By: Laura Meyers
According to a new report by Marijuana Business Daily, the Internal Revenue Service (IRS) has “begun probing the large cash transactions of dozens of Colorado marijuana companies, sparking uncertainty and unease among cannabis entrepreneurs.”
The audits focus on the appropriate use of Form 8300, which is required to report cash payments received of more than $10,000.
Reactions are mixed.
“It’s not necessarily something that a marijuana business has to freak out about. All cash-intensive industries are subject to Form 8300 filing requirements,” Colorado attorney Rachel Gillette, who has already settled multiple Form 8300 audits, said.
Business owners, however, aren’t so sure.
One business owner, who asked to remain anonymous so as not to draw the attention of the IRS, is used to dealing with the IRS over issues such as 280E, not a failure to file Form 8300. That type of scrutiny is something new, he said.
“So I’m looking at this with my tax attorney, and it’s pretty serious,” he said. “They’re not ruling out criminal charges. And, as a matter of fact, I know a couple of the audits have come from the fraud division of the IRS.”
Marijuana Business Daily reports:
At least 30 Colorado businesses have been hit with Form 8300 audits in recent weeks, said Colorado attorney Jim Thorburn, who represents multiple marijuana companies facing such audits. The main problem, he said, is there’s considerable uncertainty surrounding around the audits and what they could presage.
Thorburn’s concerns mainly stem from an IRS questionnaire agents have used in the audits. The questionnaire was obtained by a cannabis industry attorney and shared.
It contains queries unrelated to a standard 8300 audit, such as: “How many plants do you grow per year?” and “How many times did you harvest them during the examination period?”
“What the IRS agents are telling us is that this is strictly civil, and that it’s educational,” Thorburn said. “If you take them on their word, on the surface, then it would be civil. The question is, are they being completely candid with us? And we just don’t know. And when we see a lot of these questions that are being asked, it raises more questions. Is this going criminal? I don’t know.”
He also raised the possibility of the IRS working together with the U.S. Treasury Department and the Department of Justice to develop money laundering charges against cannabis companies. He noted that in April 2015 the IRS signed a memorandum of understanding with the Financial Crimes Enforcement Network (FinCEN) to share information.
This sounds all too familiar to the 2012 IRS scandal, in which federal workers admittedly targeted conservatives, non-profit groups for extra scrutiny by the entity.