A key advisory group to the Internal Revenue Service has recommended that the agency refrain from targeting tax professionals who consult with marijuana companies, which could further bolster the cannabis industry’s standing from a federal perspective.
“Marijuana businesses that are now legal in some states but still illegal under federal law need ethical and competent tax advice,” the report reads. “Tax professionals who give that advice need assurance that they will not be adversely affected by the fact that the business is illegal under federal law.”
The report was compiled by the 19-member IRS Advisory Council, and specifically addressed the quandary posed by 280E, the portion of the federal tax code that has been a bane to cannabis companies across the nation. Under 280E, marijuana businesses are not allowed standard business deductions.
“With over 20 states allowing medical marijuana and now states beginning to legalize recreational marijuana, this industry needs qualified, ethical professionals to help them fulfill their income tax obligations,” the council asserted in its report.
The council further suggested that the IRS publish formal guidelines for accountants and tax pros to clarify that they won’t be audited by the federal government or face other sanctions for working with cannabis companies.