As legal professionals navigating the challenges in the cannabis industry, we are all too aware of the risks our clients encounter daily. Recently, a topic of interest has been whether cannabis businesses should withdraw their Employee Retention Credit (ERC) claims, especially in light of the Internal Revenue Service’s (IRS) recent developments.
Holland & Hart LLP‘s report states that the IRS has made two significant announcements concerning ERC claims. On September 14th, 2023, the IRS announced an immediate stop on the processing of ERC claims until the end of that year in response to concerns about eligibility and potential threats to businesses.
The IRS is essentially expressing concern over the ‘substantial share of new claims’ being ineligible, posing a financial risk to businesses who may be led astray by aggressive promoters and marketing. This declaration from a government body that is no stranger to regulatory complexity only exacerbates the potential legal and financial pitfalls that cannabis businesses already face.
So, should cannabis businesses withdraw their ERC claims? There’s no universal answer as it depends entirely on each individual business’s situation, the potential benefits they could accrue from these claims and the level of risk they are willing to assume. However, the critical point remains that companies must be vigilant and cautious when navigating these legal intricacies.
In such uncertain times, it becomes even more crucial for corporations and law firms to consult legal professionals experienced in dealing with complex regulatory frameworks. Careful navigation through these issues can help mitigate risks and ensure businesses remain compliant amid evolving regulations.
Therefore, staying informed about industry developments and the various legal perspectives on them is essential. Understanding the IRS’s latest announcements and their implications on ERC claims could prove pivotal for businesses, especially those in precarious sectors like cannabis.