Avoid Cannabis Cash Tax Civil & Criminal Penalties

The Federal Government is not cooperating with the states in terms of its controlled substance status, and that means cannabis businesses are cash businesses. Banks and credit card companies are not participating because there is a chance they might be accused of money laundering. The controlled substance ruling has created a challenge for people in the legal cannabis business, and a cash nightmare for the Internal Revenue Service. Since there are no banking or credit card services available, owners of CBD businesses must make their tax payments in person.

Making an in-person appointment with the Department of Revenue isn’t as easy as one might expect. The amount of cash being processed by state revenue offices is bogging down the antiquated collection system. The issue with making an appointment with the Department of Revenue is timing. There are only so many appointments each day, and if one of those appointments runs over the allocated time, or someone is late, the appointment schedule falls apart.

Form 8300 Law

If someone brings a larger payment than expected, there could be a delay in the schedule. Payments over $10,000 require form 8300. That form is called, Report of Cash Payments Over $10,000 Received in a Trade or Business, and it is required if a cannabis business receives more than $10,000 in cash from one buyer. That could be one transaction or two or more related transactions.

Form 8300 is an important tool to combat money laundering. The IRS and the Financial Crimes Enforcement Network (FinCEN) are looking for tax evasion, terrorist activity, and illegal drug dealing all the time. A person, business, corporation, trust, association, partnership, or estate must file form 8300 if any cash transaction is more than $10,000 in any state, the District of Columbia and any U.S. possession, or territory. That law includes Puerto Rico, Guam, the U.S. Virgin Islands and the Mariana Islands. Form 8300 must be filed by the 15th day after the cash sale. The form can be filed by mail or electronically.

Form 8300 Requirements

Cannabis businesses must also furnish the IRS with a written statement that lists the name of each person that is included in form 8300 by January 31 of the tax filing year. Meeting the proper IRS requirements is important. Failure to do so may mean civil and criminal penalties if form 8300 is not filed properly and filed on time. There are no exemptions when it comes to filing form 8300 with the IRS. All cannabis businesses must file the form.

Source(s): IRS