A new Treasury Department internal watchdog report criticizes the Internal Revenue Service (IRS) for failing to adequately advise taxpayers in the marijuana industry about compliance with federal tax laws.
In its review of IRS policy with respect to cannabis businesses, the Treasury Inspector General for Tax Administration (TIGTA) found that IRS is missing millions of dollars in tax assessments in state-legal markets and that taxpayers experience a significant impact due to an federal tax code known as 280E that prevents marijuana companies from making business deductions that are available to other industries.
Part of the solution, TIGTA said, should be for IRS to “develop and publicize guidance specific to the marijuana industry.”
“Such guidance would improve awareness of tax filing requirements for taxpayers in this industry, such as the correct application of” the policy, “which would reduce the burden of tracking inventory for certain small businesses,” the report, which was released on Monday, states.
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