A high-ranking IRS (Internal Revenue Service) official is making efforts to assist cannabis businesses to be tax compliant under the cover of present state prohibition. In a past interview, the official said that the legalization initiative will succeed in eradicating countrywide criminalization.
During an insightful webinar, Eric Hylton, IRS commissioner of the self-employed/small business division, offered candid details on the various concerns in the marijuana sector from a state perspective. The main theme in his comments is that states have begun authorizing cannabis irrespective of federal legislation, which’s creating problems that have to be solved.
He said that the major challenge is that cannabis is still categorized as a Schedule I controlled substance according to the state law. He added that when speaking with his workers, the commission recognized that the measure will potentially be implemented in all states.
Despite the national-federal policy conflict, IRS advises business proprietors to be knowledgeable since there’re tax mandates irrespective of whether the state government recognizes their income as illegal or not.
This comes after the IRS launched the revised tax compliance guide for cannabis companies in September. Hylton’s recent webinar appearance is part of the department’s ongoing education initiative.
The IRS commissioner pointed out that currently there are gluts of people trying to venture into the cannabis business
Eric also recognized the difficulty of establishing non-conventional banking relationships in the cannabis industry. He noted that the current state prohibition makes several cannabis businesses run on a cash-only system since financial firms aren’t willing to take the risk of servicing federally illicit organizations.
He said that the commission is trying to close the gap through providing educational services.
Another significant issue for the sector that popped up during the interview is that while cannabis enterprises are subject to pay state taxes, they can’t access tax merits that are made available in other industries under the 280E IRS statute.