The IRS 208E Tax Law Is Complicated
There is no doubt that cannabis laws in the United States are complicated at best and since the federal government still classifies it as a Schedule, I drug, means the marijuana business is not only challenging, but accounting and tax law is confusing.
One of the more complicated challenges is the 280E tax code which is an IRS code that states, section 280E of the Internal Revenue Code that states businesses that sell cannabis—be it for medical or recreational purposes—are forbidden from recording tax deductions and credits due to its Schedule I classification.
So, even though an increasing number of states have made the sale of medical and recreational marijuana legal, tax code 280E continues to heavily impact the finances of cannabis businesses because, at present, they can only deduct taxes for the cost of goods sold; nothing else.
Hire A Knowledgeable Cannabis Accounting Professional
Of course, there are ways to maximize your canna-business tax liabilities and we can help. When hiring a cannabis accountant, it’s important to make sure you hire someone like us who is familiar with the once obscure 280E tax code so we can give you the best options to minimize your risks and costs.
We Help You Keep Extremely Detailed Records
You want to be able to claim Costs of Goods Sold (COGS) where available. If your business is audited and you don’t have comprehensive records about every individual transaction, you risk forfeiting your COGS claim, and you’ll have to pay a steep 20% fee for signing an inaccurate tax return. And trust us the IRS loves to get paid.
Turn to our experienced cannabis accountant firm for:
- Accounts Receivable
- Accounts Payable
- Financial Statements
- Account Reconciliations
- General Ledger
- Sales Tax Returns
- Non-Profit Accounting
- Inventory Setup
- Cost of Goods Sold Tracking
- Historical Data Entry
- Remote Services
- QuickBooks Setup and Training
- Accounting Review and Clean-Up
- Payroll and Human Resources