Tax Byte

Once a business receives cash exceeding $10,000 (in either a transaction or related transactions), a Form 8300 must be filed. Cannabis businesses are cash intensive businesses and therefore are subject to the reporting requirement.

A March 1, 2024 Chief Council Memorandum 202409016 addresses a series of questions related to the filing of Form 8300 that have arisen in examinations of cannabis businesses. The memorandum provides guidance on many of these issues in a 16 question-and-answer format. Additional guidance on questions related to cash couriers/armored cars who transport cash between growers/manufacturers and dispensaries/sellers is in process.

Example from Q and A #2. What is reasonable cause for failure to timely file the Form 8300 and what would allow it? In part, the Chief Council answers:

Under §6724(a), no penalty for a failure under §6721 and §6722 shall be imposed “if it is shown that such failure is due to reasonable cause and not willful neglect.” It is the taxpayer’s burden to establish reasonable cause.

Tax practitioner planning. The reasonable cause waiver for penalties is important for all businesses, not just the cannabis business. Reasonable cause for the information return penalties generally exists when: 

• The filer acted in a responsible manner, both before and after the failure occurred, and
• There are significant mitigating factors, or (ii) the failure was the result of circumstances beyond the filer’s control.

Resource. A more detailed discussion of reasonable cause for the information return penalties is in IRM 20.1.7.12.1 (12-16-2022).