Ronnie McKee offers advice to dealers who may unwittingly find themselves face to face with a suspicious IRS agent.
“Don't panic,” says the former IRS compliance officer who now aids dealerships in complying with government regulations. “Don't argue. Don't agree.”
The government is not always right, and many situations can be worked out. But the boom can crash down if it is determined that a dealer disregarded complying with regulations or, worse, intentionally tried to circumvent them.
“The IRS has targeted automobile dealerships in the past, especially in Florida,” says McKee.
She specializes in helping dealers comply with IRS Form 8300 requiring businesses to report a “cash” transaction or a series of related transactions exceeding $10,000. The law is aimed at preventing shady characters from laundering money through dealerships and other businesses.
Cash in this case includes currency, domestic or foreign, as well as some cashier checks (ones from the proceeds of a loan are exempt). Also included are both money orders and traveler's checks with a face amount of $10,000 or less.
Keeping out of trouble is a lot easier than getting into it, says McKee at an F&I Management and Technology conference.
Intentional disregarding the law carries penalties of at least $25,000 for each offense. “When do you make enough profit to cover a $25,000 penalty?” she asks. “You've got to keep your eye on compliance.”
If a business owner willingly participates in money laundering, “that's big,” she says. Criminal penalties include up to five years in prison.
She cites a 2009 case in which a judge sentenced a Virginia dealer to 140 months in prison and ordered him to forfeit $1 million, the approximate amount of the money he was convicted of laundering for a group of drug traffickers.
