Use a pardon letter with more than $5000 bounty in Single Player.

You will be given your first pardon letter by Seth, instead of using it hold onto the letter and just pay off the bounty instead. If you do use this pardon letter early on, you can earn more by completing the hideout side missions. I suggest you make a new save and attempt this away from your main save file. Once you have completed the requirements you can then load back your original save and continue playing through the story.

Once you have access to The North you can then make your way to Blackwater. On the western side of town you will find a train station. Just across the street is a large red brick building, which has the title "Welcome to Blackwater" painted on the site. Climb to the top of this building and start killing people. You can stand at the top of the ladder and pick people off as you see them. If you span the camera around from the town hall lawn to the train station you will find an infinite loop of AI civilians. Keep killing people until you reach $5,000 bounty. You can now duck behind cover on top of the building and wait for your wanted level to vanish.

Once your wanted level has dropped make a run for the train station and use your pardon letter to void your bounty. Do not shoot anyone as you make your way to the train station, if you do your wanted level will go back up and using the letter won't be possible.