Handling Cannabis Tax Examinations: Sec. 280E, Audits, IRS Guidance, Reporting Requirements
Course Details
- smart_display Format
On-Demand
- signal_cellular_alt Difficulty Level
Intermediate
- work Practice Area
Tax Law
- event Date
Tuesday, October 11, 2022
- schedule Time
1:00 p.m. ET./10:00 a.m. PT
- timer Program Length
90 minutes
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This 90-minute webinar is eligible in most states for 1.5 CLE credits.
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BARBRI is a NASBA CPE sponsor and this 110-minute webinar is accredited for 2.0 CPE credits.
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BARBRI is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).
This CLE/CPE course will guide tax counsel and advisers on effective methods in handling IRS cannabis tax examinations for businesses engaged in the cannabis industry. The panel will discuss critical federal and select state tax law provisions impacting marijuana businesses, essential items of focus by the IRS when examining cannabis operations, and techniques in managing audits.
Mr. Toscher has been representing clients for more than 35 years before the Internal Revenue Service, the Tax Divisions of the U.S. Department of Justice and the Office of the United States Attorney, numerous state taxing authorities and in federal and state court litigation and appeals. Mr. Toscher enjoys a unique combination of solid criminal defense experience and extensive substantive tax experience to assist individuals and entities subject to sensitive government inquiries. He has considerable experience as lead counsel in defending criminal tax fraud investigations (both administrative and grand jury investigations) as well as in defending criminal tax prosecutions (both jury and non-jury). Mr. Toscher’s tax practice includes a wide array of substantive areas including income taxes, estate taxes, employment taxes, sales taxes and property taxes. He is routinely involved in sensitive issue or complex civil tax examinations and administrative appeals on behalf of wealthy individuals and their closely held entities as well as large corporations involving both domestic and foreign tax related issues.
Mr. Kalinski specializes in both civil and criminal tax controversies as well as sensitive tax matters including disclosures of previously undeclared interests in foreign financial accounts and assets and provides tax advice to taxpayers and their advisors throughout the world. He handles both federal and state tax matters involving individuals, corporations, partnerships, limited liability companies, and trusts and estates. Mr. Kalinski has considerable experience handling complex civil tax examinations, administrative appeals, and tax collection matters. Prior to joining the firm, he served as a trial attorney with the IRS Office of Chief Counsel litigating Tax Court cases and advising revenue agents and revenue officers on a variety of complex tax matters.
Ms. Brown’s practice focuses on individuals and organizations who are involved in criminal tax investigations, including related grand jury matters, court litigation and appeals, as well as representing and advising taxpayers involved in complex and sophisticated civil tax controversies, including representing and advising taxpayers in sensitive-issue audits and administrative appeals, as well as civil litigation in federal, state and tax court.
The sale and distribution of cannabis for recreational or medical use is a powerful economic engine generating billions in annual revenue, with over 40 states and the District of Columbia having some form of legalization of the substance. Despite state relaxation of marijuana prohibition laws, without careful planning, regulated cannabis businesses can be subject to hefty tax assessments and penalties.
Under Section 61, all gross income must be reported from whatever source it is derived. However, under Section 280E, cannabis businesses cannot deduct rent, wages, and other expenses unless it is for the cost of goods sold (COGS), resulting in a substantially higher tax rate than other companies on their income. The IRS issued guidance to its agents on conducting audits of cannabis businesses giving IRS agents the authority to change a cannabis business' accounting method. Under Section 280E, COGS does not include certain costs. Thus, they remain non-deductible for income tax purposes.
As more states legalize cannabis and make available licenses to grow, manufacture, distribute, and sell cannabis, the IRS has increased cannabis tax audits, which could result in unbearable tax liabilities.
Listen as our panel discusses federal and select state tax law provisions impacting cannabis businesses, critical items of focus by the IRS when examining cannabis operations, and tactics for managing audits.
- Federal and state tax law issues for cannabis businesses
- Key planning strategies to minimize tax liability and avoid audits
- Section 280E
- Ownership structures
- Deductions
- Navigating IRS examinations of cannabis businesses
The panel will review these and other key issues:
- Federal and select state tax law provisions impacting cannabis businesses
- Application of tax rules to the cannabis industry and key planning techniques
- Key issues raised and techniques in handling IRS examinations
- Effect of Section 280E and deduction of the cost of goods sold
Learning Objectives
After completing this course, you will be able to:
- Understand the IRS' analysis and application of tax rules to the cannabis industry
- Identify critical issues resulting in IRS audits of cannabis operations and methods to avoid them
- Recognize the impact of Section 280E on cannabis business operations
- Field of Study: Taxes
- Level of Knowledge: Intermediate
- Advance Preparation: None
- Teaching Method: Seminar/Lecture
- Delivery Method: Group-Internet (via computer)
- Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
- Prerequisite: Three years+ business or public firm experience preparing foreign tax forms and schedules at mid-level within the organization, supervising other preparers/accountants. Specific knowledge and understanding of current rules for calculating taxable income of corporations and pass-through entities. Understanding of federal and state audit procedures, allocation and apportionment of income.
Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.
Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).
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