In comments made to CPAs in August, an IRS official implied that nullification of 280E is not likely to be retroactive.
A lawyer for the Internal Revenue Service told a group of accountants in Denver recently that despite the ongoing marijuana rescheduling process – which should nullify the 280E section of the federal tax code for state-legal cannabis companies – the tax policy will be enforced until rescheduling is completed. And after that, the attorney warned, the regulatory move will likely give the agency new tools with which to pursue tax-delinquent cannabis companies.
According to Marijuana Moment, IRS Senior Counsel Luke Ortner delivered the news during remarks made to the American Institute of Certified Public Accountants in August, implying that moves made by some multistate operators, such as Trulieve Cannabis Corp., to obtain 280E refunds may have been premature.
Although the message isn’t precisely a new one from the IRS – it issued a similar warning in July – Ortner suggested that the agency won’t simply close the book on past years’ 280E debts that are still outstanding for state-legal marijuana companies. The implies that the nullification of 280E likely will not be retroactive but only for future tax years.
“The IRS’s policy is not to look the other way because things have changed going forward,” Ortner said, according to a summary of his remarks shared with Marijuana Moment. “For now – unless courts say otherwise – the IRS interprets section 471(c) narrowly and will defend its position that it is not an end run around the application of 280E.”
Ortner also said that the IRS has often deferred to the Drug Enforcement Administration on enforcing past due tax liabilities, but once the rescheduling process is finished, the IRS will take a more central role in collecting on past-due federal taxes from marijuana businesses.
Previously, Ortner noted, the IRS has not seized and tried to sell cannabis inventory as a way of settling marijuana company tax debts, as it would with more mainstream companies. In the future, that may very well change, he said.
The IRS “could seize and sell a cannabis business’s assets – including marijuana inventory – to satisfy outstanding tax liabilities,” according to the summary of Ortner’s remarks.
It’s not yet clear exactly when the rescheduling process may conclude; the DEA has slated a Dec. 2 hearing on rulemaking related to effort, which will push any decision into 2025 at the earliest.
In comments made to CPAs in August, an IRS official implied that nullification of 280E is not likely to be retroactive. Read More