Our office was recently approached by a San Francisco cannabis dispensary that was undergoing an IRS tax audit. Since the dispensary was trafficking in marijuana, a drug listed on Schedule I of the Controlled Substances Act, none of the dispensary’s deductions were allowable per 26 U.S. Code § 280E.
We found, however, a number of the dispensary’s expenses that were unrelated to its cannabis activities. Our tax attorneys were able to get the IRS to concede that those expenses were not subject to the Section 280E limitations and were in fact deductible. We also advised the dispensary’s bookkeeping staff how to keep the business records organized for ongoing tax compliance, and facilitated their tax return preparation.
Federal, state, and local tax compliance
Making your cannabusiness highly tax-efficient can directly benefit your bottom line. Moskowitz, LLP is a full-service tax firm that helps a wide variety of individuals and businesses with their federal, state, and local tax compliance. This includes, but is not limited to tax planning and return preparation, guidance and remedies for non-compliant taxpayers, resolution of documentation problems, and assistance with issues surrounding cash hoards.
IRS audits and tax litigation
In recent years we have seen a marked increase in marijuana business audits. It is no longer a matter of IF you will be audited by the IRS, but WHEN. Particularly in this industry, you need to stay within the law – we can advise you as to what actions put you at risk, how to be prepared, and will aggressively represent your interests during every stage of an IRS audit and/or litigation. We have also represented many businesses undergoing California Franchise Tax Board (FTB) audits and litigation.
Employment Development Department (EDD) and sales tax audits
EDD and sales tax audits can be very costly and time-consuming. Our firm handles these routinely for a variety of businesses, including marijuana-related businesses, and can guide you through the steps needed to ensure that the process is smooth at the lowest possible cost to you.
Highest quality tax representation for cannabis businesses
One of the core principles of the Moskowitz LLP tax law firm is that individuals and businesses should benefit from the tax code. Our tax attorneys and CPAs are dedicated to providing the best tax planning guidance, and diligently representing both individuals and businesses at all stages of federal and state tax controversy and litigation.
Disclaimer: Growing, cultivating, and distributing marijuana are violations of federal law under the Controlled Substances Act, Title 21, Section 841(a)(1). The tax firm of Moskowitz, LLP can assist you in adhering to state and local law and regulations, and advise you on how to conduct your operations in a way that will minimize your risk of federal prosecution. However, we do not intend for our advice to assist you in the violation of any law and in light of the evolving nature of the marijuana industry in the U.S., clients must understand that our legal and tax services can guarantee neither success nor immunity from civil and/or criminal prosecution. In all areas where the legal landscape is constantly changing, we recommend that our clients act with caution, stay abreast of developments in the industry, and consult with us often.