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Thread: IRS Tells Medical Marijuana Dispensary It Owes Millions In Taxes

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    Re: IRS Tells Medical Marijuana Dispensary It Owes Millions In Taxes

    Quote Originally Posted by Dittohead not! View Post
    It says that retail businesses pay taxes on the difference between the wholesale price of the goods they buy and the retail price of the resale. That's what it said.

    Oh, and the tax code is in black and white, not in red.
    The tax code says that businesses that peddle controlled substances can't deduct the purchase price of those products. That's what it says...note the present tense, because it didn't stop saying it.

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    Re: IRS Tells Medical Marijuana Dispensary It Owes Millions In Taxes

    Quote Originally Posted by apdst View Post
    The tax code says that businesses that peddle controlled substances can't deduct the purchase price of those products. That's what it says...note the present tense, because it didn't stop saying it.
    280E?
    No deduction or credit shall be allowed for any amount paid or incurred during the taxable year in carrying on any trade or business if such trade or business (or the activities which comprise such trade or business) consists of trafficking in controlled substances (within the meaning of schedule I and II of the Controlled Substances Act) which is prohibited by Federal law or the law of any State in which such trade or business is conducted.
    or are you talking about a different section?

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    Re: IRS Tells Medical Marijuana Dispensary It Owes Millions In Taxes

    Quote Originally Posted by danarhea View Post
    Here's the deal - Obama says that the Federal government will not enforce Federal drug laws on marijuana dispensaries in California. But, if the deductions for doing business as a marijuana dispensary are not allowed, the Feds will be able to put them out of business as tax evaders.

    Very sneaky move, Barack.

    I would like to see some responses from the Tea Party in here. It is my belief that they will denounce this move by Obama's administration for what it is - An abuse of Federal power. In fact, I believe that we may even find some agreement from people on opposite sides of the political spectrum here.

    Article is here.
    Can't really blame Obama for this:

    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.

    Shaw says that her dispensary is also the first in the country to be handed a “final determination” demanding back taxes from the IRS. The final determination, handed down earlier this month, rules that MAMM owes nearly $800,000 from 2009 alone because its businesses deductions are now considered invalid. Shaw has been filing tax returns with business deductions since MAMM’s foundation in 1997, but this is the first year that the IRS has taken issue with them. If the IRS goes back and audits MAMM’s books dating back to ’97, the dispensary would owe millions — millions Shaw says neither she nor her organization has.

    Shaw believes that the end goal in all this is to hit her and other dispensary owners with astronomical back taxes that they will be unable to pay, a situation that would inevitably shutter every dispensary that gets audited. The Obama administration had issued a Justice Department directive in 2009 to not take action against medical marijuana dispensaries, and while Shaw has faith that the administration itself remains committed to honoring that plan, she’s convinced that “the DEA is using the IRS to get rid of us while Obama’s busy.”
    It's not like he made a phone call and said, "Sic 'em!" The IRS uses fear and intimidation on businesses so that individuals can settle their back-tax debts for 20-cents-on-the-dollar. http://asheham.wordpress.com/2011/03...juana-vendors/
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    Re: IRS Tells Medical Marijuana Dispensary It Owes Millions In Taxes

    Quote Originally Posted by Whovian View Post
    280E?


    or are you talking about a different section?
    No, that's the one I'm talking about. Doesn't that mean that businesses that peddle controlled substances can't write off the expense of those substances?

    Now I know why most pharmacies are half pharmacy and half gift shop.

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    Re: IRS Tells Medical Marijuana Dispensary It Owes Millions In Taxes

    Quote Originally Posted by apdst View Post
    No, that's the one I'm talking about. Doesn't that mean that businesses that peddle controlled substances can't write off the expense of those substances?

    Now I know why most pharmacies are half pharmacy and half gift shop.
    Not quite. It means that those selling those substances illegally can't write off their expenses. And, since California is flying in the face of Federal laws, these shops are selling Federally-illegal substances. They'll probaby lose -- but only after they've put a number of shops out of business that can't afford the litigation.
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    Re: IRS Tells Medical Marijuana Dispensary It Owes Millions In Taxes

    This is a struggle between the State of California and the federal government over the legalization of pot, pure and simple.
    Just where in the Constitution does it give the federal government the authority to carry on the war on drugs in the first place? Shouldn't it be a state issue?
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    Re: IRS Tells Medical Marijuana Dispensary It Owes Millions In Taxes

    Quote Originally Posted by apdst View Post
    No, that's the one I'm talking about. Doesn't that mean that businesses that peddle controlled substances can't write off the expense of those substances?

    Now I know why most pharmacies are half pharmacy and half gift shop.
    No deduction or credit shall be allowed for any amount paid or incurred during the taxable year in carrying on any trade or business if such trade or business (or the activities which comprise such trade or business) consists of trafficking in controlled substances (within the meaning of schedule I and II of the Controlled Substances Act) which is prohibited by Federal law or the law of any State in which such trade or business is conducted.
    Only if the controlled substance is illegal is it not allowed to be deducted from taxes. You're whole point about how drugs cost so much because the IRS wants them to be or whatever the hell you're arguing quite possibly is the most retarded statement on the forums today.
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    uh that is so small as to be stupid. Do you want registration? given less than 3% of criminals get their guns from private sales, its pretty much a waste of resources
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    you are confused. I never denied that many criminals get guns in private sales.

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    Re: IRS Tells Medical Marijuana Dispensary It Owes Millions In Taxes

    Quote Originally Posted by apdst View Post
    No, that's the one I'm talking about. Doesn't that mean that businesses that peddle controlled substances can't write off the expense of those substances?

    Now I know why most pharmacies are half pharmacy and half gift shop.
    I believe that is correct. Like I said earlier on in this thread, essentially, the medical pot shops in Ca are being told by Ca that their business is legal, but being punished by the Feds (tax wise) for running an illegal business.

    It's kinda f-ed.

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    Re: IRS Tells Medical Marijuana Dispensary It Owes Millions In Taxes

    Quote Originally Posted by MaggieD View Post
    Not quite. It means that those selling those substances illegally can't write off their expenses. And, since California is flying in the face of Federal laws, these shops are selling Federally-illegal substances. They'll probaby lose -- but only after they've put a number of shops out of business that can't afford the litigation.
    Drug dealers don't files taxes.

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    Re: IRS Tells Medical Marijuana Dispensary It Owes Millions In Taxes

    Quote Originally Posted by Whovian View Post
    I believe that is correct. Like I said earlier on in this thread, essentially, the medical pot shops in Ca are being told by Ca that their business is legal, but being punished by the Feds (tax wise) for running an illegal business.

    It's kinda f-ed.
    I think you're totally misinterpreting what the Federal government is doing.

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