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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 18, 10, 4:46 am
  #46  
 
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Originally Posted by DownUnderFlyer View Post
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.
If he's exporting a hot item that isn't available yet internationally, like the Apple iPad was a few months ago, then there wouldn't be an option to buy from a wholesaler.

Regardless, numerous things about this arrangement don't pass the smell test. Reward doesn't justify the risks IMO.
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Old Aug 20, 10, 5:48 am
  #47  
 
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Originally Posted by weave View Post
If he's exporting a hot item that isn't available yet internationally, like the Apple iPad was a few months ago, then there wouldn't be an option to buy from a wholesaler.

Regardless, numerous things about this arrangement don't pass the smell test. Reward doesn't justify the risks IMO.
A place I worked a number of years ago did this exact thing. We focused on import video games and systems (back when Japan got everything before the US). We couldn't deal with wholesalers as they wouldn't send out of the country so ended up dealing with a couple large retailers in Japan.

There are a few reasons to use retailers instead of wholesalers, and if the market is there it can still be profitable. But the situations are probably fairly rare.
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Old Aug 20, 10, 6:22 pm
  #48  
 
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Originally Posted by juggler451 View Post
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.
Hehe...I did the coins deal for a while until I realized how ridiculous it was carrying 45lb boxes of coins into the bank a couple times a week.
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Old Aug 21, 10, 10:07 pm
  #49  
 
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Originally Posted by weave View Post
If he's exporting a hot item that isn't available yet internationally, like the Apple iPad was a few months ago, then there wouldn't be an option to buy from a wholesaler.

Regardless, numerous things about this arrangement don't pass the smell test. Reward doesn't justify the risks IMO.
I still don't understand the rewards. Are they MR points that are not wanted; or the Centurion card, for which the cost is unjustified?
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Old Aug 22, 10, 3:22 am
  #50  
 
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Originally Posted by Izzy24 View Post
I still don't understand the rewards. Are they MR points that are not wanted; or the Centurion card, for which the cost is unjustified?
To some the fee is worthwhile just to be able to boost the ego and impress by pulling out that black card in front of everyone. (Usually the people who go out of the way to do everything possible to meet the spend for that one time as opposed to those who routinely avg. the required spend without putting their life on the card.)
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Old Aug 23, 10, 8:44 am
  #51  
 
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Originally Posted by boncovi View Post
We have a customer who buys stuff in quantities and somehow sells them to other countries. He always deals in cash.

He can easily spend $30k in a week, only with us. I know he shops around and buys many stuff, computers, cameras, ipads etc. from electronics stores, apple store etc. all legit places.

He's cool and we sit down and drink beer from time to time after work.

I know if I go and ask him if I could charge his purchases from merchants except where I work on my Amex and he reimburses me, he will say "no problem".
If you offered to pay for $30k of goods for me on your card I would probably also say "no problem".
The problem comes when I do not pay you back, change my mobile number and generally stop coming to your store.
Maybe there is a good reason this guy pays in cash. That in itself is enough to set all the alarms ringing.
This kind of deal always ends in tears - not of joy !
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Old Aug 23, 10, 3:53 pm
  #52  
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Originally Posted by JCBR View Post
If you offered to pay for $30k of goods for me on your card I would probably also say "no problem".
The problem comes when I do not pay you back, change my mobile number and generally stop coming to your store.
Maybe there is a good reason this guy pays in cash. That in itself is enough to set all the alarms ringing.
This kind of deal always ends in tears - not of joy !
Well, true.

But that would only happen if I was dumb enough to charge $30k on my personal card and give somebody the goods without getting paid.
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Old Aug 25, 10, 8:52 am
  #53  
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Sounds like the OPs customer (the one with all the cash) is laundering this cash at the retail outlet for goods which will then be sold at different entities.
I'd recommend not to get too involved.
Selling him the goods for cash: yes, why not if it's good business
Getting involved in the flow of cash and ownership of products: wouldn't touch it with a bargepole !
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Old Aug 25, 10, 9:34 am
  #54  
 
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Originally Posted by Rambuster View Post
Sounds like the OPs customer (the one with all the cash) is laundering this cash at the retail outlet for goods which will then be sold at different entities.
I'd recommend not to get too involved.
Selling him the goods for cash: yes, why not if it's good business
Getting involved in the flow of cash and ownership of products: wouldn't touch it with a bargepole !
Again, to reiterate the salesperson's liability here:
"Selling him the goods for cash; yes, why not if it's good business" needs to be followed with the legal obligation to file under AML such transactions either over 10k or under 10k if they are in subsequent visits by the same customer and total beyond that amount (as is clearly the case presented by OP).
Non compliance by OP in this (as the salesperson - not just for the store owner/manager) could subject them to all sorts of nastiness which (to put it mildly) are best avoided.

It's not a case of "it's above board and can be explained under scrutiny" but a totally seperate reporting requirement (regardless of anything else) which is prosecutable despite the buyer being legit or not.
OP should make sure they are filing form 8300 first.
Trying to figure out how to get a Cent card or MR points should be secondary on the list.
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Old Aug 26, 10, 12:17 pm
  #55  
 
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I can't sit still on this one.

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.
Right on, boncovi. Banks are "deputized" to report all transactions over $10K, and most banks report all transactions over smaller thresholds such as $3K. You will not taxed on these transactions from this reporting, and the IRS may ultimately take no action. However, you really get into trouble when disguising smaller amounts to thwart being reported over the $10K. The IRS has software, and will detect small transactions designed to hide transactions under the $10K reporting requirement.

Furthermore, on your personal income tax return you need to report and pay personal income taxes for all income activities as separately stated from any deductions allowed (cost of goods) regardless if it's reported to the IRS (1099 or bank $10K requirements). Being the financing conduit carries risks of under reporting and makes your tax filing complex. Additionally, you and the other party should determine whether or not either side meets any 1099 filing for this purchase/sale agreement. The dollar amount requirements are much lower (and shrinking) for business activities individuals.

Another problem you will run into is state/local sales/property/income tax, and regulatory business registration, and reporting/collection requirements. While there are exemptions for retailers purchasing goods for re-sale and occasional sales (think garage sales), the tax auditors like to come out and "go on fishing expeditions" to collect further information about you and your business activities for reporting to other taxing and regulation authorities.

Whether you claim to be an occasional seller or just two individuals, the facts and circumstances as proscribed by law will dictate whether or not you are a "retailer" versus "occasional sale" or engaged in business activities versus "two friends helping each other." You'll be setting yourself up as an audit risk and the IRS and/or state/local Departments or Revenue. Upon (lengthy and costly to you) audit, they will request all such information three or so years down the road, only to discover that your activities are not correctly or adequately disclosed on your tax returns. You may also start out with a few small transactions, but may quickly creep into becoming deemed as business activities or into other tax jurisdictions. Each state has their own set of rules, and compliance becomes complex very quickly.

I can only vaguely comment on the hypothetical situation given for discussion purposes, and do not express any tax advice. I am unemployed and do not work for any taxing authority, but couldn't sit still on this one. Many of us here in the money-starved northeast states understand various reporting requirements, and the creep into multi-state reporting. Back to lurking...

Last edited by Tax_Man; Aug 26, 10 at 12:33 pm Reason: disclaimer at bottom.
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Old Dec 23, 10, 6:28 pm
  #56  
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Originally Posted by Tax_Man View Post
Right on, boncovi. Banks are "deputized" to report all transactions over $10K, and most banks report all transactions over smaller thresholds such as $3K. You will not taxed on these transactions from this reporting, and the IRS may ultimately take no action. However, you really get into trouble when disguising smaller amounts to thwart being reported over the $10K. The IRS has software, and will detect small transactions designed to hide transactions under the $10K reporting requirement.

Furthermore, on your personal income tax return you need to report and pay personal income taxes for all income activities as separately stated from any deductions allowed (cost of goods) regardless if it's reported to the IRS (1099 or bank $10K requirements). Being the financing conduit carries risks of under reporting and makes your tax filing complex. Additionally, you and the other party should determine whether or not either side meets any 1099 filing for this purchase/sale agreement. The dollar amount requirements are much lower (and shrinking) for business activities individuals.

Another problem you will run into is state/local sales/property/income tax, and regulatory business registration, and reporting/collection requirements. While there are exemptions for retailers purchasing goods for re-sale and occasional sales (think garage sales), the tax auditors like to come out and "go on fishing expeditions" to collect further information about you and your business activities for reporting to other taxing and regulation authorities.

Whether you claim to be an occasional seller or just two individuals, the facts and circumstances as proscribed by law will dictate whether or not you are a "retailer" versus "occasional sale" or engaged in business activities versus "two friends helping each other." You'll be setting yourself up as an audit risk and the IRS and/or state/local Departments or Revenue. Upon (lengthy and costly to you) audit, they will request all such information three or so years down the road, only to discover that your activities are not correctly or adequately disclosed on your tax returns. You may also start out with a few small transactions, but may quickly creep into becoming deemed as business activities or into other tax jurisdictions. Each state has their own set of rules, and compliance becomes complex very quickly.

I can only vaguely comment on the hypothetical situation given for discussion purposes, and do not express any tax advice. I am unemployed and do not work for any taxing authority, but couldn't sit still on this one. Many of us here in the money-starved northeast states understand various reporting requirements, and the creep into multi-state reporting. Back to lurking...
I dont' know why anyone would be so desperate for a Cent card. Plat does almost all the same things.

If you really trust this guy, just get a supplemental card in his name, have him charge whatever...and have him pay directly to Amex. It's not that complicated.

Centurion can be worth the 2500 fee:

$300 30-day out of country trip insurance I used to buy
$2250 5x$450 per platinum card account for myself, wife, and key employees
I used to pay the annual fee for anyways
2-for-1 Mandarin Oriental is something I never planned on, but an extremely nice and worthwhile perk
FHR upgrade on booking - an extremely useful and money saving perk
500 or so Maple Leaf Club Membership (useful not for me, but some members who don't have status with Air Canada)

The only issue was the $5000 signup fee. A bit ridiculous, but it will have paid itself back over the next couple of years anyways.
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Old Dec 23, 10, 9:09 pm
  #57  
 
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Originally Posted by Allvest View Post

500 or so Maple Leaf Club Membership (useful not for me, but some members who don't have status with Air Canada).
its 649 (world wide maple leaf access) 500 is for the domestic maple leaf card.

just wanted to clearify
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Old Dec 24, 10, 5:27 pm
  #58  
 
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Originally Posted by taipeiflyer View Post
you are right... a little over $100,000 can cut it. i know from personal experience in the last year. the $250,000 figure is a mythical creation by the cardholders who carry it to make themselves sound like bigger spenders than most of them actually are.
Before I got my Centurion card a few years ago, the rep added up my amex purchases to make sure I was over the $250k charge threshold for the previous 12 months.

The $250k may not have been a firm number for all people but they did apply it to me.
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Old Dec 24, 10, 10:09 pm
  #59  
 
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Originally Posted by Peter Silberman View Post
Before I got my Centurion card a few years ago, the rep added up my amex purchases to make sure I was over the $250k charge threshold for the previous 12 months.

The $250k may not have been a firm number for all people but they did apply it to me.
It was a firm number for many years. It is now higher.
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