Internal Revenue Service (IRS) is basically a revenue service for the United States Federal Government and is responsible for tax collection and administers the internal revenue code. Many international transactions that are made through money transfer service providers like Western Union are monitored by this regulatory body as per the orders of the Government of the United States.
In this article we will talk about aspects related to the transactions that need to be reported to the IRS.
Internal Revenue System (IRS) is a revenue service for the United States federal government that is responsible for tax collection and also administers the internal revenue code.
The IRS originates from a federal office known as the Commissioner of Internal revenue and was established in 1862. It aimed to collect the country’s first-ever income tax to fund the American Civil War.
Later in 1913, after the Sixteenth Amendment was formalized, Congress imposed taxes on the income of every citizen, and hence the Bureau of Internal Revenue came into being that was later 1953 renamed as Internal Revenue Service.
However, today the IRS monitors all the monetary activities along with assisting taxpayers in tax-related matters. In addition, it has more than 74 thousand employees and is a part of the U.S Department of Treasury.
Does Western Union report transactions to the IRS?
On December 15th, 2011, Western Union and U.S Internal Revenue Service (IRS) signed an agreement to resolve issues regarding the company’s International operations. Therefore, all the transactions exceeding $ 10,000 are reported to the IRS. The transaction is reported by individuals who receive funds from different parts of the world. All he/she has to do is to fill the IRS form 8300 that helps the authorized enforcement bodies to act against money laundering, tax evasion, illegal dealings and other such activities that involve terrorism or criminalization.
Read More: Is Money Received from Western Union Taxable
Why are Financial Institutions regulated to report transfers to the IRS?
All the financial institutions are required to submit cash reports to the IRS as per the U.S Bank Secrecy Act. The report is known as Currency Transaction Report (CTR) and aids in achieving multiple objectives.
Furthermore, last year President Joe Biden demanded that all the individuals who earn an amount against any service or any business receiving funds exceeding $600 annually should report to the IRS. The proposal enables the IRS to monitor and keep record of the receiving amounts and expenses.
How big of a Money Transfer Received from Western Union is reported to the IRS?
According to the U.S Internal Revenue Service any individual or company that deals in jewelry, vehicles, real-estate, pawn items, insurance and other such things need to file IRS form 8300 if they are earning cash that is greater than $10,000. IRS also adds that the cash includes coins, dollar bills or any foreign currency, bank checks, bank drafts, traveler checks etc.
Also note that if a person sells any item that is for personal use and has a value of more than $10,000 will have to report to the IRS.