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New IRS Audits in Colorado Worry Cannabis Companies`

News Posted Jul 11 2016

For as long as medical and recreational marijuana has been operating within the US, it still remains illegal under federal law, which keeps marijuana business owners and investors very cautious, as penalties for federal money laundering can reach up to 20 years in prison and a half a million dollar fine. The IRS has recently decided to audit parts of the primarily cash marijuana industry of Colorado, and while the focus of the audit is in companies that failed to file the proper tax form for purchases over $10,000, the questionnaire is asking far more information than necessary. IRS agents claim the audits are purely educational for the businesses who were simply unaware of the needed paperwork, but some experts are worried the federal agency is planning to use the extra information to bring crimal charges onto the industry. At least 30 dispensaries in Colorado have been audited in recent weeks, with more expected to continue. Former IRS veteran explains that marijuana businesses operating in other legal states will likely see similar audits in another year.

“The scope of an 8300 audit should be: ‘How many of your customers paid you in excess of $10,000 in cash? How often? Who were they? How were the events triggered? Did you file an 8300? If not, why not?'” Riordon said.

“The scary thing about our criminal justice system is that our prosecutors have wide discretion as to what cases to prosecute and what cases not to,” Wykowski said. “I wouldn’t rule out a prosecution for an 8300 offense. I would hope not. But I wouldn’t rule it out.”

Original article: http://mjbizdaily.com/new-irs-audits-colorado-worry-cannabis-companies/

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