Cannabiz Law Blog

“Nothing can be said to be certain, except death and taxes.” This infamous line credited to Benjamin Franklin still rings true 230 years later.

However, the government still has barriers that make a cannabis business’s ability to pay taxes ever more burdensome. Without the restrictions on banking, tax payments can be paid online or by simply mailing a check like any other business. But as long as cannabis remains a Schedule 1 drug, restrictions for banking will remain.

Unless a business owner has found a financial institution to accept their cash, business owners are limited to paying their required tax payments in cash. With proper planning, the burden of paying in cash can become more manageable. No matter the type of tax you have to pay, the State of Michigan and IRS have procedures to allow you to pay in cash.

STATE OF MICHIGAN

The Michigan Department of Treasury will accept payments for taxes via check, money order, or in cash. A cash payment can be made at one of the field offices located around the state if the payment is $2,000 or less. If a cash payment is being made over this amount, then there is only one office in Lansing that will take these payments. The LARA Cashier Office located in the BMR building, will accept these payments without limitation. This same office will accept payments for all tax types including sales, excise, payroll, income, etc. The LARA Cashier is located at 2407 North Grand River Avenue, Lansing, MI 48906.

INTERNAL REVENUE SERVICE

For the IRS, there are a few more options for a business owner. If the business has a bank account, then the EFTPS system is preferred and free to use. Assuming the business does not have a bank account, which most in the cannabis industry do not have, then their options are limited. The only office in the State of Michigan that accepts cash payments is the Detroit Taxpayer Assistance Center.

To make the cash payment, an appointment must be made with the office ahead of time. Current wait times for an appointment are 6-8 weeks out, so careful planning must be done to timely pay all taxes. Since federal tax payments are made annually or quarterly, it is a wise decision to make an appointment when possible and even pre-pay certain taxes. Any overpayments can always be applied to a later period or refunded to the business. This practice avoids late payment penalties being applied to the outstanding balance and provides further proof to the IRS of your intent to stay compliant.

If the Detroit office is not feasible or if an appointment cannot be made for any reason, then other options do exist. First, a business owner can acquire money orders and mail them in to the IRS – but these are subject to certain daily limits. The owner can also obtain cashier’s checks as well. But with both money orders and cashier’s checks, these lead to a number of potential questions or issues for the owner. This may include questions as to the source of the funds, an IRS/FinCEN form 8300 being completed, or potential threat to close personal bank accounts.

The only other alternative is to pay cash at a 7-Eleven store, but this also is limited to $1,000 per day in payments. Unfortunately, with the current rules under the Bank Secrecy Act, these are the rules we have to follow.

To make an appointment with the Detroit office, please call 844-545-5640. Please note that exact change is required for the payment in cash.