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Spending $250K for Centurion, How About IRS? Large Cash deposits out of your league?

Spending $250K for Centurion, How About IRS? Large Cash deposits out of your league?

Old Aug 16, 10, 9:24 am
  #31  
 
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Originally Posted by andrewpartyman View Post

The actual problem is that every transfer he gives you over about $12k (I think that's the limit for a tax-exempt "gift") is subject to U.S. income tax. So every time you received money from him, you would have to pay taxes therefore making every transaction with him a losing one. Wouldn't take long to be in the 35% tax bracket, therefore making your 60k/year base salary worthless when it is taxed at 35% + state income tax + medicare tax + social security. Going to work would suck for you.
The OP wouldn't be subject to gift taxes; he'd be acting as an agent for the customer (not a reseller). He'd show all of the money from buying electronics as business revenue, offset by the cost of acquiring the merchandise.

The IRS won't have a problem as long as you keep good records. They might laugh at you when you tell them you're trying to generate massive pass through spending to get a Centurion card.

As long as you do the proper paperwork, it doesn't matter that you'll have banking transactions over $10k. It's just a flag for the IRS -- and if you're keeping your records on the up-and-up, you'll survive an audit.

That said, you're setting yourself up for an audit, an FR, and potential trouble if your customer fails to pay you for any reason.

If you're not planning on getting a cent card this year, and you don't care about MR, then there's honestly no point in going through all of that trouble.
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Old Aug 16, 10, 9:51 am
  #32  
 
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Originally Posted by taipeiflyer View Post
it was 7 months ago... my spend is a little more than half of the mythical 250+ number, so keep spouting falsehoods to make yourself feel special. my god-brother has one- it works for him, not so much for me. sorry, but your information is flat-out wrong. maybe i am just more important to amex than you are... 250 is not the baseline for everyone.
Once again like I said, could you tell me your relationship with Amex? I avg more spend than you, have been a member longer than you I assume(78) not a single late payment and haven't had an invite in years nor have I ever heard of anyone lower than 250k getting an invite since they raised it years ago. So if you could please give some insight as to why ONLY you have different requirements? There are plenty of US cent holders on FT and Im sure not a single one can attest to getting an invite with lower than 250k spend since 2005 on.
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Old Aug 16, 10, 10:36 am
  #33  
 
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Originally Posted by mlad1101 View Post
Once again like I said, could you tell me your relationship with Amex? I avg more spend than you, have been a member longer than you I assume(78) not a single late payment and haven't had an invite in years nor have I ever heard of anyone lower than 250k getting an invite since they raised it years ago. So if you could please give some insight as to why ONLY you have different requirements? There are plenty of US cent holders on FT and Im sure not a single one can attest to getting an invite with lower than 250k spend since 2005 on.
you talk about getting an invite.... have you actually called and simply asked? i was not invited. i called the cent line and said both my god-brother and god-dad have cards, and they have talked about the benefits, and i was interested in finding out if i qualify for one. they said yes. i have been a cardholder since 2002, and have used it primarily to book 15-20 J/F tickets per year between here and asia for myself. i told them i wanted a day to think about it, and decided to pass. sometimes, all you have to do is ask.
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Old Aug 16, 10, 11:23 am
  #34  
 
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Originally Posted by andrewpartyman View Post
In short, you sum up the problem with America. ... Also, the pursuit of ridiculous status symbols like a Centurion Card is absurd. I'd rather have that cash in the bank or a nice sports car. A credit card in the wallet means nothing.
Heh.. that made me smile.
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Old Aug 16, 10, 2:17 pm
  #35  
 
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Originally Posted by taipeiflyer View Post
sorry, but he is not smurfing at all... he is not trying to break up transactions into smaller transactions... he is in fact trying to make bigger purchases, by not only buying his stuff but everyone else's too.
Originally Posted by andrewpartyman View Post
Any banking transaction of $10k or more in cash has to be reported to the IRS. Checks, wire transfers, etc. are not held to this as there is a paper trail. If this man were to refund you with a check there is no problem.

The actual problem is that every transfer he gives you over about $12k (I think that's the limit for a tax-exempt "gift") is subject to U.S. income tax. So every time you received money from him, you would have to pay taxes therefore making every transaction with him a losing one. Wouldn't take long to be in the 35% tax bracket, therefore making your 60k/year base salary worthless when it is taxed at 35% + state income tax + medicare tax + social security. Going to work would suck for you.
Originally Posted by thissnisnottaken35 View Post
As long as you do the proper paperwork, it doesn't matter that you'll have banking transactions over $10k. It's just a flag for the IRS -- and if you're keeping your records on the up-and-up, you'll survive an audit.
Originally Posted by boncovi View Post

Cash transactions over 10K has to be reported by the bank. I know if you go and deposit 9K every other day, you may receive a letter from the bank telling that you're trying to avoid $10k threshold, be careful.

Authorities come knocking on your door and searching your house to see if you're selling drugs, or do you get audited by IRS?

On the other hand, how do you get taxed on personal buying/selling activities? Let's say I buy a single item for $9,000. I post an ad on craigslist, sell it for $9,000. I get paid cash, it's under threshold, and I did not make any income because I sold it at no profit, so nothing to get taxed. I do this 300 times and flipped $270,000 in cash, all deposited to my checking account in cash and transferred to Amex to pay the bill. How about that? Technically, I did not go above $9K at all, and I did not make any income.
Deliberately trying to avoid the mandatory filing requirements, no matter the intent, is smurfing. The OP's intent is to hide the source of the funds, and even if for a legitimate purpose, the IRS CID wouldn't care, because the OP intended to avoid the taxes by structuring his transactions that way.

Either way, it's a bad move. If the OP wants to be a reseller, then he should start a business, and pay the taxes to be a reseller. Once he discusses trying to deposit $270K+/yr in cash without reporting to the IRS, that's a crime.

Edit:

There's a reason that business charge a markup. It's for the taxes, fees, and overheads. If things were this simple, then there would be no middle men because they couldn't make money!
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Old Aug 16, 10, 7:59 pm
  #36  
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Originally Posted by FoundInRNO View Post
because the OP intended to avoid the taxes by structuring his transactions that way.!
All points taken except this. How can one avoid taxes by structuring transactions below 10K? When you go over 10K, you don't get taxed. It just gets reported to the government.

You don't set yourself up as a reseller, you avoid tax, that's another story. I just couldn't make connection between depositing below 10K and avoiding tax.
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Old Aug 16, 10, 11:00 pm
  #37  
 
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Originally Posted by taipeiflyer View Post
it was 7 months ago... my spend is a little more than half of the mythical 250+ number, so keep spouting falsehoods to make yourself feel special. my god-brother has one- it works for him, not so much for me. sorry, but your information is flat-out wrong. maybe i am just more important to amex than you are... 250 is not the baseline for everyone.
Are you perhaps in Taipei?
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Old Aug 17, 10, 12:37 am
  #38  
 
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Originally Posted by aviators99 View Post
Are you perhaps in Taipei?
He said US cards previously, he should play lotto since he is the only one in the world offered it for half spend he's got some luck. I don't think I've seen a single substantiated claim(actually even unsubstantiated) of someone getting it for less then 250k since they raised the limit. Maybe he IS just more important to Amex than the rest of us and his spend is on items that Amex makes 25% on so overrides higher spend
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Old Aug 17, 10, 1:45 am
  #39  
 
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Originally Posted by mlad1101 View Post
There are plenty of US cent holders on FT and Im sure not a single one can attest to getting an invite with lower than 250k spend since 2005 on.
i "qualified" with $150K spent although i called them to ask about it rather than getting invited. i am not sure if you were being technical (being invited vs. asking if qualify) but i did get my biz cent with <$250K and this was well after '05 (i think in '06 or even early '07 without going back and looking at my records).

-hchon

p.s. i since "switched" my biz cent to personal cent (which also a lot of FTers said was not possible) and subsequently canceled it. i didn't have any special relationship with amex, i don't think, and i still don't.

p.p.s and if any of you want to make statements such as "it simply didn't happen. move on" then i'd be happy to show the two canceled cards i have - nobody asked them for me to send it back and i have them in my business card holder box somewhere. then again, i guess it doesn't prove that i switched from one to the other, oh well.
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Old Aug 17, 10, 7:36 am
  #40  
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What I heard was, people can qualify by spending less than $250k. It all depends how you spend.
You put $250k raw material purchases for your business, you qualify.

You put $150K charge, $100k of which are flights, hotels and restaurants, they can offer the centurion to you as you're the perfect person to use the perks of Centurion.

Don't know if the info is legit though.
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Old Aug 17, 10, 9:08 am
  #41  
 
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Originally Posted by boncovi View Post
All points taken except this. How can one avoid taxes by structuring transactions below 10K? When you go over 10K, you don't get taxed. It just gets reported to the government.

You don't set yourself up as a reseller, you avoid tax, that's another story. I just couldn't make connection between depositing below 10K and avoiding tax.
You would owe the taxes as a reseller on any fees you earn, regardless of the $10K limit. By not paying the taxes and keeping your transactions smaller than the reporting limit, the IRS would assume that you're operating UTR. Other issues that start to open up are "co-mingling of personal and business funds"...

Seems like a lot of heartache and BS to get a credit card. Work harder at something else and I bet the card will come to you when it's time.
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Old Aug 17, 10, 9:33 am
  #42  
 
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Originally Posted by boncovi View Post
All points taken except this. How can one avoid taxes by structuring transactions below 10K? When you go over 10K, you don't get taxed. It just gets reported to the government.

You don't set yourself up as a reseller, you avoid tax, that's another story. I just couldn't make connection between depositing below 10K and avoiding tax.
Correct. Don't confuse other posters' advice for genuine legal rulings.

There's a difference between doing something suspicious and doing something illegal.

What they are warning you against is only due to the suspicion, nobody will throw you in a rat infested cell with drug dealers.

The thing to remember is this: You are like a person at the back of a store, making gestures like you have been slipping items into your jacket lining. Yes, the camera will see you. Yes, a security guard will pull you aside. Yes, maybe even a cop will be called. But at the end of the day, if you can explain legitimately that you simply have bad mosquito bites and are scratching, and there is nothing inside your jacket - they will send you on your way.
Will it be a pleasant way to spend your afternoon? Maybe not - but if you have done nothing wrong, and have proof of that, then you'll end up walking out of the store on your way.

A more troubling question is how this customer purchases in your store over 10k in cash, as by law you must file an AML report under the Patriot Act for that transaction or series of transactions (you as the salesperson, not the customer).

And disregard the previous financial expert advice regarding income tax on gifts, as it is fundamentally incorrect in several ways. If in doubt, ask a real tax attorney or any good accountant. (Anyone telling you that you are subject to income tax on a gift over 12k... I don't know where to begin...)
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Old Aug 17, 10, 11:37 am
  #43  
 
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I can tell you that when I called in 2006 with $239k of spend, most of which was on travel and a large portion on kids' tuition, I was told "no". But 1 week later, at $250k+ (but less than $251k), it was shipped to me overnight.
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Old Aug 17, 10, 11:40 pm
  #44  
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Originally Posted by thissnisnottaken35 View Post
The OP wouldn't be subject to gift taxes; he'd be acting as an agent for the customer (not a reseller). He'd show all of the money from buying electronics as business revenue, offset by the cost of acquiring the merchandise.

The IRS won't have a problem as long as you keep good records. They might laugh at you when you tell them you're trying to generate massive pass through spending to get a Centurion card.

As long as you do the proper paperwork, it doesn't matter that you'll have banking transactions over $10k. It's just a flag for the IRS -- and if you're keeping your records on the up-and-up, you'll survive an audit.

That said, you're setting yourself up for an audit, an FR, and potential trouble if your customer fails to pay you for any reason.

If you're not planning on getting a cent card this year, and you don't care about MR, then there's honestly no point in going through all of that trouble.
Good approach.

I think the OP would be able to do this if he works closely with the bank, IRS etc and ideally gets his "friend" to deposit the money in the bank directly rather than pay it to him in cash. Doing so would also increase the chances of the money coming from legitimate sources.

BTW, buying such large quantities or merchandise from retailers and not wholesalers or the manufacturers and exporting it to other countries is either suspicious or not very profitable.
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Old Aug 18, 10, 12:58 am
  #45  
 
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Originally Posted by gallardo View Post
I guess an attorney or accountant would be the best ones to ask this, however I guarantee you would have a problem with the cash deposits. The bank would almost certainly file a SAR on you and possibly close your account. Checks or ACH would be better, but even still would raise flags with the IRS due to your income.

And since it's hypothetical, I'll say at 60k a year income the cent card is way too expensive, nor is someone the target customer of centurion. Also, when you apply for centurion they will ask your income, would you lie?
I think it is more suspicious to do lots of $9k deposits. I used to deposit $10-20k 3x a day at banks in coins. I'd always get a CTR for what I did. I suspect I got a SAR at some point too. So far, no one has come knocking on my door yet.
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