IRS Clamps Down on Money Laundering : Audit: The IRS will be examining 100 San Diego businesses to check for unreported cash transactions.
The Internal Revenue Service said Wednesday it will conduct special examinations of the financial records of 100 San Diego businesses to check for unreported cash transactions as part of the agency’s stepped-up efforts to control money laundering.
According to the IRS, millions of dollars in illicit cash profits from drug deals are being recirculated back into the economy through cash purchases of “high ticket” items that retailers are required to report, but often do not.
The San Diego businesses to be audited--jewelers, furriers, auto and boat dealers, and other sellers of expensive goods--have already been notified over the past two weeks that they will be examined, said Ann Logan, a spokeswoman for the IRS’ Laguna Niguel district office. The examiners will be paying particular attention to the businesses’ cash journals, bank deposits and daily ledgers, she said.
The examinations are a means of enforcing IRS laws that require businesses to declare and submit special forms on each transaction involving $10,000 or more in cash. As of Monday, businesses must also report transactions valued at $10,000 or more in which money orders or traveler’s checks are used.
The IRS says it will impose a fine on violators of up to $25,000 or equal to the amount of the transaction, whichever is greater.
Logan speculated that some retailers agree with purchasers not to report the cash amounts in fear of losing the business. To comply with the reporting process, retailers are required to take buyers’ social security numbers and to verify their identification with driver’s license numbers or through other means.
Despite an education program over the past several years that involved personal visits by IRS agents to businesses, the IRS said in a statement that “money laundering operations still flourish,” and that noncompliance on the cash transaction reporting rules ranges from 42% to 72% throughout the IRS’ Laguna Niguel district.
The San Diego examinations are the “first tier” of a series of audits that will be held in other counties in the Laguna Niguel district, which encompasses San Diego, Orange, Imperial, Riverside, San Bernardino and part of Los Angeles counties.
