The Internal Revenue Service (IRS) would like to get paid\u2014and it\u2019d help if the marijuana industry had access to banks like companies in other legal markets, an official with the federal department said. She also talked about unique issues related to federal tax deductions for cannabis businesses.<\/p>\n
At an event hosted by UCLA\u2019s Annual Tax Controversy Institute on Thursday, IRS\u2019s Cassidy Collins talked about the \u201cspecial type of collection challenge\u201d that the agency faces when it comes to working with cannabis businesses while the product remains federally illegal.<\/p>\n
While IRS isn\u2019t taking a stand on federal marijuana policy, Collins said that the status quo leaves many cannabis businesses operating on a cash-only basis, creating complications for the agency, in part by making it harder for banks to \u201cpay us.\u201d<\/p>\n
\u201cThe reason why [the marijuana industry is] cash intensive is twofold,\u201d she said. \u201cNumber one, a lot of customers don\u2019t want a paper trail showing that they\u2019re buying marijuana, and number two, the hesitancy of banks to allow marijuana businesses to even bank with them.\u201d<\/p>\n
Of course, the reason why many financial institutions remain hesitant<\/a> to take on cannabis companies as clients is because the plant is a strictly controlled substance under federal law.<\/p>\n \u201cThere\u2019s been a number of legislative bills that have been introduced\u2014and I am definitely not expressing any opinion personally or on behalf of the IRS about any pending or proposed legislation,\u201d Collins, who is a senior counsel in the IRS Office of Chief Counsel, said. \u201cBut it is interesting to note that, if the law changed so that the marijuana businesses could have banks, that would make the IRS\u2019s job to collect [taxes] a lot easier. As part of collection, we want the money. That\u2019s our end goal there.\u201d<\/p>\n A major part of what makes cannabis businesses unique is that they don\u2019t qualify for traditional tax credits under an IRS code known as 280E. That policy \u201cprohibits them from claiming deductions for business expenses because they\u2019re technically being involved in drug trafficking,\u201d Collins explained at the event<\/a>, from which small excerpts of her comments were reported<\/a> by Bloomberg.<\/p>\n There are some options available to lessen the burden on marijuana firms, however. At the end of the day, \u201cIRS will work with marijuana companies because, again, we want to get paid,\u201d Collins said.<\/p>\n One of the ways the agency works with marijuana business operators is to have them visit designated IRS \u201ctax assistance centers\u201d that accept cash payments in excess of $50,000. But the official warned businesses to \u201cbe prepared to be there for a little while\u201d as the center checks\u2014and double checks\u2014the amount of cash being submitted.<\/p>\n \u201cRevenue officers will assist the marijuana companies in paying us,\u201d she said.<\/p>\n IRS officials could also help cannabis firms by having officials accompany them \u201cto the bank in order to try to help the taxpayer secure a cashier\u2019s payment to pay the IRS, as well as using money orders,\u201d she said, adding that \u201cour revenue officers are are wanting to work with the marijuana companies to help assist them to pay us.\u201d<\/p>\n \u201cWhen the revenue officers are there in person with the taxpayer, that could potentially help increase the likelihood that the bank will cooperate and help the taxpayer transition into a cashier\u2019s check,\u201d she continued. \u201cAnd that has been a trend since this first became legal [at the state level], that more and more banks are allowing cannabis companies to bank with them.\u201d<\/p>\n In a report published earlier this year, congressional researchers examined tax policies and restrictions for the marijuana industry<\/a>\u2014and how those could change if any number of federal reform bills are enacted.<\/p>\n IRS, for its part, said last month that it expects the cannabis market to continue to grow, and it offered some tips to businesses<\/a> on staying compliant with taxes while the plant remains federally prohibited.<\/p>\n As it stands, banks and credit unions are operating under 2014 guidance from the Financial Crimes Enforcement Network (FinCEN) that lays out reporting requirements for those that choose to service the marijuana industry.<\/p>\n Leaders in both chambers of Congress are working on legalization bills to end federal marijuana prohibition. But stakeholders are hopeful that, in the interim, legislators will enact modest marijuana banking reform. Legislation to protect financial institutions from being penalized for working with cannabis businesses passed the House for the fifth time last month<\/a>.<\/p>\n Rodney Hood, a board member of the National Credit Union Administration, wrote in a Marijuana Moment op-ed this month<\/a> that legalization is an inevitability\u2014and it makes the most sense for government agencies to get ahead of the policy change to resolve banking complications.<\/p>\n IRS separately hosted a forum in August dedicated to tax policy for marijuana businesses<\/a>\u00a0and cryptocurrency.<\/p>\n Earlier this year, IRS Commissioner Charles Rettig\u00a0told Congress that the agency would \u201cprefer\u201d<\/a>\u00a0for state-legal marijuana businesses to be able to pay taxes electronically, as the current largely cash-based system under federal cannabis prohibition is onerous and presents risks to workers.<\/p>\n Former Treasury Secretary Steven Mnuchin said in 2019 that he\u2019d like to see Congress approve legislation resolving the cannabis banking issue and he pointed to the fact that\u00a0IRS has had to build \u201ccash rooms\u201d to deposit taxes<\/a>\u00a0from those businesses as an example of the problem.<\/p>\n IRS released\u00a0updated guidance on tax policy for the marijuana industry<\/a>\u00a0last year, including instructions on how cannabis businesses that don\u2019t have access to bank accounts can pay their tax bills using large amounts of cash.<\/p>\n The update appears to be\u00a0responsive to a Treasury Department internal watchdog report<\/a>\u00a0that was released earlier in the year. The department\u2019s inspector general for tax administration had criticized IRS for failing to adequately advise taxpayers in the marijuana industry about compliance with federal tax laws. And it directed the agency to \u201cdevelop and publicize guidance specific to the marijuana industry.\u201d<\/p>\n Luxembourg Set To Become First European Country To Legalize Marijuana Following Government Recommendation<\/a><\/p>\n<\/blockquote>\n\n The post Top IRS Official Says Marijuana Banking Reform Would Help Feds \u2018Get Paid\u2019<\/a> appeared first on Marijuana Moment<\/a>.<\/p>\n
The Internal Revenue Service (IRS) would like to get paid\u2014and it\u2019d help if the marijuana industry had access to banks like companies in other legal markets, an official with the federal department said. She also talked about unique issues related to federal tax deductions for cannabis businesses. At an eventContinue Reading<\/a><\/span><\/p>\n","protected":false},"author":458,"featured_media":0,"comment_status":"false","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[18,81],"tags":[],"_links":{"self":[{"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts\/50676"}],"collection":[{"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/users\/458"}],"replies":[{"embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/comments?post=50676"}],"version-history":[{"count":1,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts\/50676\/revisions"}],"predecessor-version":[{"id":50677,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts\/50676\/revisions\/50677"}],"wp:attachment":[{"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/media?parent=50676"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/categories?post=50676"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/tags?post=50676"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}\n
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\nRead More: Top IRS Official Says Marijuana Banking Reform Would Help Feds \u2018Get Paid\u2019<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"