The Internal Revenue Service has sent many Colorado marijuana companies questionnaires largely focused on IRS Form 8300, which tracks cash transactions above a certain amount. Fears of money laundering charges have gripped cannabis entrepreneurs.
“So I’m looking at this with my tax attorney, and it’s pretty serious,” said one cannabis entrepreneur who received inquiries about the cannabis specific Form 280E. “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.”
Form 8300 must be filled out by people or businesses that trade more than $10,000 in a single transaction. The IRS notes: “Drug dealers and smugglers often use large cash payments to ‘launder’ money from illegal activities.”
No fewer than 30 Colorado businesses have received Form 8300 audits recently, according to Colorado attorney Jim Thorburn.
Agents use an IRS questionnaire which features questions beyond the scope of a 8300 audit. Namely, “How many plants do you grow per year?” and “How many times did you harvest them during the examination period?”
Thoroughbourhg said: “..When we see a lot of these questions that are being asked, it raises more questions. Is this going criminal? I don’t know.”
Federal money laundering charges carry penalties as grim as 20 years behind bars, and a $500,000 fine per violation.
“I see this as a very dangerous development,” California attorney Henry Wykowski said. He believes similar measures will be taken in California by the IRS. “If you gave them this information under the guise of a civil audit, you would be making admissions that – if they decided to charge you criminally – could be used against you in a trial.”