Marijuana dealers hit by taxes, complain loudly

[kage69]

I dont see the issue, just dont pay the taxes.

I don't think that's an option. Anyone involved with MM over the last 5 or so years has watched the IRS and Justice Dept. swoop down on dispensaries suspected of cooking the books and other violations.

Being a bit broke is preferable to dealing with Feds that come after you for tax evasion. IMO anyway.

 

[herm0016]

They choose to be in a business that is only quisi-legal. the feds did not force these people to be criminals in the eyes of the fed. The fact that they thought it was all going to be a hippie dream to run a dispencery is not the feds, or my, problem.

 

[Yreka]

Why would you keep going for years after you found out the tax situation?

They forgot...

 

[Atomic Playboy]

Whether something is legal in a particular state or not doesn't matter in terms of the IRS regulations. The IRS is a federal agency, following federal laws and regulations. It will (correctly) not allow you to get credits or exemptions for things that are federal crimes.

And there is a legitimate gripe to be had if the activity you're engaging in is legal according to the jurisdiction you live in but the IRS treats it as an illegal enterprise yet still demands compensation. The way marijuana is treated at the Federal level in this country is unbelievably stupid. "It's illegal; we won't arrest you for it, but we will tax you as though it is a legitimate business but let you claim no deductions or exemptions. Suck it!" Absurd. Let the people claim the tax deductions any other business owner would and you'll actually see a lot more revenue coming in at the Federal level because you won't have to waste taxpayer money prosecuting people who will never be able to pay you the exorbitant amounts the Feds are asking for.

 

[Darwin333]

To clarify, that should read "other legal businesses rightly...."

People whine that they can't legally deduct expenses of their criminal enterprise??

What's next, bank robbers claiming the expense of buying a gun as a business expense?

Yet its legal in the state they are doing business in.

The state wants the tax revenue.

The feds want the tax revenue.

So lets make it so that they basically must break tax laws in order to operate and screw the .gov out of desperately needed revenue. Brilliant plan I tell ya.

 

[Darwin333]

Taxes for a Business are based on Profit, not Revenue. I am sure if we drill down further we might see that the IRS isn't even taxing a business but rather an individual.

Thats because businesses are allowed to deduct the expenses it took to make that profit. If you were not allowed to deduct those expenses (as appears to be the case in the OP) they would be taxed based on revenue.

 

[Darwin333]

Whether something is legal in a particular state or not doesn't matter in terms of the IRS regulations. The IRS is a federal agency, following federal laws and regulations. It will (correctly) not allow you to get credits or exemptions for things that are federal crimes.

Then it should not demand that you pay taxes for the same activity. They shouldn't get to have it both ways.

 

[PokerGuy]

And there is a legitimate gripe to be had if the activity you're engaging in is legal according to the jurisdiction you live in but the IRS treats it as an illegal enterprise yet still demands compensation. The way marijuana is treated at the Federal level in this country is unbelievably stupid.

Be that as it may (the stupid part), federal law supercedes state law. Legal or not legal in your jurisdiction doesn't matter, nor does the IRS even care. The IRS doesn't really care about how your income is earned, just that you need to pay taxes on the income. The regulations that govern exemptions and deductions are based on federal law. Very simple really. The IRS is doing exactly what it should be doing.

Now if you want to talk about changing the federal law, that's another discussion entirely.

"It's illegal; we won't arrest you for it, but we will tax you as though it is a legitimate business but let you claim no deductions or exemptions. Suck it!" Absurd.

You're mixing entirely different parts of government together. The state government says it's legal, federal government says it's illegal. That means you can can prosecuted for it as a federal matter, but not by the state. The IRS is not law enforcement, they handle tax collection.

Let the people claim the tax deductions any other business owner would and you'll actually see a lot more revenue coming in at the Federal level because you won't have to waste taxpayer money prosecuting people who will never be able to pay you the exorbitant amounts the Feds are asking for.

That's back to the discussion of changing federal law. Until such time as that happens, the IRS can't just "let the people claim the tax deductions" because you can't claim expenses from illegal activity for deductions. They don't make the rules.

 

[Atomic Playboy]

Now if you want to talk about changing the federal law, that's another discussion entirely.

I thought that was the entire point of the discussion; the Federal law doesn't make sense in this case (tax revenue collection for businesses that are legal locally but illegal Federally).

 

[highland145]

I thought that was the entire point of the discussion; the Federal law doesn't make sense in this case (tax revenue collection for businesses that are legal locally but illegal Federally).

It's the state law that doesn't make sense not the federal.

 

[Atomic Playboy]

It's the state law that doesn't make sense not the federal.

In what way?

 

[PokerGuy]

I thought that was the entire point of the discussion; the Federal law doesn't make sense in this case (tax revenue collection for businesses that are legal locally but illegal Federally).

The federal law was there before the state law was put in place. If the states create laws that conflict with federal laws, then you can expect these kinds of problems.

Taxation and revenue collection doesn't really have anything to do with the legality per se. The deductions and expenses you can claim are going to be bound by federal law, but the collection and taxation is based on the income, not whether the activity that generated it is locally legal or not.

Bottom line, until the federal law changes (when/if), these people will need to realize that they are going to have to pay taxes on the full proceeds of their criminal enterprises.

 

[PokerGuy]

I dont see the issue, just dont pay the taxes.

Perhaps im wrong on this im not american and not up to date on all laws there but:

AFAIK its still not legal to do this there and these businesses are NOT classified as a business under federal law, correct?

So if you are not classified as a business then they cant collect taxes because you arnt a business, there is nothing for them to collect taxes from right?

If they took you to court over this would they not have to admit you ARE a business at that point which would then give you the ability to have tax write off's like any other business.

Or is this not how it works there?

I don't think you grasp how the system works.

 

[Fern]

There are some really weird responses here.

Folks, all you're looking at is another way for the federal govt to punish you for the crime of selling weed if they can't/don't bust you under the drug statutes.

Section 280E, the tax penalty section that is being used against them, would, I feel, be unconstitutional if applied to any other (legal) business. It's confiscatory and punitive.

People who think pot s/b legal and/or those who think it should left up to the states themselves should oppose this treatment.

Fern