IRS Official Offers Tax Advice To Marijuana Businesses And Says Feds Expect Industry To Keep Growing

IRS Official Offers Tax Advice To Marijuana Businesses And Says Feds Expect Industry To Keep GrowingPublished 1 day ago on September 28, 2021By Kyle Jaeger

The Internal Revenue Service (IRS) says it expects the marijuana industry to continue to grow, and it’s offering some tips to cannabis businesses on staying compliant with taxes while the plant remains federally prohibited.

In a blog post on Monday, IRS’s De Lon Harris said that the “evolving and complex issue my organization has been focused on is the tax implications for the rapidly growing cannabis/marijuana industry.”

“The specific rules and regulations regarding how [marijuana] is taxed at the federal level provides the IRS an opportunity to promote voluntary compliance, not only through audits, but also through outreach and education,” he said, noting the rapid expansion of state-legal cannabis markets. “And while there are 14 states that still ban cannabis use, we expect both unlicensed and licensed marijuana businesses to grow.”

“It’s tricky from a business perspective, because even though states are legalizing marijuana and treating its sale as a legal business enterprise, it’s still considered a Schedule 1 controlled substance under federal law,” Harris wrote. “That means a cannabis/marijuana business has additional considerations under the law, creating unique challenges for members of the industry.”

The official, who serves as commissioner of IRS’s Small Business/Self Employed (SB/SE) Examination division, recognized that the status quo means that marijuana businesses are forced to operate on a largely cash-only basis, and federal prohibition also means that companies in the sector are precluded to taking key tax deductions.

However, while the tax statute known as 280E means the industry is ineligible for most federal tax deductions and credits, he noted that marijuana firms “can deduct their cost of goods sold, which is basically the cost of their inventory.”

“What isn’t deductible are the normal overhead expenses, such as advertising expenses, wages and salaries, and travel expenses, to name a few,” Harris said. “I understand this nuance can be a challenge for some business owners, and I also realize small businesses don’t always have a lot of resources available to them.

The official previewed a new “Cannabis/Marijuana Initiative” the agency is launching that will provide specific job training to tax officials to effectively carry out audits within the industry, ensure that there’s consistency in the IRS’s policy for cannabis, work with stakeholders to ensure tax compliance and help to identify non-compliant businesses.

“I’m very focused on the success of this strategy because it’s very important for business owners to understand that under our nation’s tax laws, and specifically Internal Revenue Code 61, all income is taxable, even if someone is running a business that’s considered illegal under federal law,” he said. “This is a truly groundbreaking effort for our agency.”

“Our strategy is not limited to pushing information out via our website in the hope that business owners will find it. I’ve made it a priority for my SB/SE organization to engage with the cannabis/marijuana industry through speaking events and other outreach. I have done three of these types of events over the last year, and what I have heard is a genuine desire to comply with the tax laws regarding the industry. Through this extended outreach, we hope to help small business owners and others fully understand the unique tax rules before there are any compliance issues.”

“Since the unique circumstances of the cannabis industry can make tax preparation challenging, I hope that new and experienced business owners take my advice in this post and use our resources to ensure they understand their tax obligations and avoid penalties associated with non-compliance,” the blog post concludes. “We’re always here to help with tools, information and guidance.”

This is yet another signal that while marijuana remains federally illegal, agencies are increasingly recognizing that a policy shift is happening in states and may well be on the horizon at the congressional level.

As leadership in the House and Senate work to advance legislation to deschedule cannabis, lawmakers have also pushed to enact clear, statutory protections for financial institutions that work with state-legal marijuana businesses. And that would be accomplished through House-passed standalone legislation, or an amendment that was attached to a defense spending bill this week.

In the interim, 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. FinCEN released a report last week showing that there were 706 financial institutions that said they were actively serving cannabis clients as of the last quarter.

IRS separately hosted a forum last month dedicated to tax policy for marijuana businesses and cryptocurrency.

The seminar, which was presented by a representative of the National Association of Tax Professionals (NATP), examined issues such as allowable tax deductions while cannabis remains federally illegal and how different states approach taxing marijuana. It also covered issues related to paying taxes on earnings in Bitcoin and other forms of digital currency.

Earlier this year, IRS Commissioner Charles Rettig told Congress that the agency would “prefer” for 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.

Former Treasury Secretary Steven Mnuchin said in 2019 that he’d like to see Congress approve legislation resolving the cannabis banking issue and he pointed to the fact that IRS has had to build “cash rooms” to deposit taxes from those businesses as an example of the problem.

IRS released updated guidance on tax policy for the marijuana industry last year, including instructions on how cannabis businesses that don’t have access to bank accounts can pay their tax bills using large amounts of cash.

The update appears to be responsive to a Treasury Department internal watchdog report that was released earlier in the year. The department’s 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 “develop and publicize guidance specific to the marijuana industry.”

Harris’s predecessor at IRS SB/SE also participated in an informational webinar in December, offering candid insights on a variety of cannabis industry issues from the federal perspective.

Source

When the IRS says we can make money at this then legalization is just around the corner. The IRS knows there is a lot of money involved in cannabis. Money the IRS wants in their coffers. As do the politicians. That means keep the the pressure on. Do not let up or give up.

Taiwan versus China or Russian rhetoric and Chinese delivery

Chinese Communist dictator Mao Tse Tung and Russian/Soviet Communist dictator Nikita Khrushchev
‘We Will Take America Without Firing A Shot’ Nikita Khrushchev Source

  The Russians issued the threat but it may be the Chinese who make it a reality. China still labels itself as "communist" and I'm sure they will try to complete the job that the Soviets had started. Unlike the Russians who merely rattled their sabers and engaged in rhetoric the Chinese are taking a much more honest but sinister approach such as the release of biological agents upon the rest of the world. I know this was done deliberately because they suspended all flights within China but allowed international travel. China murdered people in other countries. Even countries that would have been their allies such as Iran. Their real target was America and it was meant to punish Americans for voting for Trump. The reason is because Trump stood up to the Chinese bullies and the Chinese bullies didn't like it. But now that Trump has been illegally deposed and Joe Biden has been installed as Deep State Dictator things are different.That is because China owns Biden China exacts its revenge against Americans.

This has to come to an end. We cannot allow this to continue. We have to stop them from acting like the big bully on the block. If we don't we will have a Red Dawn situation on our hands.

I have an idea and I propose the following.

There are two Chinas. The second one is Taiwan. I propose aiding Taiwan economically and militarily. Especially militarily. American military bases on the island of Taiwan would be nice too. American military bases in Taiwan. American military bases in Japan and South Korea. That would definitely get Beijing's attention. Speaking of South Korea let's get them involved as well. After all no one hates communism more than South Korea. If we do this we may get China to sing a different tune and that tune may be "God bless America".

Amazon no longer discriminates against those using cannabis plus they back marijuana legalization

Amazon CEO Dave Clark said Tuesday that the company will no longer screen most of its employees for marijuana use, and it will back federal legalization legislation.

"We will no longer include marijuana in our comprehensive drug screening program for any positions not regulated by the Department of Transportation," Clark said in a blog post on Amazon's website. The change in policy comes as a response to "where state laws are moving across the U.S.," Clark said.

Amazon also pledged to throw its considerable weight behind marijuana legalization on a countrywide scale, saying the company would be "actively supporting The Marijuana Opportunity Reinvestment and Expungement Act of 2021 (MORE Act)—federal legislation that would legalize marijuana at the federal level, expunge criminal records, and invest in impacted communities."

The MORE Act, which was reintroduced to the House last month by Democrat Jerry Nadler from New York, would not only make recreational cannabis use legal in the entire United States, and work to release inmates incarcerated because of non-violent marijuana-related offenses, it would also attempt to address racial inequities in the way existing marijuana laws have been enforced.

According to a 2020 report from the American Civil Liberties Union (ACLU), Black people are three times more likely to be arrested for marijuana possession than white people in the United States.

The bill includes a 5 percent tax on retail marijuana sales that would pay into the Opportunity Trust Fund that would pay for services like job training, re-entry, and health services, aimed at helping communities that have been impacted by generational unjust enforcement of the war on drugs.

"The whole intention and vision behind this bill is that it would repair past harms of drug prohibition," said Maritza Perez, national affairs director at the Drug Policy Alliance, a nonprofit working to reform drug laws. "We're hoping that another successful House vote would continue to pile on momentum," she told NBC News.

The MORE Act was passed by Congress once before in December 2020 but never received a vote in a Republican-controlled Senate. The bill will likely reach Senate later in 2021, and will be received by a Democratic majority this time. It will be backed by Leader Schumer of New York, Cory Booker of New Jersey and Ron Wyden of Oregon. All three of these Democratic senators' states have approved recreational cannabis.

In 2020 recreational marijuana sales totaled about $20 billion, and are expected to reach more than twice that, according to research cited in the bill.

"We hope that other employers will join us, and that policymakers will act swiftly to pass this law," Clark said in the Amazon blog post.

It is not clear if the bill will have sufficient backing to pass the Senate.

Newsweek reached out to the National Organization for the Reform of Marijuana Laws for comment.

Amazon Won't Screen Employees for Marijuana Use, Will Back Federal Legalization (newsweek.com)

This is fantastic. A major corporation getting behind marijuana legalization. It's about time. It's about time someone in corporate America took notice and realized the drug war was a complete fiasco.

Tyranny in travel

From Campaign for Liberty:

Statism is the acceptance of ideas so unpopular they need to be mandatory in order to work.

There is no better example of a misguided statist idea than a vaccine passport scheme.

It’s such a bad policy that many in the federal government have denied wanting a vaccine passport, even if it would make their rich cronies in Big Pharma even bigger sums of money.

Instead, the statists are counting on the private sector, led by giant corporate operations, to roll it out and not give the average person a choice on opting out of the experimental COVID shot . . . if they want to participate in society!

We sent out a survey to see where you stood on vaccine passports and the results were overwhelming: YOU agree with us at Campaign for Liberty -- they should be completely rejected in a free society.

Now it’s time for Congress to act.

With airlines, sports teams, and even the state of Oregon experimenting with a health certificate proving you’ve received the COVID shot through a vaccine passport smartphone app or other approved documents, it won’t be long before the federal government moves to either create a federal passport or offer states “incentives” to create one under “federally approved guidelines.”

They will claim fifty different sets of laws creates too much confusion.

That’s why it’s critical you and I take action against this tyranny NOW -- before it’s too late!

Sign the petition to your U.S. Senators and Representative demanding they pass legislation to ban any federal vaccine passport scheme.

Once you’ve signed, please consider chipping in $35, $75, or even $100 to help Campaign for Liberty’s efforts to ban vaccine passports nationwide.

How real is a vaccine passport?

Canadian officials have announced that travelers coming into the country will have to use an electronic vaccine passport app to prove their vaccination status.

The state of Hawaii has issued a mandate limiting movement between islands -- travelers will have to use their vaccine passport app, called “Hawaii Safe Travels.”

The European Union is rushing to implement a vaccine passport in order for Americans to travel to the E.U. and news reports say, “The U.S. is being closely consulted on the European passport, so any future American system will likely use similar protocols.”

Even U.S.-based airlines are starting to use a system called “Verifly,” which requires travelers to upload vaccination documents in order to meet travel requirements for international flights.

This is in place right now, so the immediate question is how long before this requirement is in place to fly from “COVID hot spots” within the U.S., all according to the bogus and overstated coronavirus case counts?

Don’t believe the denials

President Biden and his administration have flip-flopped on the issue, but last said through his mouthpieces he has no plans for a federal vaccine passport, which sounds plausible given they want to hide behind the private sector rollout.

The issue with accepting that statement at face value is these same statists will inevitably come back later and vow to do the opposite to clear up all the confusion of multiple systems and in order to enforce one uniform policy.

This is all coming to a head very quickly.

The health bureaucrats, like Dr. Anthony Fauci and those at the CDC, are quickly losing credibility, so there’s a very short window of time to get corporations to buy in to vaccine passports while the public is still frightened.

Sign the petition to DEMAND that Congress ban federal vaccine passport schemes immediately!

Then, please consider chipping in $35, $75, or even $100 to give Campaign for Liberty the resources needed to fight this medical tyranny.

Elitist technocrats like the World Economic Forum’s (WEF) Klaus Schwab want to transform our world into what can only be described as a dystopian nightmare.

The linchpin in his global scheme is the vaccine passport because it ties your medical data to everything you buy, everywhere you go, and everyone you spend time with. That means health tyrants are coming to make the loss of medical freedom a permanent change . . . before the rest of the country wises up!

While millions of Americans are not fully sold on this vaccine, I fear that many of them could be coerced into taking this experimental shot if they would lose their job, miss out on travel experiences, or even be kept out of businesses they rely on.

They should be free to choose whether or not to get the vaccine, free from any and all heavy-handed coercion or force!

While quite a few governors have issued executive orders to halt the use of vaccine passports, state legislatures are starting to step up and pass bills that would prohibit anyone, such as big corporations, from refusing service to people based on their vaccination status.

But I’m afraid just a handful of states courageously stepping up may not be enough to head this tyranny off with so much at stake!

Once a vaccine passport scheme is implemented, it will be incredibly difficult to break free.

These people will not stop until we demand they stop and then stop complying with any of their mandates.

Sign the petition at once!

There are many hopeful signs with the complete loss of credibility of maniacal health bureaucrats like Anthony Fauci, but after a year of fear tactics and psychological abuse, the abuse of the general public through medical tyranny has been institutionalized.

If vaccine passports become widespread, the very worst of the lies surrounding this pandemic will be made a permanent part of our lives.

Americans are more than capable of making their own health decisions, and Congress needs to defend that right.

It is their duty.

For Liberty,

Ron Paul, M.D. Chairman

P.S. It’s time for Congress to act.

With airlines, sports teams, and even several states experimenting with a health certificate proving you’ve received the COVID shot through a vaccine passport smartphone app or other approved documents, it won’t be long before the federal government moves to either create a federal passport or offer states “incentives” to create one under “federally approved guidelines.”

They will claim fifty different sets of laws creates too much confusion.

That’s why it’s critical you and I take action against this tyranny NOW -- before it’s too late!

Sign the petition to your U.S. Senators and Representative demanding they pass legislation to ban any federal vaccine passport scheme.

P.P.S. Liberty will ultimately prevail, but not without you and me facing some tough battles. Many eyes need to be opened, and Campaign for Liberty is keeping the brushfires of liberty burning. Let’s make 2021 a historic year. Please consider a generous donation now.

If you’d prefer to donate via PayPal, please click here.

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The mission of Campaign for Liberty is to promote and defend the great American principles of individual liberty, constitutional government, sound money, free markets, and a constitutional foreign policy, by means of education, issue advocacy, and grassroots mobilization.

Because of Campaign For Liberty's tax-exempt status under IRC Sec. 501(C)(4) and its state and federal legislative activities, contributions are not tax deductible as charitable contributions (IRC § 170) or as business deductions (IRC § 162(e)(1)).

Campaign For Liberty.

MTG Vs AOC

I'm sure by now you have heard about the feud between between Republican Congresswoman Marjorie Taylor Greene (MTG) versus Democratic Congresswoman Alexandria Ocasio Cortez (AOC). From what I've seen I'll have to side with MTG. She is standing up to a monster and a bully. AOC is exceptionally skilled at dishing it out. It's being on the receiving end of it is when she starts crying. Now you have the House Speaker Democratic Congresswoman Nancy Pelosi coming to AOC's aid by threatening MTG with ethics violations. Ethics violations? How about when Democratic Congresswoman Maxine Waters threatened Trump supporters with mob violence. Does that count? Not with the Democrats.

Donald Trump evens the score with Joe Biden

'Hidden' Biden': White House refuses to explain why Biden won't face the public.