The IRS Takes Tax Evasion Seriously -- No Matter Who You Are! The IRS Takes…
IRS Launches Marijuana Industry Webpage on IRS.gov
Marijuana continues to be a federally illegal substance even though most states across the country allow legal sales, either recreationally, medicinally, or both. Because the sale of marijuana is federally illegal, marijuana business owners must prepare their tax returns in accordance with the federal tax code and handle their cash carefully. Our Phoenix tax lawyers can provide support and guidance on these new tax regulations by helping you navigate this new informative webpage.
Generally, the ability to deduct ordinary and necessary business expenses provides significant tax savings. However, the Internal Revenue Service consistently applies a provision of the Internal Revenue Code that precludes the deductibility of business expenses associated with operating a marijuana business. In other words, the classification of cannabis as federally illegal severely hinders legal cannabis companies from taking advantage of these tax savings.
However, the Code does permit marijuana growers, producers, wholesalers, and retailers to deduct cost of goods sold from their gross receipts. The costs of goods sold generally includes inventory costs, including the cost of the product itself, shipping the product, and other directly related expenses. The rules related to cost of goods sold are complex and marijuana businesses must keep meticulous records in order to avoid an IRS audit.
Marijuana businesses also face challenges with respect to handling large amounts of cash. This includes filing FinCEN Form 8300 related to certain transactions.
With all these regulatory requirements in place, it is difficult for marijuana businesses to understand and meet their tax responsibilities. IRS has recently released a new marijuana business webpage to help these business owners.
The page covers a number of topics such as section 280E, income reporting, cash payment options, record keeping, and FAQs. While the page is a good starting point, the industry continues to face complex regulatory requirements and business owners should consult with tax experts and qualified Phoenix tax attorneys to ensure their compliance to ensure their compliance. Penalties for failure to comply can be financially devastating.
If you own a business selling, growing, or producing marijuana, you need to work with an experienced Chandler tax lawyer to understand your tax rights and responsibilities. Silver Law PLC operates in Arizona and Nevada and all of its lawyers are former trial attorneys for the IRS. A tax lawyer from our team can help you understand how the complex Tax Code applies to your marijuana business operations. We’ll help you ensure that you are meeting your obligations. If you have been audited or are facing collections, we are also in a position to help you navigate that process. We can either find ways to bring down your tax debt or can negotiate a settlement for you. Call us today to talk with a tax lawyer and learn more.
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