The IRS Office of Professional Responsibility plans to release guidance in the first quarter of 2015 for practitioners working with marijuana retailers in states where the business is legal. The practitioners are pushing for the IRS to issue guidance clarifying that a tax professional will not be considered unethical, targeted for audit or be considered in violation of Circular 230 rules solely for preparing a return for a marijuana business. Although some states now allow the sale of marijuana, those sales are still illegal under federal law. Because the sale of marijuana is an illegal activity under federal law, the cost of goods sold will be an issue as drug dealers are never allowed to claim a cost of goods sold. In addition, there are related issues such as deductions dependent on whether the sale of marijuana is a trade or business of cultivating or sale, or whether it's a subsidiary trade or business that just happens to have a connection. Indeed, if the IRS does not allow COGS or Section 162 deductions, the tax bills could be a major hurdle.
Wednesday, November 19, 2014
Tuesday, November 4, 2014
The average time it will take for tax practitioners to get through to the Internal Revenue Service on their dedicated practitioner phone line in 2015 is projected to be 52 minutes, National Taxpayer Advocate Nina Olson said on November 4, 2014. Ironically, the IRS calls the dedicated line the "Tax Practitioner Priority Hotline." There's nothing "priority" or "hot" about that 52 wait and could be slower than the DMV.