As I write this (in March), I just got off the phone with one of my clients. He just did very well in a poker tournament, and won just over $11,000. He took the money in cash (rather than a check) as he thought he was going to need the cash. He doesn’t, so he was wondering about making a cash deposit of over $10,000 as there would be a Currency Transaction Report issued.
I told him that a Currency Transaction Report isn’t anything to worry about it. The IRS gets so many of them that as long as you’re paying your taxes they’re not a big deal. Just smile as the bank teller fills out the extra paperwork.
On the other hand, if you break up your $11,000 transaction into two $5,500 deposits, you can get in trouble. Big trouble. A suspicious activity report (SAR) might be issued. The IRS doesn’t get as many of these, and almost all of them are investigated. And you will never know when one is issued.
You don’t believe me? Here’s a tale of woe that caused the downfall of a politician.
He was a prosecutor, and he used the Bank Secrecy Act (among other laws) to help send many individuals—primarily in organized crime—to prison. He then became Attorney General of his state, serving two terms in that office. He was then elected Governor.
But our public figure had a problem. He enjoyed the world’s oldest profession. While traveling to Washington, D.C. he used a service called the Emperor’s Club. He funded his nighttime activities by making multiple wire transfers of just under $10,000.
Come on, could a politician who used to use the Bank Secrecy Act actually get blindsided by the Act? Yes. Eliot Spitzer’s wire transactions were duly reported by North Fork Bank. That led to an IRS investigation which led to an FBI investigation which led to a governor becoming an ex-governor.
So if you want to send money, go big-time. Send more than $10,000. But whatever you do, don’t break up your cash transactions into smaller pieces to evade the reporting requirements. One day you might find two armed federal agents at your door, reminding you, “You have the right to remain silent….”
I hope you enjoyed this series of humorous posts. I’ll be back with normal content in one week.