Many people, lawyers included, are unaware of what "tax structuring" or "structuring payments" involves, but the consequences of engaging in this activity can be painful. 26 U.S.C. § 6050I and 31 U.S.C. § 5324 specifically prohibit "structuring" payments or deposits with the intent to evade tax responsibilities.
As an example, any person who receives $10,000 or more in cash is required to report this income/receipt to the IRS via Form 8300. However, some people choose to split (or structure) payments/deposits by making multiple deposits below $10,000, instead of making one deposit exceeding $10,000. Therefore, such a person would try to avoid the filing of a Form 8300, which means the money would not be reported to the IRS as required.
In an example closer to home, last month, Larry Mark Mangum, a veterinarian from Morristown, Tennessee, was sentenced by the U.S. District Court in Greeneville, "to serve 60 days in prison, five years probation, pay a $50,000 fine and complete 350 hours of community service" for structuring currency transactions to evade the reporting requirements made by the federal law, according to a press release from the Department of Justice. Mangum admitted he was making numerous deposits under $10,000 to keep the banks from filling out Form 8300 and reporting it to the Internal Revenue Service. In a two-year period, Mangum made over $400,000 cash deposits to three different banks.
31 U.S.C. § 5324(d) states that if a person violates this law, he/she can serve up to 5 years in prison and be fined. If a person "violates this section while violating another law of the Unites States or as part of a pattern of an illegal activity involving more than $100,000 in a 12-month period shall be fined twice the amount provided in subsection (b)(3) or (c)(3) of section 3571 of title 18, United States Code, imprisoned for not more than 10 years, or both."