Tax Question/ Wire Transfer

[Unregistered]

Someone I know was approached by a customer of his who asked him if he (the customer) could bring him a large amount of cash (over 15k), and deposit it into his account and then wire transfer it over to another country for him. I told my friend that this sounded very fishy and something is not right. My friend said his customer's reasoning for this was that he had to get the money wired over there to give to his family. I explained what little I know about large cash deposits and international wire transfers and how this does not sound like a good idea. My friend did it anyways. Now my questions is this, is he going to have to pay tax on this large amount of money that he deposited into his account that stayed in there for a couple of hours at the most??? I say he will, he does not think he will.

[jainen]

nominee

Money he holds as a nominee is not income to him so I don't think the IRS will trouble him. Other parts of the Treasury Department, however, could cause him a world of hurt.

[Bees Knees]

There are a number of scams out there that are similar to this, wanting people to deposit large sums of money into their account for some reason or another, and then they would get a small percentage as a fee for their effort.

What they are really doing is getting your bank account information so that they can withdraw funds out of your account.

I would warn your friend that if this customer in anyway had access to his bank account number, he is in danger of having this customer make unauthorized electronic withdrawals.

[Lion]

Deposit & Wire Transfer

Aren't there paperwork requirements for cash receipts greater than $10,000? And, for foreign transfers over $10,000? If it wasn't cash received, there have been a lot of counterfeit money orders lately. At the very least, your friend should close that bank account so no one else can access it. Let us know how it all turns out.

[Unregistered]

Crooks

You have to be kinda careful about those things nowadays. The woods are full of scam artists. Since the requester may have been an American it's possible that it was legit, but it's a long shot. Common sense tells you that if it wasn't illegal, or wouldn't cost the guy tax on a 1099, or didn't involve some sort of personal risk, then he'd just do it himself.
I got a letter from one of those guys a couple of years ago. It was just a form letter--they use the shotgun approach--casting a wide net and trying to pull in as many suckers as possible. It was from Nigeria and I've since read about several instances of fraud commited against U.S. citizens by con artists operating from there. My guy claimed to be a government official who wanted to send money to people in the U.S. but was prevented from doing so by Nigerian law. The bait they dangle under your nose it this: they have business associates in the U.S. to whom they want to send five million dollars. If you will only open a bank account in the U.S.and authorize them to draw out of it, then they will pay you a commission of 10% of the five million ($500,000) just to handle the exchange for them. Gosh! Sounds like pretty good pay for going to the bank and opening a checking or savings account, doesn't it?
I ignored it, but later read of others who had been taken in by the same scammers. What they did was correspond back and forth with the pigeon a bit, then claim that the government was insisting on a three thousand dollar "international exchange fee" (or some such fee, handling charge, etc.) before they could send the money and pay you off. They claimed that they were unable to transfer the fee to the U.S. (just like the 5 million) and if you would only have enough faith to assist them by depositing the fee in the bank account, then you would still clear $4,997,000 "with the full backing of a government guarantee." Of course, once greed bested good judgment, the account was cleaned out, mail/e-mail addresses were terminated, and phones were disconnected.
The reason these things never die is that they keep working--sort of like a mild version of a Chauncey Hutter seminar--though, in that thing, at least you get to pick up a few tax
biz tips for your thousand bucks (no, I haven't been to one; just read his ad-card and got the drift and the gist of it, I believe).
Have a nice day (as if it were optional). ------Black Bart

[Bees Knees]

I had a similar incident just a few weeks ago, only this time it was a phone solicitor. This guy with a heavy accent calls me on my cell phone asking for me, not being able to pronounce my name very well. (How can you mess up the pronunciation of Bees Knees?) There was a lot of talking in the background with people speaking other languages. After a minute of establishing who I was, he asks me if I am a U.S. Citizen. Yes. Do I have a legitimate bank account that can accept this grant? Yes, What grant?

Then he goes into super fast talking mode saying things I couldn’t understand. I could tell when he was done, though, and some kind of question was asked like would that be OK with me.

I said, I am not interested in buying anything. He said, “Sir, we are not asking you to buy anything. This is a grant.” I said: “Why do I need a grant?” He said, “well you can use if for anything you want!” And then he hangs up.

Bottom line is, when you give them a bank account number and routing number thinking they are going to transfer money to you, what you are really doing is giving them access to your bank account so they can make a sudden withdrawal.

[Unregistered]

My first thought when he told me about this was one of those phony cashier's check or money order things. The guy actually gave him the money in cash and just asked him to wire it. He did not give him any percentage or anything like that for it. My only concern was the fact that this guy could not do this himself is what really bothered me. At least my friend had the foresight to use his bank account that his wife set up for him for his "allowance" money so to speak. He never has more than $150 in there at one time. So at least he did not use the account that is their main money accounts. I am just afraid that my naive friend got himself into something that is not quite legal and he is going to get himself and his wife burned. I was also concerned that they are going to get stuck paying taxes on this.

[Lion]

Receipt & Wire Transfer

Look at FinCEN Forms 104 & 105 to see if either or both apply to your client. There are also other forms he can use to report suspicious events re cash, whether or not he is required to report. He should certainly be concerned that the other person did not make the out-of-country transfer himself through his own banking relationships but asked someone else to do it. He won't be taxed on income that was not his to use, but might have reporting requirements re the large amount of cash received &/or the large amount leaving the US. Some of these forms are due within 15 days of receiving the cash, so do look into them with your client.

[Armando Beaujolais]

What's the guy going to say when the IRS does a bank deposit analysis? "Some guy gave me $15,000 dollars as a nominee for somebody else."

"Sure, sure," will be the IRS response. "What other cash receipts from your business have you failed to report?"

Not a good thing.

[Unregistered]

Uncle Maxie

Brings to mind a client I had years ago. T/P had a used car dealership--handled only the snazziest, clean, late model rides. They had a lounge/kitchen area where they sat around between sales, shooting the breeze, snacking, whatever, etc. An older guy, claiming to be retired started hanging around, talking about maybe buying a car sometime or another.
He was affable, outgoing, obliging, and a real comedian who cracked jokes endlessly. Called himself "Uncle Maxie" and everybody liked him. Nobody knew anything about his background and he lived at a local "by-the-week" motel. Still, he made himself useful, running errands for the guys, going to the post office, getting lunch, etc. Even bought several lunches, saying it was no problem since he got good retirement benefits from some factory job "up north" and he "liked you guys a lot."

The camaradie went on for about two and a half months; Maxie continually building rapport and cementing his relationship with the guys. Then one day Maxie had an emergency; his (some relative) had to be taken to the hospital twenty miles away and his car was on the blink. Could he borrow a good car to take here (couldn't take a junker as he couldn't take a chance on it breaking down with her on the way to hospital)? No problem, T/P said; gave him a very nice late-model Buick at 9 A.M. "Back right after lunch," said Maxie.
That was about twenty years ago. T/P nor anybody else has seen or heard from "Uncle Maxie" since.

They figured he cleared about $10,000 just being a nice guy.