MJ Biz Report – IRS ramps up marijuana business audits after COVID-19 lull, sources say

Like other federal agencies during the coronavirus pandemic, the IRS put much of its routine work on the back burner, including audits, enforcement and collections, according to tax professionals.

But since last summer, the federal tax agency appears to have reemerged from its COVID-19 shell.

As a result, cannabis industry tax experts are warning clients of a new wave of audits targeting marijuana companies and their 2019 returns, which could result in additional tax bills for businesses.

“There was a lot of slowdown in the IRS because of COVID in the IRS,” said Rachel Gillette, a Denver tax attorney with the Holland & Hart firm.

“Now, we’re seeing (IRS audits) all over the country, from East Coast to West Coast, and it’s wherever cannabis is legal.”

Gillette said she’s seen a “significant increase” in audit notification letters being sent to marijuana company clients of hers.

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