Marijuana Dispensary Settles Case after IRS Suggests It Engage in Money Laundering

Discussion in 'Marijuana News' started by jainaG, Jan 3, 2016.

  1. http://taxfoundation.org/blog/marijuana-dispensary-settles-case-after-irs-suggests-it-engage-money-launderingApril 20, 2015 By James W. Kennedy

    \tImagine running a small business and being assessed a penalty by the IRS. Then
    imagine being told by the IRS that the only way to avoid the penalty is
    to commit a serious felony, laundering money. This Kafkaesque nightmare
    actually became reality for a Colorado marijuana dispensary called
    Allgreens when it tried to pay its federal payroll taxes.

    Generally speaking, in the United States, cash is legal tender for all debts, public charges, taxes, and dues. This general rule gets a little fuzzy when it comes to payment of payroll taxes. In compliance with a law
    designed to reduce administrative costs and save taxpayers money, the
    IRS requires taxpayers to deposit their payroll taxes using the Electronic Federal Tax Payment System (EFTPS).
    https://www.irs.gov/uac/EFTPS-The-Electronic-Federal-Tax-Payment-System

    Usually this isn"t a bad system: using EFTPS instead of a paper filing system saves
    taxpayers on compliance and administration. For taxpayers who do not
    pay with EFTPS, no penalty is assessed if the taxpayer can show that the
    failure to use EFTPS was due to "reasonable cause and not willful neglect”.

    For most marijuana related businesses, using EFTPS simply isn"t possible. EFTPS requires a bank account. Most banks refuse
    to offer services or accounts to marijuana businesses, citing their
    illegality under federal law. The inability to use EFTPS certainly
    appears to be a reasonable cause for not using EFTPS, but the IRS has disagreed.

    When Allgreens asserted that they had reasonable cause for not using
    EFTPS, the IRS denied that their failure was reasonable and offered an
    alternative to paying the penalty: funnel cash to a third party with a bank account.
    http://www.denverpost.com/business/ci_27746718/irs...

    There was only one small problem with this alternative: it required the
    taxpayers to perform financial transactions that conceal the federally
    illegal source of their funds. This is virtually the definition of money laundering, punishable by twenty years in federal prison.

    Allgreens and their attorney Rachel Gillette took the IRS to court, and last month the agency agreed to back down and rescind
    the 10 percent penalties it had assessed the taxpayer. But according to
    Gillette, "This settlement only affects this client…marijuana
    businesses unable to use bank accounts are still operating in an
    uncertain environment”.

    Taxation should be neutral and transparent,
    not punitive and uncertain. The IRS shouldn"t penalize taxpayers who do
    everything they can to comply with tax law, and it definitely shouldn"t
    suggest taxpayers launder money to pay taxes.
     
  2. isn't every cent of tax money ever paid from (" legal ") cannabis sales money laundering because cannabis is a federally illegal substance. the tax man is whoopity whoop for the taxes even if illegally derived. can the feds go after the irs for accepting illegally derived cannabis tax in ("Legal") states??
     

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