The Internal Revenue Service (“IRS”) is a United States government agency that is responsible for collecting taxes and enforcing tax laws contained in the Internal Revenue Code. Below are a few terminologies that the agency uses — and which every cannabis business needs to know.
Tax Deficiency
This is basically the difference between what the IRS has determined is owed to the federal government based off of its records and what a taxpayer reports on their return.
The Audit Technique Guide/Participant Guide
These guides are internally written and published by the IRS and are used to assist agents in auditing businesses. While the Audit Technique Guide is made public for companies and can be used by businesses to help in paying federal taxes, the Participant Guide remains confidential and was published for IRS use only.
The Authorization Form
This form is used by agents of the IRS to request targeted audit programs, commonly referred to as a Compliance Initiative Project. The form, which includes a description of the audit, its scope and its objectives, must be completed by agents and signed by their superiors.
Compliance Initiative Project (“CIP”)
As mentioned above, this is the formal title for a targeted series of audits for noncompliant industries and taxpayer groups. The objective of the targeted audit programs are to find returns when the agency suspects that taxpayers have underpaid their federal taxes.
Since 2010, the Internal Revenue Service has launched at least five CIPs targeting cannabis companies.
- The Internal Revenue Code’s Section 280E: This prevents any company that is engaged in the trafficking of Schedule 1 or 2 controlled substances from obtaining standard business deductions on their federal taxes. As a result of this section, licensed cannabis businesses pay higher taxes when compared to businesses in other industries.
- CHAMP: Refers to a major legal case that focuses on section 280E and its application to state-legal cannabis businesses. The case, “Californians Helping to Alleviate Medical Problems vs. Commissioner,” was closed in 2007 after a ruling was issued, which found that the plaintiff’s caregiving service was separate from the dispensary.
- Olive: This is the shorthand reference for another section 280E legal case, which was decided in 2012. The case, “Olive vs. Commissioner and CHAMP,” along with CHAMPS, are considered to be important legal precedents for how the IRS applies Section 280E of the internal revenue code to cannabis businesses.
- Freedom of Information Act (“FOIA”): This federal law was enacted to ensure government transparency,in 1967. It is commonly referred to using its abbreviation forma: FOIA. The FOIA allows United States citizens to ask for documents from any government agency.
Many U.S.-based cannabis companies may be wondering when changes will be made to the federal laws governing marijuana so that they can enjoy equal treatment by tax authorities in the way companies in Canada, such as Pure Extracts Technologies Corp. (CSE: PULL) (OTC: PRXTF), are regarded where cannabis is legal across the country.
NOTE TO INVESTORS: The latest news and updates relating to Pure Extracts Technologies Corp. (CSE: PULL) (OTC: PRXTF) are available in the company’s newsroom at https://cnw.fm/PULL
About CNW420
CNW420 spotlights the latest developments in the rapidly evolving cannabis industry through the release of two informative articles each business day. Our concise, informative content serves as a gateway for investors interested in the legalized cannabis sector and provides updates on how regulatory developments may impact financial markets. Articles are released each business day at 4:20 a.m. and 4:20 p.m. Eastern – our tribute to the time synonymous with cannabis culture. If marijuana and the burgeoning industry surrounding it are on your radar, CNW420 is for you! Check back daily to stay up-to-date on the latest milestones in the fast -changing world of cannabis.
To receive instant SMS alerts, text CANNABIS to 21000 (U.S. Mobile Phones Only)
For more information please visit https://www.CNW420.com
Please see full terms of use and disclaimers on the CannabisNewsWire website applicable to all content provided by CNW420, wherever published or re-published: http://CNW.fm/Disclaimer
Do you have questions or are you interested in working with CNW420? Ask our Editor
CannabisNewsWire420
Denver, Colorado
http://www.CNW420.com
303.498.7722 Office
Editor@CannabisNewsWire.com
CNW420 is part of the InvestorBrandNetwork.
