Cannabis IRS and State Audit Assistance
IRS and State Audit Services for Cannabis Companies
BGM was one of the first accounting and advisory firms to serve the cannabis industry, starting in 2009. Since then, our professionals have been involved in dozens of IRS 280E audits and state audits. Throughout it all, we’ve established collaborative relationships with the top 280E attorneys in the US to deliver the best IRS or state audit services can deliver.
Leveraging decades of active expertise in the industry, our Minnesota-based firm can help you achieve compliance with our targeted IRS and state audit services for cannabis companies.
01 IRS Section 280E Audits and Compliance
One of the most challenging issues that your cannabis organization will face is compliance with IRS Section 280E. Specifically, 280E forces marijuana, hemp, CBD and ancillary cannabis companies to pay much higher federal and state taxes than other types of businesses.
The section expressly disallows any tax deductions besides the cost of goods sold (COGS). And understanding what is deductible as COGS is not as straightforward as one might think.
At BGM, we understand the nuances and complexities involved in 280E compliance. We’re here to provide you with strategic IRS audit assistance to keep your company penalty-free.
02 Form 8300 Audits and Compliance
In Colorado, many of the top licensed cannabis organizations have faced “random” Form 8300 audits at the whim of the IRS. These have occurred even when the company has been operating entirely legally and compliantly at the state level.
Generally, any person in a trade or business who receives more than $10,000 in cash in a single transaction or related transactions must file a Form 8300. But the requirement of Form 8300 completion isn’t always straightforward.
That said, the penalty for violating this requirement, either by failing to file or filing late, can be substantial. And the penalties can add up. For example, if your cannabis organization has 10 or more violations within a single year, you can be penalized up to $250,000.
Our team can work with you to identify when you need to file Form 8300 and how to ensure compliance year-round.
03 Sales and Use Tax Audits and Excise Tax Audits and Compliance
We’ve seen a significant increase in sales and use tax audits and excise tax audits among our cannabis, hemp, medical marijuana and CBD clients. This is due to the complexities involved in remaining compliant with these tax types.
Most companies find it difficult to identify all imposed sales and excise taxes, calculate taxes accurately and remit timely payments to avoid penalties and interest. Even clients who think they’re being fully compliant can find themselves in situations that leave them owing thousands of dollars.
Our tax professionals can clarify what’s involved in these taxes and help you remain compliant so you can pass any audits with flying colors.
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