The Workplace of the Chief Counsel of the IRS not too long ago printed a memorandum offering info for hashish firms which have problem complying with Kind 8300, which should be filed at any time when an organization receives a money fee. greater than $10,000. The memorandum was issued in response to a collection of questions from Financial institution Secrecy Act examiners who work with hashish trade firms and gives a wide range of useful steerage relating to correct compliance with the Kind 8300. Amongst different issues, the memorandum clarified that firms will not be required to confirm. the “suspicious transaction” field within the first line of the shape solely as a result of they’re concerned within the hashish trade.
Kind 8300 could be frequent within the hashish trade because of the frequent use of money and the problem that some firms can have in securing correct banking preparations. As a result of ongoing rigidity between state and federal legal guidelines relating to hashish, it may be tough for firms to conform when reporting to the federal authorities relating to their hashish enterprise actions.
The memorandum supplied useful steerage relating to a number of questions relating to the right completion of Kind 8300, together with the next:
Report the kind of transaction and the outline of companies
In Half 3, line merchandise #33, when reporting the kind of transaction through which the cash was obtained, companies should choose Field J “Different.” So, when offering the particular description of companies in line merchandise #34, firms ought to:
- present a particular description reminiscent of “hashish flower bill to ______”; o
- if the corporate doesn’t wish to embody the phrase hashish/marijuana within the particular description, use NAICS code 11 – “Agriculture, Forestry, Fishing and Searching” or use a extra acceptable subcategory code reminiscent of 424590 – “Different Service provider uncooked materials agricultural merchandise. wholesalers”.
Suspicious Transactions and Required Notifications
Companies mustn’t examine the “suspicious transaction” field on line 1 of Kind 8300 defensively simply because they’re concerned within the hashish trade; they will need to have another motive for suspicion.
Even when a enterprise checks the “suspicious transaction” field, that doesn’t exempt it from the duty to inform the payer of the cash {that a} Kind 8300 has been filed to determine the payer. If the “suspicious transaction” field has been checked, the enterprise should present a written notification assertion as an alternative of a replica of Kind 8300, though that is typical enterprise apply, to keep away from disclosure to the payer whose kind has been marked suspicious. .
If the enterprise has a real worry for its security if it had been to ship such a notification, it should hold a written file of its choice to not ship the notification and its justification for not doing so, which can be reviewed by the examiner to verify. if the worry was authentic. If the examiner disagrees, the enterprise should still be topic to a penalty for failure to inform.
Intentional disregard / Intentional penalty
Companies mustn’t ignore correspondence from the IRS Financial institution Secrecy Act help crew, nor ought to they proceed to function in violation of steerage beforehand supplied by their IRS Financial institution Secrecy Act examination crew. In the event that they achieve this, they could be topic to willful contempt/willful penalties.
For instance, an organization could also be topic to willful disregard/willful penalty if, after the IRS examination crew has formally knowledgeable that firm of the necessities and threat, the corporate continues to do enterprise with a shopper who insists on paying in money and refuses to pay. present the knowledge wanted to finish Kind 8300 (such because the buyer's EIN/TIN).
Money Funds between Associated Entities
When figuring out whether or not money funds between associated entities require the submitting of a Kind 8300, the controlling issue is whether or not the entities share a single EIN for tax reporting functions. Even when the entities share a standard company guardian and are positioned in the identical constructing, if every entity has its personal EIN, then a Kind 8300 is required for transfers between the entities.
The Kind 8300 in query could be filed by the subsidiary entity receiving the fee or by the frequent company guardian.
Reporting and Verification Obligations
When finishing a Kind 8300 for a money transaction, filers are required to incorporate the EIN/TIN (and supply the notifications described above) for all events concerned within the motion of the cash, together with (if relevant) the companies of money courier and the person driver. working as an worker of such money courier companies.
Companies are required to confirm the title and tackle of every particular person reported on Kind 8300. Driver's licenses, state hashish license playing cards and different frequent types of identification are accepted for this objective in the event that they include a photograph, the worker's title and a present expiration date. . If they don’t include an tackle, the corporate should take steps to individually confirm the tackle, reminiscent of a separate type of identification or a utility invoice/account assertion with the right title and tackle.
An entire copy of the IRS FAQ memorandum could be discovered at this hyperlink: irs-form8300-marijuana-cash-payments.pdf (documentcloud.org).
For any questions or issues, please contact Andrew M. Halbert (ahalbert@foxrothschild.com), Joshua Horn (jhorn@foxrothschild.com) or one other member of the Fox Rothschild LLP Hashish Regulation Observe Group.
