420 with CNW — IRS Official Discusses Cannabis S
Post# of 227
(Total Views: 243)
Posted On: 05/17/2022 4:39:22 PM
420 with CNW — IRS Official Discusses Cannabis Sector’s Current Financial Challenges
The U.S. IRS Taxpayer Advocate, an agency under the Internal Revenue Service (IRS), has published a blog post in which the agency discusses the tax obligations that marijuana companies have and the efforts which are being taken at the Congressional level to resolve some of those challenges.
The blog post pointed out that, although companies in the cannabis industry are expected to meet their federal tax obligations, the firms aren’t at liberty to deduct many of the expenses that firms in other industries normally deduct when determining their tax obligations. This disparity stems from the fact that under federal law, marijuana is a controlled substance that cannot be bought or sold legally, so businesses engaged in cannabis business can’t claim tax deductions on an illegal activity.
Erin Collins, the National Tax Advocate (NTA) who penned the post, wasn’t committal about any changes to policy that needed to be made. However, she did acknowledge that Congress was making efforts to enact marijuana legalization or at the very least offer protections to banks that opt to do business with marijuana companies at state level.
The reason for posting this article, according to the author, was to highlight some of the increasing frustrations that a notable and growing category of taxpayers, including marijuana growers, processors, distributors as well as retailers, face. Educating these taxpayers was also a focus of the post.
The NTA wrote that tax code 280E is unequivocal in precluding businesses that “traffic marijuana” from taking advantage of many tax deductions enjoyed by other businesses that the federal government regards as legal. Because of this provision, Collins says that businesses in the marijuana industry end up meeting their tax obligations from their gross earnings rather than from their net income as would ordinarily be the case.
Another challenge facing the cannabis industry is the limited number of IRS locations that can receive cash payments. Businesses not only have to arrange to transport such large sums of cash, but they also have to move long distances in order to access the specific IRS sites capable of accepting large cash payments to clear tax obligations.
As a result of the high tax rate and the limitations on what business expenses can be deducted, it is significantly harder for a marijuana business to reach break-even point in its operations, the post says. The article also mentions that since marijuana isn’t federally recognized as a medicine, people can’t deduct medical marijuana costs as they file their annual tax returns.
The issues raised in this NTA article are known all too well by established marijuana companies such as Cannabis Strategic Ventures Inc. (OTC: NUGS) that have, through dogged determination, managed to find a measure of success despite those huge odds stacked against the industry.
NOTE TO INVESTORS: The latest news and updates relating to Cannabis Strategic Ventures Inc. (OTC: NUGS) are available in the company’s newsroom at http://cnw.fm/NUGS
Please see full terms of use and disclaimers on the CannabisNewsWire website applicable to all content provided by CNW420, wherever published or re-published: http://CNW.fm/Disclaimer
The U.S. IRS Taxpayer Advocate, an agency under the Internal Revenue Service (IRS), has published a blog post in which the agency discusses the tax obligations that marijuana companies have and the efforts which are being taken at the Congressional level to resolve some of those challenges.
The blog post pointed out that, although companies in the cannabis industry are expected to meet their federal tax obligations, the firms aren’t at liberty to deduct many of the expenses that firms in other industries normally deduct when determining their tax obligations. This disparity stems from the fact that under federal law, marijuana is a controlled substance that cannot be bought or sold legally, so businesses engaged in cannabis business can’t claim tax deductions on an illegal activity.
Erin Collins, the National Tax Advocate (NTA) who penned the post, wasn’t committal about any changes to policy that needed to be made. However, she did acknowledge that Congress was making efforts to enact marijuana legalization or at the very least offer protections to banks that opt to do business with marijuana companies at state level.
The reason for posting this article, according to the author, was to highlight some of the increasing frustrations that a notable and growing category of taxpayers, including marijuana growers, processors, distributors as well as retailers, face. Educating these taxpayers was also a focus of the post.
The NTA wrote that tax code 280E is unequivocal in precluding businesses that “traffic marijuana” from taking advantage of many tax deductions enjoyed by other businesses that the federal government regards as legal. Because of this provision, Collins says that businesses in the marijuana industry end up meeting their tax obligations from their gross earnings rather than from their net income as would ordinarily be the case.
Another challenge facing the cannabis industry is the limited number of IRS locations that can receive cash payments. Businesses not only have to arrange to transport such large sums of cash, but they also have to move long distances in order to access the specific IRS sites capable of accepting large cash payments to clear tax obligations.
As a result of the high tax rate and the limitations on what business expenses can be deducted, it is significantly harder for a marijuana business to reach break-even point in its operations, the post says. The article also mentions that since marijuana isn’t federally recognized as a medicine, people can’t deduct medical marijuana costs as they file their annual tax returns.
The issues raised in this NTA article are known all too well by established marijuana companies such as Cannabis Strategic Ventures Inc. (OTC: NUGS) that have, through dogged determination, managed to find a measure of success despite those huge odds stacked against the industry.
NOTE TO INVESTORS: The latest news and updates relating to Cannabis Strategic Ventures Inc. (OTC: NUGS) are available in the company’s newsroom at http://cnw.fm/NUGS
Please see full terms of use and disclaimers on the CannabisNewsWire website applicable to all content provided by CNW420, wherever published or re-published: http://CNW.fm/Disclaimer
(0)
(0)Cannabis Strategic Ventures, Inc (NUGS) Stock Research Links
Scroll down for more posts ▼