When does the bank report your deposit to the IRS?

Never, unless you have a much bigger problem than you realize.

A person buying a car who has legally obtained the money to pay and is paying more than a few hundred dollars pays by check. Banks do not report deposits of checks into regular bank accounts. Even if you deposit several million dollars, they do not report it.

Banks do report it if you deposit it in an IRA, HSA, etc. However, it is illegal to deposit that much in any of those types of accounts, and I do not think that you have one of those types of accounts. I think you have a regular, normal account, and can deposit a check for any amount you want, without the IRS knowing or caring.

If the person paid you $12,000 in cash, then you have an even bigger problem. The only types of car buyers who are likely to pay that much in cash are criminals, and they usually pay with cash that they obtained illegally, such as drug money or stolen money. You could be in a lot of trouble for accepting that money.

Your friend is probably right. Usually a bank or securities dealer has to file a report for cash transactions of $10,000 or more. It's called a CTR and is generally used to combat money laundering. I'm pretty sure this only applies to CASH deposits though - a check probably wouldn't generate any IRS reporting.

Why would you be worried about this matter?

Suspicious Activity Report (SAR)

The SAR must report any cash transaction where the customer seems to be trying to avoid BSA reporting requirements by not filing CTR or MIL, for example. A SAR must also be filed if the customer's actions suggest that he is laundering money or otherwise violating federal criminal laws and committing wire transfer fraud, check fraud or mysterious disappearances. The bank should not let the customer know that a SAR is being filed. These reports are filed with the Financial Crimes Enforcement Network ("FinCEN").

Hope that you find the above enclosed information useful. 02/28/2012

I used to work for BofA... we would have to report anything over 3K in cash deposited into any account. If you withdrew $10,000 and more in cash, we would have to report that, meaning we would fill out forms.

It can be as little as 3k in cash if that is outside your normal pattern. The 12k is reported immediately and you will be asked where the money came from.

banks are r'qd to report all transactions of $10000 or more at they occur, probably daily

Its $10,000

$10K is correct.

your friend is right.