We bought truck for cash, it will be reported to IRS, we are terrifed, what now?

Question

We paid cash over $10,000 for a used truck at a dealership and weren't aware they had to report it to the IRS. Now we are terrified what the IRS will do to us. It was honest money from the sale of another vehicle and money we had saved personally. Does anyone know what happens after it is reported? Thanks!

Answer 1

Don't worry about it. It will be reported as a cash transaction but you won't even be asked about it unless you're audited. In order to cover yourself in case you are audited, keep good records supporting the fact that you received the money from the sale of another vehicle and savings. For example, if you deposited the money from selling your vehicle into a savings account and then withdrew it to pay for this vehicle, keep a copy of the bank statement showing the withdrawal.

Answer 2

You have nothing to worry about -- UNLESS you realized a sizable profit on the sale of the vehicle you sold to make this purchase and failed to report that profit. Even then, one transaction is not likely to trigger an investigation.

I have to disagree with the info from another responder. He said such transactions are not reported to the IRS, but to the treasury department. The law involved comes to us via the Bank Secrecy Act, which requires such reporting. The treasury department, which the IRS is a part of, farmed out part of the administration of this act to the IRS. The law no longer just covers banks and financial institutions either; it now requires any person who receives, in a single transaction, in the course of trade or business, a sum in excess of $10K, to report that transaction on IRS form 8300. You probably learned of this reporting when you got a copy of that form.

This act was never written to harass or worry honest taxpayers. It was written to help identify money launderers. The most likely thing that will happen is that a computer will take your 8300 info and check it against a list to see if you have had several such transactions. If you have, it look to see if you are a person registered as routinely making such transactions. It may then compare it to your reported income to see if it is within the realm of possibility -- meaning do you report earning only $8K per year while being able to buy a $10+K vehicle for cash. If everything looks reasonable, which it sounds like it should, it should not trigger an investigation. Even if it does trigger an investigation, this may be nothing more than a phone call requesting an explanation of the money used.

$10K is actually not a lot of money and not an unusual transaction. Don't stress out over it -- especially not if there was no wrongdoing.

Answer 3

First off, it's NOT reported to the IRS. Any single cash transaction of $10,000 or more IS reported to the Treasury Department, however this is for the purpose of preventing such crimes such as money laundering, drug dealing, terrorist financing, etc. If the TD discovered something nefarious going on they probably would involve the IRS -- that's the way that Al Capone was finally done in -- but nobody is looking to make your life hard over a single vehicle purchase and sale since you've done nothing wrong.

The Treasury Department is looking for trends in these transactions. A single transaction won't raise any notice what so ever. Even if it did, since the funds were legitimately acquired you have absolutely NOTHING to worry about! They'd be looking for any public records that could explain what the source might have been. DMV records and real estate transfer records, etc. would be reviewed and in your case would point to an entirely innocent transaction.

So, kick back and relax! Enjoy your new truck! NOTHING is going to happen since you've done NOTHING wrong!

Answer 4

Why would you be worried? You don't need to be - the only time you'd get in trouble is if that was money you'd made and not paid tax on. That can be one of the ways the IRS catches tax cheats. Since it's legit money, no problem.

I paid much more than that in cash for a car over a year ago, never heard anything that it would be reported, and never heard anything from the IRS about it either. I have paid cash in the past for cars also, and never been questioned.

Relax- and quit worrying.

Answer 5

Paying over $10K cash isn't an unusual transaction for a car dealership. You have nothing to worry about. The IRS rules are to catch money-laundering.

Answer 6

Don't worry. Unless the cash came from drug smuggling and you are trying to "launder" the money, you don't have anything to worry about.

Answer 7

yes cash payments over 10,000 dollars must be reported to IRS as well as the office of Home land Security
IRS will investigate the source of the funds and you will have to pay any taxes due.