Structuring and cash hoarding are actions that can appear similar but have drastically different implications. For taxpayers, the similar appearance can potentially trigger issues with the IRS.

The Bank Secrecy Act, a federal law, requires that banks report any deposit over $10,000. The act's goal is to prevent money laundering and other financial crimes. Any transaction over $10,000, meaning both deposits and withdrawals, falls under this law. The transaction must be reported to the federal government within 15 days.

Anyone who attempts to evade this reporting requirement is potentially guilty of structuring. Even if the money comes from a legal source, structuring is still illegal. If an individual or business is found guilty of structuring, one potential penalty is forfeiture of funds.

What is Structuring?

Structuring refers to making deposits under $10,000 to avoid federal reporting rules for banks. Banks and other financial institutions may also put a hold on large payments, although this is unrelated to the Bank Secrecy Act.

A one-time or occasional deposit under $10,000 is unlikely to trigger any federal laws. Repeated transactions that total more than $10,000, especially when made close in time, are more likely to attract attention.

Smurfing is a form of structuring, and the two terms are sometimes used interchangeably. This practice involves using multiple people to make small deposits, sometimes posting them to multiple accounts, to avoid reporting requirements.

Prosecuting structuring isn't about punishing people for depositing money. It's about punishing individuals who are trying to evade financial and bank reporting requirements.

Tips for depositing large sums of money:

·        Deposit full amounts in a single deposit.

·        Avoid multiple smaller transactions close in time.

·        Maintain records and documents that show the money's source.

The key is to show that any deposits were not made with the intention of avoiding reporting requirements.

What is Cash Hoarding?

Cash hoarding refers to holding onto an excessive amount of money, usually in a checking account. While generally not the best option for financial planning, cash hoarding refers to activities that aren't illegal.

For questions about how to avoid triggering any federal investigations related to bank deposits, call Senior Partner, Tax Controversy Attorney, and former IRS attorney Brandon A. Keim at (602) 200-7399 or contact him online to discuss your options.