The Internal Revenue Service’s (IRS) Taxpayer Advocate is reminding people of the unique financial challenges that state-legal marijuana businesses face under federal prohibition. In a blog post published on Tuesday, the independent agency under IRS explained that cannabis companies are still obligated to pay federal taxes—but they’re barred from deducting most expenses that other industries can claim because the federal government considers marijuana a strictly controlled substance. National Tax Advocate Erin Collins didn’t call for a specific policy change, but she did acknowledge efforts in Congress to enact legalization, or at least protect banks that work with state-legal businesses from being penalized by federal regulators. The purpose of the new post was to “shed some light on the frustrations encountered by a growing segment of the business taxpayer population—the growers, distributors, and retailers of marijuana-related products—and educate them on federal tax law,” the agency said. “There are significant federal tax-related consequences for businesses engaged in the ‘trafficking’ of marijuana, even in states that have legalized (or decriminalized) the use of it,” the tax advocate wrote, adding that a federal tax provision known as 280E specifically precludes cannabis businesses from claiming most deductions.
Mmp News Author, Medical Marijuana Program Connection, 05/10/2022 17:57:00