What CMC reporting is and why scrap dealers file it

CMC stands for Copper, Magnesium, and Catalytic converters — three categories of scrap metal that require special reporting to the IRS. If you buy, sell, or process these materials as a scrap metal dealer, you must report certain transactions on Form 8300 or through a broker reporting system, depending on how you conduct business.

The IRS tracks CMC transactions because these metals are frequently stolen and resold. By requiring dealers to document who they buy from and what they pay, the agency can trace metal back to theft cases and help law enforcement. For you as a dealer, this means keeping detailed records of each CMC purchase and reporting cash transactions above $10,000 in a single day.

CMC reporting is separate from your regular business income reporting. You still report all scrap metal sales as business revenue on Schedule C (if you are self-employed) or on your business tax return. CMC reporting is an additional layer that focuses specifically on the source and payment method of these three metals.

Key Takeaways

  • CMC reporting applies to copper, magnesium, and catalytic converters — you must document each purchase, including who sold it to you and how much you paid.
  • If you pay more than $10,000 in cash for CMC materials in a single day, you must file Form 8300 with the IRS within 15 days.
  • You need the seller's name, address, and government-issued ID for every CMC transaction, whether you pay cash or not.
  • Some dealers use a broker or third-party reporting system instead of filing Form 8300 themselves — check with your accountant or the IRS about which method applies to your operation.

When you must file Form 8300 for CMC sales

Form 8300 is required when you receive more than $10,000 in cash in a single day for CMC materials. The threshold is $10,000 total across all transactions that day, not per transaction. If you buy copper from one seller for $6,000 cash and magnesium from another for $5,000 cash on the same day, you have crossed the $10,000 threshold and must file.

The form must be filed within 15 days of the transaction. You submit it to the IRS, and you also give a copy to the person who sold you the metal. The form asks for the seller's name, address, date of birth, government-issued ID number, the date of the transaction, the amount paid, and a description of the materials.

If you pay by check, credit card, or bank transfer instead of cash, Form 8300 is not required — but you still must keep records of the transaction. Many dealers use a broker or reporting system that handles this documentation automatically, which can simplify your record-keeping.

What information you need to collect from every CMC seller

For every CMC purchase, you must record the seller's full name, street address, and date of birth. You also need a copy of their government-issued photo ID — a driver's license, passport, or state ID card. Write down the ID number on your receipt or in your transaction log.

Record the date, time, and amount paid. Describe what you bought: "copper wire," "magnesium scrap," "catalytic converters" — be specific enough that you could identify the same batch later. If the seller brings in multiple types of metal, list each one separately with its weight or quantity and the price paid for each.

Ask the seller how they obtained the material. You are not required to investigate or verify their answer, but documenting what they tell you protects you if the metal turns out to be stolen. If a seller refuses to provide ID or their story seems inconsistent, you can decline the purchase.

How to file Form 8300 or use a broker system

You have two main routes: file Form 8300 yourself, or use a broker or third-party reporting system that files on your behalf. Many larger dealers and those who handle high volumes of CMC use a broker because it reduces paperwork and the risk of filing errors.

If you file Form 8300 yourself, you can submit it by mail to the IRS address listed in the form instructions, or you can file electronically through the IRS e-file system if you have a PIN or use a tax professional. The form is straightforward — it takes 10 to 15 minutes per transaction once you have the seller's information in front of you.

If you use a broker, you provide them with the transaction details (seller name, ID, amount, materials), and they handle the IRS filing and record-keeping. Some brokers charge a small fee per transaction. Ask your accountant or local scrap metal association whether a broker is common in your area and what the typical cost is.

Record-keeping requirements for CMC dealers

Keep a log or ledger of every CMC purchase, whether the transaction triggers Form 8300 or not. The log should include the date, seller's name and ID number, what you bought, the weight or quantity, and the price paid. Store this alongside copies of Form 8300 filings and any broker reports.

The IRS can audit your CMC records at any time. If you cannot produce a seller's ID or your transaction log does not match your Form 8300 filings, you may face penalties. Keep records for at least three years — longer is safer if you have the space.

If you use a broker or reporting system, ask them how long they retain records and whether they provide you with copies for your own files. Some dealers keep both a digital copy and a paper backup in case one system fails.

Common mistakes that trigger IRS penalties

The most common error is filing Form 8300 late. The 15-day important date is firm — the IRS charges penalties for late filing even if you file eventually. Set a calendar reminder for day 15 after any cash CMC transaction over $10,000.

Another mistake is incomplete seller information. If you file Form 8300 without the seller's ID number or with an incorrect address, the IRS will reject it or flag it for follow-up. Before you hand over payment, verify the ID matches the person in front of you and write down the number correctly.

Some dealers underreport the amount paid or list the wrong metal type to avoid filing. This is fraud and carries criminal penalties, not just civil ones. Report what you actually paid and what you actually bought.

What happens if you do not file or file incorrectly

If you fail to file Form 8300 when required, the IRS can assess a penalty of $25,000 or more per violation. If the failure is intentional, criminal charges are possible. If you file late, the penalty is typically $100 to $500 per form, depending on how late and whether it was a first offense.

If you file with incomplete or false information, the IRS may audit your entire business to determine whether you are underreporting income or hiding transactions. An audit can take months and cost thousands in accountant fees.

The best protection is to treat CMC reporting as a routine part of your business. Build it into your intake process: get the ID, write down the information, file the form on time. If you are unsure whether a transaction requires Form 8300, file it anyway — filing when not required is not a penalty, but failing to file when required is.

Frequently Asked Questions

Do I have to report CMC sales if I pay by check instead of cash?

No. Form 8300 is only required for cash transactions over $10,000 in a single day. If you pay by check, credit card, or bank transfer, you do not file Form 8300. You still must keep records of the transaction for your business and tax records, but the IRS reporting requirement does not explore.

What counts as cash for CMC reporting?

Cash means physical currency. Checks, money orders, and electronic transfers do not count. Some dealers ask whether paying partly in cash and partly by check triggers the $10,000 threshold — it does. If you pay $6,000 cash and $5,000 by check on the same day, you have crossed $10,000 and must file Form 8300 for the cash portion.

Can I ask a seller to split a large transaction into two days to avoid Form 8300?

No. Deliberately splitting transactions to stay under the $10,000 threshold is called "structuring" and is illegal. If the IRS detects a pattern of transactions just under $10,000, they can investigate and impose penalties. Report each transaction as it occurs, on the day it occurs.

What if a seller does not have a government-issued ID?

You cannot legally buy CMC from someone without a government-issued photo ID. You can decline the sale. If you buy anyway and later file Form 8300 with incomplete ID information, you are liable for penalties. It is better to turn away one sale than to face an audit.

Do I need to report CMC sales to anyone besides the IRS?

Some states and cities have their own scrap metal reporting requirements separate from federal CMC reporting. Check with your state's revenue department and your local business licensing office. If your state requires additional reporting, you will need to file both the federal Form 8300 and the state form.