IRS goes after medical marijuana in California (Washington Independent)

[chill_wind]

IRS goes after medical marijuana in California
By Kyle Daly | 03.17.11 | 3:41 pm

Federal agencies have stepped up efforts to crack down on medical marijuana, and while high-profile ATF raids may be more immediately shocking, there is a less direct tactic being used that could spell the death of medical marijuana across the country, according to its opponents.

In the last several months, the IRS has begun targeting medical marijuana dispensaries in California, declaring that some owe millions in back taxes as a result of a section of U.S. tax code that the IRS is now applying to medical marijuana dispensaries.

This isn’t the first time the IRS has attempted to use this clause to go after medical marijuana dispensaries. In 2007, the agency assessed that San Francisco-based dispensary Californians Helping to Alleviate Medical Problems (CHAMP) owed nearly half a million dollars in back taxes. The IRS argued at the time that Section 280E of the U.S. Tax Code, created in the early ‘80s to prevent drug dealers from writing off “business” expenses, meant that because CHAMP’s business was built on a drug that is illegal under federal law, the business deductions it made that year were invalid. CHARM took its case to U.S. Tax Court and won, cutting its payments from $426,000 to $4,905.

So if there’s already a court precedent for the IRS losing a case just like this, why are they suddenly, vigorously pursuing it again? That’s not entirely clear — and the IRS refuses to comment on any audits it undertakes. And yet, Steve Fox, lobbyist for the National Cannabis Industry Association (NCIA), says that he’s heard that up to a dozen dispensaries throughout California have been put through the audit process (and there could be untold dozens more who haven’t made it known outside of their organizations). Just three have gone public with their audits: the Harborside Health Center in Oakland, The Farmacy in Los Angeles and the much smaller Marin Alliance for Medical Marijuana (MAMM) in the northern town of Fairfax, which has the distinction of being the longest-standing licensed medical marijuana dispensary in the country, according to founder and director Lynette Shaw.

More: http://washingtonindependent.com/106597/irs-goes-after-medical-marijuana-in-california

(bold edit mine)

[CountAllVotes]

1. I cry bullsh*t on this

The dispensaries around here do pay taxes and it is 9% btw. County taxes are 8.75% but they pay that extra chunk just to shut them the hell up!

:kick:

[truedelphi]

2. K & R the OP and 100 % agree, Count All Votes.

And a happy Saint Paddy's day to ya, if you be Irish!

[CountAllVotes]

3. thank you!

And a big yes, I am mostly Irish!

Céad míle fáilte to you! :hi: :D

[NYC_SKP]

5. County taxes are not federal taxes. I was listening to the story on KGO Sunday in SF.

They're disallowing all ordinary expenses such as rent and utilities, and of course the transactions around acquiring "stock" from "wholesalers" is pretty tricky.

But if they disallow all expenses related to doing business AND tax RETROACTIVELY, well, good bye dispensaries.

x(

[Rageneau]

7. Obama says: Vote Libertarian in 2012!

Actions speak louder than words, and Obama's recent actions clearly say, "More Insane Drug War, please."

I've decided to cast my next vote FOR something, and Libertarians, with all their faults, are more courageous and are correct on more issues than Obama seems to want to be.

[CountAllVotes]

8. frankly ...

I rather like Cynthia McKinney

[dkofos]

4. I see this pushing medical marijuana back under ground and cutting off a good

source of revenue for cash starved municipalities.

[ReggieVeggie]

6. There he goes again

another pomise broken

[Ignis]

9. Can anyone spare some Change?

It appears we're fresh out.

:argh:

[Taverner]

10. WTF?

I thought that Eric Holder said...oh yeah, that was pillow talk just like everything else about the Obama Admin