Cash reporting for dealer transactions besides retail vehicles sales

Cash reporting for dealer transactions besides retail vehicles sales

The indictment of former House Speaker Dennis Hastert has brought the subject of illegal cash transactions back to the public eye. Itês a good time, then, for dealers revisit with staff, everyoneês obligation to report cash transactions over $10,000. Historically, dealers looked only at cash reporting on retail vehicle sales. But what about in other departments?

Used car wholesales

A dealer does business with a wholesaler and takes only cashierês checks or cash. The wholesaler buys four vehicles for $12,600, paying cash. Is that a reportable transaction?

You bet. The dealerês cash reporting policy should cover wholesale used sales where the dealership receives cash of more than $10,000 for one or more vehicles sold in a 24-hour period, or when the sale of the vehicle(s) is negotiated within 24 hours, or when the cash is received within 24 hours. Staff in this role need to know the rules.

Parts department

A customer comes to the parts department and orders $24,000 worth of oil filters to be sent to South America. He returns to the dealership when the filters are ready for shipment and pays $24,000 in cash. Is the transaction reportable?

Yes. The same 24-hour rule applies that does in the used-car wholesale example, above. Parts department staff need to know whatês required on cash reporting and how to comply.

Service department

A customer buys a car and makes an $8,000 down payment in cash. At the time of sale, she arranges for new wheels, tires and suspension improvements for $3,500. When she picks up the car from service, she pays $3,500 in cash. Is that reportable?

Yes. The sum of the two cash transactions is over the $10,000 reporting threshold. The dealership must report cash payments over $10,000 for service to a vehicle or less than $10,000, if the service is negotiated as part of a vehicle sale and all cash received on related transactions exceeds $10,000. Fixed Operations staff should be aware of the cash reporting rules, too.

The IRS is continually auditing dealers for compliance with cash reporting laws. A dealership should have a cash reporting policy, and personnel in all departments affected by the policy should be regularly trained.

Thanks to Michael Charapp of Charapp & Weiss, LLP, for this information.

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