Legal Question in Tax Law in California
I made a $24,000 USD purchase from a supplier here in the U.S.. My company is also in the U.S.. The supplier now wants me to send the money for the product to another person outside of the U.S.. I have the product, but my concern is he may be trying to evade the income tax.
The supplier is a registered U.S. business and lives here in the U.S.. He is from the country where he wants the money wired. He has also asked me to break up payments into two checks if the cost is over $10,000 in the past. Can I get in trouble for doing either one of these? I'm a 100% honest tax payer. I think maybe he is not. He will not take my checks now, he wants the money wired out of the country, and I'm the one who has to go to my bank and wire it. Again, I have the product, so that's not the issue. Most people would be happy with that, but I don't want to be a part of anything that may be illegal.
1 Answer from Attorneys
His tax evasion isn't your concern, but you may have other concerns.
You should insist on some kind of contractual agreement that the purchase and sale was made in the U.S. (actually in Orange County, California) lest he sue you in some foreign court (where it would be expensive for you to litigate) claiming that the foreign country's law applies and claiming the right to a refund for some BS reason.
You are certainly within your rights to send him an IRS Form W-9 requesting he state his valid SSN or TIN under penalty of perjury; and to ask him where you can send his Form 1099-MISC. If you agree to pay him in amounts under $10,000 and the money is in "bearer" form, this could be a violation on your part of the currency reporting laws. However, if you send him a check or wire transfer payable in his name (not cash or "bearer" form), it should be irrelevant whether the amount is over or under $10,000. Maybe he has an incorrect or mistaken view of the currency reporting laws.
To be clear, if you give or receive cash or bearer instruments in amounts of $10,000 or more you would need to file a Currency Transaction Report (CTR) and also a customs declaration if the transfer is international. Deliberately breaking up a transaction that is subject to these laws into amounts under $10,000 is called "structuring" and is a serious federal crime.
One additional thing you could do to cover yourself would be to file a Suspicious Activity Report (SAR) (search the term).
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