account meets the other
exemption criteria (except for the dollar amount).
(3) Currency transactions for each account individually do
not exceed $10,000 on a regular and frequent basis.
(4) Aggregated currency transactions for all accounts
included in the group regularly and frequently exceed $10,000.
If a bank determines that an exemption would be appropriate in
a situation involving a group of accounts belonging to a single
customer, it must apply to the IRS for authority to grant one
special exemption covering the accounts in question. As with all
requests for special exemptions, any request for additional
authority to grant a special exemption must be made in writing and
accompanied by a statement of the circumstances that warrant
special exemption treatment and a copy of the statement signed by
the customer as required by SS103.22(d). 31 CFR 103.22(d).
[ADDITIONAL MATERIAL DELETED]
Holding
When a customer has more than one account and a bank employee
has knowledge that multiple currency transaction have been
conducted in the accounts or the bank has an existing computer or
manual system that permits it to aggregate transactions for
multiple accounts, the bank should aggregate the transactions in
the following manner.
First, the bank should aggregate for each account all cash-in
or cash-out transactions conducted during one business day. if the
account has an exemption limit, the bank should determine whether
the exemption limit of that account has been exceeded. If the
exemption limit has not been exceeded, the total of the
transactions for that particular account does not have to be aggre-
gated with other transactions. If the total transactions during
the same business day for a particular account exceed the exemption
limit, however, the total of all of the transactions for that
account should be aggregated with any total from other accounts
that exceed their respective exemption limits, with any accounts
without exemption limits, and with any reportable transactions
conducted by or on behalf of the customer not involving accounts
(e.g., purchases of bank checks or "cash back" transactions) of
which the bank has knowledge. The bank should then file a CTR for
the aggregated amount.
89-5 (December 21, 1989)
Issue
How does a financial institution fulfill the requirement that
it furnish information about the person on whose behalf a report-
able currency transaction is being conducted?
Facts
No. 1. Linda Scott has had an account relationship with the
Bank for 15 years. Ms. Scott enters the bank and deposits $15,000
in cash into her personal checking account. The bank knows that
Ms. Scott is an artist who on occasions exhibits and sells her art
work and that her art work currently is on exhibit at the local
gallery. The bank further knows that cash deposits in the amount
of $15,000 are commensurate with Ms. Scott's art sales.
[THIS IS GOOD STUFF. EVER WONDER WHY YOUR NEIGHBORHOOD BANK
TELLERS ARE SO FRIENDLY AND WANT TO KNOW ALL ABOUT YOU? TO COVER
THEIR ASS, THAT'S WHY! (SEE BELOW) GIVE ME AN ATM ANY DAY! OR
SOME MAIL ORDER MONEY MARKET ACCOUNT.]
No. 2. Dick Wallace has recently opened a personal account at
the Bank. Although the bank verified his identity when the account
was opened, the bank has no additional information about Mr.
Wallace. Mr. Wallace enters the bank with $18,000 in currency and
asks that it be wire transferred to a bank in a foreign country.
No. 3. Dorothy Green. a partner at a law firm, makes a $50,000
cash deposit into the firm's trust account{*}, The bank knows that
this is a trust account. The $50,000 represents cash received from
three clients.
{*} This type of account is sometimes called a trust account,
attorney account or special account. it is an account established
by an attorney into which commingled funds of clients may be
deposited. It is not necessarily a "trust" in the legal sense of
the term.
No, 4. Carlos Gomez enters a Currency Dealer and asks to buy
$12,000 in traveler's checks with cash.
No. 5. Gail Julian, a trusted employee o! Q-mart, a large
retail chain. enters the bank three times during one business day
and makes three large cash deposits totalling $48,000 into Q-mart's
account. The Bank knows that Ms. Julian is responsible for making
the deposits on behalf of Q-mart. Qmart has an exemption limit of
$45,000.
Law and Analysis
Under SS 103.28 of the Bank Secrecy Act ("BSA") regulations,
31 CFR part 103, a financial institution must report on a Currency
Transaction Report ("CTR") the name and address of the individual
conducting the transaction, and the identity, account number, and
the social security or taxpayer identification number of any person
on whose behalf the transaction was conducted. See 31 U.S.C. 5313.
"A participant acting for another person shall make the report as
the agent or bailee of the person and identify the person for whom
the transaction is being made." Identifying information about the
person on whose behalf the transaction is conducted must always be
furnished if the transaction is reportable under the BSA,
regardless of whether the transactioninvolves an account.
Because the BSA requires financial institutions to file
complete and accurate CTR'S, it is the financial institution s
responsibility to ascertain the real party in interest. 31 U.S.C.
5313. One way that a financial institution can obtain information
about the identity of the person on whose behalf the transaction is
being conducted is to ask the person conducting the transaction
whether he is acting for himself or on behalf of another person.
Only if as a result of strong "know your customer" or other,
internal control policies, the financial institution is satisfied
that its records contain information concerning the true identity
of the person on whose behalf the transaction is conducted, may the
financial institution rely on those records to complete the CTR.
No. 1. Linda Scott, an artist. is a known customer of the
bank. The bank is aware that she is exhibiting her work at a local
gallery and that cash deposits in the amount of $15,000 would not
be unusual or inconsistent with Ms. Scott's business practices.
Therefore, if the bank through its stringent "know your customer"
policies is satisfied that the money being deposited by Ms. Scott
into her personal account is for her benefit, the bank need not ask
Ms. Scott whether she is acting on behalf of someone else.
No. 2. Because Dick Wallace is a new customer of the bank and
because the bank has no additional information about him or his
business activity, the bank should ask Mr. Wallace whether he is
acting on his own or someone else. This is particularly true given
the nature of the transaction-a wire transfer with cash for
an individual to a foreign country.
[OH YEA, IRS. EVERYBODY WHO WIRES MONEY INTO OR OUT OF THE GOOD
OLE USA IS A MONEY LAUNDERING MOBSTER, IS THAT IT? HAVE YOU EVER
HEARD OF LEGALLY TRYING TO AVOID CONFISCATORY U.S. TAXES?!]
No. 3. Dorothy Green's cash deposit of $50,000 into the law
firm's trust account clearly is being done on behalf of someone
ease. The bank should ask Ms. Green to identify the clients on
whose behalf the transaction is being conducted. Because Ms. Green
is acting both on behalf of her employer and the clients, the names
of the three clients and the law firm should be included on the CTR
filed by the bank.
No. 4. The currency dealer, having no account relationship
with Carlos Gomez, should ask Mr. Gomez if he is acting on behalf
of someone else.
No. 5. Gail Julian is known to the bank as a trusted employee
of Q-mart, who often deposits cash into Q-mart's account. If the
bank, through its strong "know your customer" policies is satisfied
that Ms. Julian makes these deposits on behalf of Q-mart, the bank
need not ask her if she is acting on behalf of someone other than
Q-mart.
['KNOW YOUR CUSTOMER' IS A EUPHEMISM FOR 'RAT ON YOUR CUSTOMER'.
NO WONDER PEOPLE VALUE SWISS BANK ACCOUNTS FOR THEIR SECRECY.]
Holding
It is the responsibility of a financial institution to file
complete and accurate CTRS. This includes providing identifying
information about the Person on whose behalf the transaction is
conducted in Part II of the CTR. One way that a financial
institution can obtain information about the true identity of the
person on whose behalf the transaction is being conducted is to ask
the person conducting the transaction whether he is acting for
himself or on behalf of another person. Only if as a result of
strong "know your customer" or other internal control Policies, the
financial institution is satisfied that its record contain the
necessary information concerning the true identity of the person on
whose behalf the transaction is being conducted, may the financial
institutions rely on those records in completing the CTR.
[EXAMPLE DEALING WITH ELDERLY PEOPLE]
Example
Jesse Fleming, a 75 year old retiree, has been saving $10
bills for twenty years in order to help pay for his granddaughter's
college education. He enters the Trustworthy National Bank where
he has no account but his granddaughter has a savings account, and
presents $13,000 in $10 bills to the teller. He instructs the
teller to deposit $9,000 into his granddaughter's savings account,
and requests a cashier's check for $4,000 made payable to State
University.
Because of poor eyesight, Mr. Fleming no longer drives and
does not possess a valid driver's license. When asked for
identification by the teller he presents a social security card and
his retirement organization membership card that contains his name
and address.
Application of Law to Example
In this example, the Trustworthy Nationust check to determine if
Mr. Fleming's social security and organizational membership cards
are acceptable forms of identification as defined in the bank's
policy and procedures. if so, and the bank is confident that Mr.
Fleming is who he says he is, it may complete the transaction.
[EXTRANEOUS STUFF DELETED. THIS EXAMPLE IS INTERESTING AS ONE OF
THE FEW TIMES A BANK WILL TAKE A MEMBERSHIP ID AS A VALID FORM OF
ID. APPARENTLY YOU HAVE TO BE OLD AND SENILE LOOKING TO GET AWAY
WITH IT. IN ANOTHER EXAMPLE (DELETED) DEALING WITH A FOREIGNER,
THE FOREIGNER HAD TO PRESENT A VISA AND/OR PASSPORT]
Example No. 2
Andrew Weiner makes a $7.000 cash deposit to his account at
ABC Federal Savings Bank. Later the same day, Mr. Weiner returns
to the same teller and deposits $5.000 to a different account. At
the time Mr. Weiner makes the second deposit, the teller realizes
that the two deposits exceed $10,000 and prepares a CTR obtaining
all of necessary identifying information directly from Mr. Weiner.
Application of Law to Example No. 2
Even though the two transactions were conducted at different
times during the same business day, Mr. Weiner conducted both
transactions at the same place and the appropriate identifying
information was obtained by the teller at the time of the second
transaction. Item 3d would not be checked on the CTR. The number
of transactions reported in item 48a must be 2 and the number of
branches reported in item 48b would be 1. The zip code for the
location, where the transactions took place would be entered in
item 48c.
[STUFF DELETED]
Example No. 3
Internal auditor Mike Pelzer is reviewing the daily cash
transactions report for People's Bank and notices that five cash
deposits were made the previous day to account # 12345. The total
of the deposits is $25,00 and they were made at three different
offices of the bank. Mike researches the account data base and
finds that the account belongs to a department store and that the
account is exempted for deposits up to $17,000 per day. Each of
the five transactions was under $17,000.
Application of Law to Example No. 3
Having reviewed the report of aggregated transactions, Mike
Pelzer has knowledge that transactions exceeding the account ex-
emption limit have occurred during a single business day. A CTR
must be filed. People's Bank is encouraged to make a reasonable
effort to provide the information for items 4 through 15 on the
CTR. Such efforts could include a search of the institution's
records or a phone call to the department store to identify the
persons that conducted the transactions. If all of the information
is not contained in the institution's records or otherwise
obtained, item 3d must be checked.
Example No. 4
Mrs. Saunders makes a cash withdrawal, for $4,000, from a
joint savings account she owns with her husband. That day her hus-
band, Mr. Saunders, withdraws $7,000 cash using the same teller.
Realizing that the withdrawals exceed $10,000, the teller obtains
identifying information on Mr. Saunders required to complete a CTR.
Application of Law to Example No. 4
In this case, item 2 on the CTR must be checked because the
teller knows that more than one person conducted the transactions.
Information on Mr. Saunders would appear in Part I and the bank is
encouraged to ask him for, or to check its records for the re-
quire(I identifying information on Mrs. Saunders. If after taking
reasonable efforts to locate the desired information, all of the
required information is not found on file in the institution's
records or is not otherwise obtained, box 3d must be checked to
indicate that all information is not being provided because
multiple transactions are being reported. Whatever information on
Mrs. Saunders is contained in the records of the institution must
be reported in the continuation of Part I on the back of Form 4789.
The number of transactions reported in item 48a must be 2 and the
number of branches reported in item 48b would be 1. The zip code
for the branch where the transactions took place would be entered
In item 48c.
[STUFF DELETED]
[AND SO ON]
********************************************************
--
Jay James <jayj...@rahul.net>
Ping-Shun Huang
> [OH YEA, IRS. EVERYBODY WHO WIRES MONEY INTO OR OUT OF THE GOOD
> OLE USA IS A MONEY LAUNDERING MOBSTER, IS THAT IT? HAVE YOU EVER
> HEARD OF LEGALLY TRYING TO AVOID CONFISCATORY U.S. TAXES?!]
First, your lengthy posting isn't very appropriate for a number of the
newsgroups, in my opinion. I hope other follow-ups will be confined to
misc.taxes, where I've set the follow-up for this message.
Second, just because you're paranoid doesn't mean someone is actually
out to get you. I'm not terribly thrilled by the "guilty until proven
innocent" stance taken by the IRS regulations, either, but most of the
rules and regulations discussed in the document you scanned in and
posted were for the most part reasonable, and it takes a very biased
and deliberately slanted reading to make them seem sinister.
Third, *MAYBE* under some circumstances, it would be perfectly
legitimate to be wiring money out of the country in $10,000 increments
to "LEGALLY TRY TO AVOID CONFISCATORY U.S. TAXES", but it sure sounds
amazingly suspect to me. I wouldn't try it if I were you without
checking with some tax barristers.
--
Ping Huang (INTERNET: psh...@mit.edu), probably speaking for himself
Frank Hielscher
[re long IRS posting]
>First, your lengthy posting isn't very appropriate for a number of the
>newsgroups, in my opinion.
I looked, and the crosslisted news-groups have to do with money, law,
and politics. Seems very appropriate.
>Second, just because you're paranoid doesn't mean someone is actually
>out to get you. .....[omissions here] ..... but most of the
>rules and regulations discussed in the document you scanned in and
>posted were for the most part reasonable, and it takes a very biased
>and deliberately slanted reading to make them seem sinister.
I have no idea whether the writer is paranoid or not, nor whether you
are paranoid or not. The article had to do with IRS rules, not paranoia.
Fact is, proven time and again, that the IRS is not the taxpayer's best
friend. See, among many other sources, the Consumer Reports articles over
many years on what to do when the IRS "comes calling".
Re the original article - I thought it was an interesting bit of
information.
Frank Hielscher, Lehigh University
Dan Lanciani
Something I've always wondered about are the filing requirements
necessary for the individuals involved in some of the example
transactions to avoid ``technical'' violations.
Domestic transactions:
You go to the bank and withdraw $20,000 cash from your personal
account (for which there is no special exemption). The bank
presumably files a CTR form. What (if anything) must you file
solely as a result of this transaction to avoid a violation?
You now take that cash and buy a new car. I understand that the
dealership has to file something; what (if anything) do you have
to file related to the cash purchase?
Instead of going to a car dealer, you buy a used car from another
individual. Does this change your reporting requirements related
to the cash car purchase?
What (if anything) must the individual seller file as a result of
the cash sale transaction?
The seller now deposits the cash in his personal bank account. The
bank presumably files a CTR form. What (if anything) must the seller
file solely as a result of this cash deposit transaction?
Foreign transactions:
You travel to a foreign country and deposit in a personal bank account
there a $20,000 check drawn on an account in the US. You file the
appropriate TD xxx form to declare your ownership of the foreign account
each year and, of course, you declare any interest as income (hopefully
taking whatever deductions/credits are available for foreign taxes paid :).
What (if any) additional paperwork must you file as a result of moving
the $20,000?
Instead of a check, you use a wire transfer to accomplish the same
transaction. Any difference in reporting requirements?
While in the foreign country, you withdraw the equivalent of $20,000
in the local currency from your personal account. Ignoring country-
specific requirements, what US forms (if any) must you file solely as
a result of this cash transaction?
Later you re-deposit most or all of the $20,000-equivalent in your
foreign account. What US forms (if any) must you file?
Dan Lanciani
ddl@harvard.*
Cassandra Kamuchey
: First, your lengthy posting isn't very appropriate for a number of the
: newsgroups, in my opinion. I hope other follow-ups will be confined to
: misc.taxes, where I've set the follow-up for this message.
Actually I found it very pertinent to *this* newsgroup - albeit a bit too
long. It was interesting to note that there are such extensive legal
strictures governing banks - when I recently had my bank wire several
thousand dollars to my student lenders to pre-pay on some of my student
loans, I became uneasy with the number of questions (well, let's be
honest - it was the comment "Why don't you let us invest your money
instead of paying off those pesky loans" that really irked me).
: Second, just because you're paranoid doesn't mean someone is actually
: out to get you. I'm not terribly thrilled by the "guilty until proven
: innocent" stance taken by the IRS regulations, either, but most of the
: rules and regulations discussed in the document you scanned in and
: posted were for the most part reasonable, and it takes a very biased
: and deliberately slanted reading to make them seem sinister.
Actually the one that I find somewhat overreaching was the "if the
customer indicates they intend to avoid reporting the cash .... or is
overally suspicious" please call us. First, I could just see myself
becoming fed up with the nosy bank manager (yep, the one that keeps
telling me about that real good investment deal) to the point where I
would start ignoring everything they said - and ooops I am on some wanted
list. Secondly, let's imagine this scenerio - you're a minority, walk into
a bank with $12,000 dollars cash, don't speak English too well and want to
open a checking account. When the teller asks you where that money comes
from you get nervous because you don't understand what is going on.
You get reported. Why? Because how would a poor immigrant get that
money if it weren't illegally? The point is - the statues (like any
law) leave a lot to human bias which is not very comforting if
you are on the receiving end. It seems to me that your post failed
to take this element into consideration.
Cass