The Growth of the Marijuana Industry Warrants Increased Tax Compliance Efforts and Additional Guidance.

The Commissioner, Small Business/Self-Employed Division, should develop a comprehensive compliance approach, i.e., national CIP, for this industry and leverage State marijuana business lists to identify noncompliant taxpayers.

The Commissioner, Small Business/Self-Employed Division, should direct all examination areas to use Aging Reason Codes to track non-CIP marijuana business examination results.

The Commissioner, SB/SE Division, should develop guidance specific to the marijuana industry, such as a Frequently Asked Questions, and document and publicize it on its IRS.gov website to improve awareness of the tax filing requirements for taxpayers in this industry, such as the application of I.R.C. Section 280E.

IRS Chief Counsel should coordinate with the Commissioner, SB/SE Division, to develop and distribute, internally and externally, specific guidance on the application of I.R.C. Section 471(c) in conjunction with I.R.C. Section 280E for taxpayers that report Schedule I related activities on Federal tax returns.

The Commissioner, Small Business/Self-Employed Division, should leverage publically available State tax information and expand use of Fed/State agreements to identify nonfilers and unreported income in the marijuana industry.