Marijuana and cannabis businesses are stuck waiting for federal law to catch up with the opinions of most of the country. Section 280E still applies to marijuana businesses even when they operate legally under state law. The IRS has also warned that some disclosures used to get around 280E lack a reasonable basis and do not provide penalty protection.
If you’re dealing with a tax debt that arose from 280E uncertainties or confusing instructions from the federal government, your business’s long-term prospects may be in jeopardy. Highland Tax Group can help you explore your settlement options and determine the best way to keep your business operational and profitable.
Are 280E Settlements Possible?
Yes, sometimes, since the IRS uses the same basic collection rules it uses in other tax cases. If the business can pay in full, the IRS generally expects full payment. If the business cannot pay in full, the IRS may consider a payment plan, compromise, or hardship status.
Cannabis businesses have an added problem. When the IRS reviews a compromise offer in a marijuana case, it may calculate the ability to pay without fully crediting expenses disallowed by 280E. And at the most basic level, a business that is behind on filings or deposits usually needs to address that before the IRS will seriously consider a settlement. Highland Tax Group can help you get back into compliance so you can move forward with your case.
What Resolution Options Are Available?
The IRS wants to collect what you owe, but it also wants a realistic approach that will actually allow you to make payments. Section 280E cases may be a bit more complicated, but the settlement options typically include:
- Offer in Compromise: The IRS allows you to pay back less than what you owe because you cannot realistically pay it back in an extended amount of time.
- Installment Agreement: A standard payment plan that allows you to pay the IRS over time.
- Currently Not Collectible: A hardship status that temporarily suspends most collection activity.
If 280E concerns have resulted in a large federal tax bill, you need to thoroughly review your options and pick the one with the greatest upside and greatest chance of success. Highland Tax Group can tell you which resolution options are realistic and work directly with the IRS to pursue the best one. Contact them today.