Massachusetts Agencies

Cash Reporting Requirements

Federal Tax and Tax Liens

Question: I know that if at a closing $10,000 or more in cash is presented, I must report this to the IRS. Do I need to similarly report when a "cash equivalent" (such as a cashier's check) equal to more that !0,000 is presented?

Answer: No, there is no requirement for reporting the handling of a cashier's check in the amount of $10,000 or more because the person or institution issuing the cashier's check is responsible for compliance with the cash reporting requirement. It's only cashier's checks (or cash equivalents) forless than $10,000 that will not have been reported by someone else. So when you are presented with any combination of cash and cash equivalents which in the aggregate total $10,000 or more, you must report each "cash equivalent" for less than $10,000 involved.

Question: I note that the good funds statute (G.L.c. 183, §63B) specifies the types of funds a title agent may accept when acting as a settlement agent. It includes cashier's checks, bank checks, certified checks and wired funds. Do agents have to report it when the lender or buyer sends funds in the form of (a) a cashier's check; (b) a bank check; (c) a certified check; or (d) some form I'm omitting?

Answer: First of all, there is an exemption from the reporting requirement for "proceeds of a loan from a bank (as that term is defined in 31 CFR part 103)." (26 CFR section 1.6050I-1[c][1][iv].) I haven't looked at part 103, yet, but I'm betting it's broad enough to include all institutional lenders and mortgage originators, so we need only to be watchful of private individual lenders who send cash equivalents for less than $10,000, which in the aggregate total $10,000 or more in a single transaction.

Second, yes, you do need to report when a buyer submits cash equivalents (defined to include cashier's checks, bank checks, bank drafts, traveler's checks, and money orders) for less than $10,000, which in the aggregate total $10,000 or more in a single transaction.

The definition of "cash equivalents" (in the regs) does not include personal checks, certified checks, or wired funds. So if a customer submits three personal checks for less than $10,000 each, which aggregate $10,000 or more, there is no reporting requirement.