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New reporting requirements for check cashers

FTB Archive Disclaimer:  Archived content is not current and may contain broken links. It remains online for historical reference or research. The search function above allows you to search archived and current content separately. If you need archived content in a different format, contact us.

PURPOSE OF BULLETIN

To advise staff how to respond to inquiries regarding the new reporting requirements for check cashers.

BACKGROUND

New information reporting requirements for check casher businesses operating in California went into effect on January 1, 2006.

DEFINITION OF CHECKS AND CHECK CASHER

For information reporting purposes, "checks" include warrants, drafts, money orders, and other commercial paper serving the same purpose.

"Check casher" means a person or entity that, for compensation, engages, in whole or in part, in the business of cashing checks, warrants, drafts, money orders, or other commercial paper serving the same purpose.

WHO IS NOT CONSIDERED A CHECK CASHER

State and federally chartered banks, savings associations, credit unions, or industrial loan companies are not considered check cashers. Check casher does not include a retail seller engaged primarily in the business of selling consumer goods, including consumables, to retail buyers that cash checks or issue money orders for a minimum flat fee not exceeding two dollars as a service to its customers that is incidental to its main purpose or business.

WHO MUST FILE

Check cashers are required to file a separate information return with the FTB for each client for whom they process either of the following:

  • Checks totaling more than $10,000 in one transaction.
  • Checks totaling more than $10,000 in two or more transactions for the same person within the calendar year.

WHAT INFORMATION IS TO BE REPORTED

Check cashers must provide the following information about affected transactions:

  • The name, address, taxpayer identification number, and any other identifying information of the person presenting the check. If no identification was used to cash the check, a short explanation must be supplied with the return.
  • The amounts and dates of each transaction.

WHEN TO FILE

Annual filing is on a calendar year basis. The information needs to be filed with the Franchise Tax Board no later than 90 days after the end of the calendar year. The filing period for reporting on transactions occurring in calendar year 2006 is January 1, 2007 through April 2, 2007.

WHERE TO GET HELP

Check Cashers can call our Information Reporting Help Desk at (916) 845-6304, or write, or email to the addresses below:

Check Casher Information Reporting MS A-181
Franchise Tax Board
PO Box 1468
Sacramento CA 95812-1468

Emails should be sent to:

IRPhelp@ftb.ca.gov

BUSINESSES WITH MULTIPLE LOCATIONS

Individuals, partnerships, or corporations that operate more than one check casher location should combine the data from all locations and submit a single information return through their headquarters.

PENALTIES FOR NONCOMPLIANCE

Failure to file a correct information return by the due date may subject the check casher to a penalty. The penalty applies if they fail to file timely, fail to include all information required, or include incorrect information.

The amount of the penalty is based on when they file the correct information return. The penalties are:

  • $15 per information return, or each client represented in a combined return, if correctly filed within 30 days of the due date of the return up to a maximum penalty of $75,000 per year ($25,000 for small businesses).
  • $30 per information return, or each client represented in a combined return, if correctly filed more than 30 days after the due date but by August 1, up to a maximum penalty of $150,000 per year ($50,000 for small businesses).
  • $50 per information return, or each client represented in a combined return, if filed after August 1 or failed to file required information returns up to a maximum penalty of $250,000 per year ($100,000 for small businesses).

Small business defined:

A small business has average annual gross receipts of $5 million or less for the three most recent tax years (or for the period existence, if shorter) ending before the calendar year in which the information returns were due.

 

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