IRS Charges Dispensaries with Unavoidable Penalties

medical
cannabis dispensary in Denver is just one of many in the area who are facing
virtually unavoidable penalties by the Internal Revenue Service. Allgreens LLC
recently reached out to the IRS after they were penalized for not paying
certain electronic taxes. It is required by federal tax law for businesses to
pay employee withholding taxes electronically, however Allgreens has been
unable to get a bank account for at least two years, making it impossible to
pay these taxes.

According to The Cannabist, an IRS hearing officer denied
the dispensary’s request to waive the 10 percent penalty because the collective
inability to secure a bank account is not a reasonable cause to do so. Unfortunately
it is not due to the dispensary’s lack of effort that they have been
unsuccessful in obtaining a bank account, instead it is discriminatory banking
laws that have caused this. Allgreens’ attorney Rachel Gillette wrote the IRS,
“The application of a penalty to an entire industry that, though willing, is
unable to comply, is discriminatory, unjust and unfair.”

It was
reported that in the IRS settlement officer’s Linda Andrews denial to Gillette,
that the IRS’ “position is all (withholding taxes) are to be made via Electric
Funds Transfer Deposit System, and as of now IRS has not made any policy change
or exception for businesses that cannot use banks to make their federal tax
deposits.”

Unfortunately, Gillette explained that at this point
the only solutions offered by the IRS suggests the dispensary use techniques
that equate to money laundering. Gillette went on to explain that the IRS’
decision shows it has allowed the federal government’s position on cannabis to
affect their decision, which is unfair and unjust when this agency should be a
fair and impartial enforcer of tax code. The case is still pending