Do Banks Collect all Transaction Information? Do they report it to the IRS?

06.11.05 | mlmr

[mlmr]

Do banks collect all infomation from checks cashed if you are a customer? IOW...if one cashes a 15 dollar check, is it put into the same system as one's own checks that are copied and stored?

[b4its2late]

No.

[oceanview]

are you kidding me? you are worried about an under-report of $300? almost every self incorporated person in the US is cheating on their taxes - deducting leases on cars and boats they they have for personal use, but declare as business deductions. and you are worried about $300?

[PAR35]

I don't understand why a bank would dishonor a check drawn on one of their accounts.

They shouldn't, but some of the big ones don't even like their own retail customers, much less folks off the street. I know I read a story along these lines a few years ago, but I'm not coming up with it tonight.

[PAR35]

If you deposit or withdraw "more than $10,000 they file a CTR -Currency Transaction Report with the IRS--but you know they do that as you are asked to sign the form. If the bank "suspects" you are "structuring" lower amount cash transactions, they can report you--without you knowing it.

Generally $5000 to generate a SAR, although in some cases smaller amounts are reportable if the bank should have reason to suspect them. It is easier to get in trouble for not filing a SAR than for filing:

"national banks are required to report known or suspected criminal offenses, at specified thresholds, or transactions over $5,000 that they suspect involve money laundering or violate the Bank Secrecy Act. Similar regulations by other regulators apply to other financial institutions."
http://www.occ.treas.gov/sar.htm

[CharlieChan]

"Suspect" is the key word. This gives banks a big out. If any given bank is making appropriate contributions to the related congressional chairs, the "judgement call" often beats administrative enforcement, especially re dommestic institutions. I was among the first generation of certain federal employees to have password access to the Detroit CBRS Telnet system. During the 1980s banks completed ignored the law until BCCI hit the fan. Then there was Polar Cap, Midas, etc. Money Laundering/Bank Secrecy statutes have been upgraded since 1970s enactment, but not until 911 did DC politicians seem to wake up. I've been out of it for a few years, but I have no doubt the politics of Title 31 continues...

[snowsislander]

For example, if I wrote a check to you on my bank, and you took it there to cash it, they would turn you away.

A bank that is refusing to cash valid checks written against accounts at that bank to the named recipient? I don't think that would make the bank's regulator very happy to hear.

It's been a while since I read any of the relevant codes, but basically failure to honor the presentation of an valid instrument by the bank holding the account was not allowed. There's nothing that makes your bank's presentation of the same instrument somehow different than you presenting in person. Unless things have changed, then I would write a letter to the bank's regulator (likely the FDIC, but maybe the OCC or the OTS.)

I wouldn't have been surprised to hear about onerous conditions attached to the identification process; lately, it seems banks want DNA samples and fingerprints and maybe a copy of your last utility bill in order for identity purposes, but that's not the same as flat refusing to honor the check's physical presentation.

[goldstategop]

The banks are required by law to report to the IRS all transactions of over $10,000. They'll still report it even if you try to keep it just under the amount that triggers the reporting. The feds want to make sure you're not hiding any income you don't want them to know about. If its illegal, you'll want to hide it under your mattress.

(Denny Crane: "Sometimes you can only look for answers from God and failing that... and Fox News".)

[Victoria_R]

I just never really thought about it until now. It isnt that much...perhaps 300 or so. With four children I would still be at the poverty level.

Does TurboTax have an I made a glitch refile section?

Given the above facts, the IRS is not going to care about $300 (unless you did something else) because 1) at the "poverty level" and 4 children there is probably some distance to even get to a taxable level of income, 2) the tax laws are so complicated the IRS is focusing on "substantially correct" not "100% correct", and 3) even if the $300 was taxable income, the tax would be about $30 and is not worth the cost the IRS would have to invest to get it.

[mlmr]

Thanks. I get afraid when I think of dealing with big guys like the IRS.