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Category: Marijuana Business

FinCEN Form 8300 and the Marijuana Industry: The Electric Company Complex

Form 8300 and the Marijuana Industry

If you own a cash-business (especially if you work in the marijuana industry – especially as a grower) then this article is for you. I have recently heard from a colleague about a tax issue that has been causing widespread fear across the marijuana industry.  I call it, the Electric Company Complex.  Apparently, electric companies (such as… Read more »

SEP Agents and the Legal Marijuana Business: The Newest Threat to the Industry

IRS SEP agents

How to Protect Yourself From The IRS Special Enforcement Program In the past few years, ever since the legalization of marijuana for medicinal and recreational use in a number of states – including Michigan – people in the industry (dispensary owners, wholesalers, growers, etc.) have for the most part, seen a decent amount of financial… Read more »

Marijuana Dispensary Audits And Your Fifth Amendment Rights

marijuana audits

[et_pb_section bb_built=”1″ admin_label=”section”][et_pb_row admin_label=”row” background_position=”top_left” background_repeat=”repeat” background_size=”initial”][et_pb_column type=”4_4″][et_pb_text background_position=”top_left” background_repeat=”repeat” background_size=”initial” _builder_version=”3.0.100″ background_layout=”light”] Can A Dispensary Claim Immunity to Avoid Future Criminal Prosecution? A Colorado medical marijuana company has refused to turn over documents to the IRS, citing fears that the records could be used against the company in a criminal proceeding. Standing Akimbo’s lawyer has… Read more »

Evaluating The Evidence In An IRS Audit

How Do Auditors Decide What’s Next? After the background check, personal interview, document review, and other cash business audit steps, there is usually a significant discrepancy between the taxpayer’s declarations about business income and the auditor’s views on this subject. These discrepancies are especially common in marijuana dispensaries. These businesses, and their employees, are so… Read more »

How the IRS Audits Marijuana Dispensaries

What to Expect in an IRS Audit of Your Dispensary (or other cash business) Marijuana dispensaries are five times more likely to face an IRS cash business audit. In 1970, lawmakers approved Section 280E of the Internal Revenue Code as a punitive measure in the “war on drugs” which was just starting at the time…. Read more »

How Does The IRS Choose Which Cash Businesses To Audit?

Examining the Cash Business Audit Profile Profiles can be good or bad. They can be the “must love dogs” type or the “potential serial killer” ilk. IRS cash business profiles lean more towards the latter, and the Service doesn’t need much evidence to launch a full review. As mentioned in a previous post, marijuana dispensaries and… Read more »

Key IRS Cash Business Audit Techniques

Marijuana dispensary cash briefcase

IRS Methods for Reconstructing Cash Income in a Tax Audit After the Service has targeted a cash business for audit, laid a foundation, examined applicable records, and interviewed the taxpayer, the nitty gritty begins. The auditor will indirectly reconstruct business income if the records are inadequate, inconsistent with the interview answers, or otherwise suspect.

Some Common IRS Audit Questions for Cash Businesses

IRS Audits Marijuana Business

Questions to Expect if Your Marijana Business Gets Audited When an IRS agent audits your marijuana dispensary (or other cash business) and says s/he has a few questions, it’s almost never about the proper strain for anxiety or muscle pain. In fact, since the IRS has already completed most or all of the groundwork, this… Read more »

How the IRS Audits Income for Cash Businesses

Cash Business Audit

The IRS Has Several Methods for Figuring Out Cash Income When treasury agents get the scent of unreported income in their nostrils, they always use a variation of the good cop-bad cop routine. Sometimes before they even drop the A-word, auditors begin asking seemingly friendly questions about perceived income discrepancies. If they do not get… Read more »

Medical Marijuana Tax Crimes

For Marijuana Business Owners: Tips to Avoid Tax Evasion or other Financial Crimes The heavy tax burden on medical marijuana dispensaries is felt nationwide, and business owners legally distributing marijuana for medical or recreational use need to be meticulous with tax preparation in order to avoid tax evasion and other crimes. When it comes to… Read more »