Register HERE to attend a free panel of experts directing cannabis operators on how to best combat the forces of recent movements from the IRS.
IRS enforcement is increasing and cannabis businesses should be on alert. Cannabis businesses are accounting for and reporting the results of their operations with gross receipts, cost of goods sold (COGS), and other deductions just like other for-profit businesses. However, as long as marijuana remains a schedule I controlled substance under federal law, these businesses must navigate the pitfalls of complex federal and state tax rules.
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 COGS, resulting in a substantially higher tax rate than other companies on their income. This dilemma has been the subject of recent tax court cases and appeals.
Listen as our panel discusses federal and select state tax rules impacting the cannabis industry, recent tax court cases, Section 280E, navigating an audit, and potential criminal exposure.
Key Talking Points
- Understanding IRS examinations, in general, and how to prepare for it
- Specific audit procedures/techniques the IRS is employing when auditing a cannabis operator
- IRS interviews during examination
- Criminal exposure
- Hot issues & areas of concern during an IRS audit (ex issues. 280E, 471(c), ownership)
Ani Galyan focuses part of her practice on tax matters for the cannabis industry in California. She is an attorney and certified tax specialist by the State Bar of California. In addition, Ani is a certified public accountant admitted to practice in California. She also holds a Masters in Tax Law (LL.M). Ani focuses her practice in the area of tax law for federal, state and local tax compliance, tax disputes, and tax crimes.
Jonathan 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. Jonathan Kalinski also previously served as an Attorney-Adviser to the Honorable Juan F. Vasquez of the United States Tax Court.
Hilary is one of the premier cannabis business and regulatory attorneys in the United States, and is licensed to practice law in California, Washington, and Florida. As chair of Harris Bricken’s Regulated Substances practice group, she helps cannabis companies of all sizes with their cannabis related business and regulatory needs. Hilary was in 2022 named by Chambers as one of only two “Band 1” California cannabis lawyers. Chambers described her as very prominent and at the cutting edge of cannabis. She also has been chosen for the fourth year in a row as a “top rated business and corporate attorney” by Thompson Reuters Superlawyers (2022).