Denver-based Allgreens, a medical-marijuana dispensary, won an action in federal court recently that could pave the way for other cannabis-related business. The company filed a petition in U.S. Tax Court challenging a tax payment penalty the IRS imposed against it for paying its tax in cash. Due to current U.S banking regulations, marijuana related business are not permitted to deposit their money with banks and Allgreens found itself stuck, unable to deposit its money in a bank in order to make the electronic tax payment while also being fined for not paying the IRS electronically. This problem for the company was no small issue when it came time to pay the IRS its employee withholding tax. The Internal Revenue Service requires businesses …show more content…
A spokeswoman for the IRS refused to comment on the settlement or its ramifications. It remains unclear whether the IRS settlement will extend to other marijuana businesses that have been assessed the cash-payment penalty because they could not obtain banking services. However, this decision indicates a softening by the IRS toward marijuana related business, which suffer many penalties and restrictions in both tax and banking realms, as a result of the nature of their product. “If this had gone through to a successful verdict in court, it would be a precedent, but this is a concession and an agreement (the IRS) will abate penalties to those who pay in cash and don’t have access to the payments system,” said Allgreens’ attorney. “Not applying (the penalty) to other businesses uniformly would be as ludicrous as having applied it in the first place.” State and local taxes paid in cash do not incur a penalty so it makes sense that employment taxes should not either, particularly when an industry is providing work for citizens. The IRS rules are clearly arbitrary and the result of typical normal process but the cannabis economy presents unique
...Marijuana is also a major cash crop and has the potential to be America’s largest cash crop. Medical Marijuana has been legalized in twelve United States including California. California has legalized medical marijuana and has had great success. Marijuana is California’s largest cash crop, raking in billions of dollars a year which is helping California’s debt. If America legalized and taxed marijuana, we could see the economy flourish and could help us break this recession.
To begin, there is a 24% tax on all cannabis sales. In just a few days of sales, Breckenridge Cannabis Club has given $120,000 of tax money to the same people in the council who voted to move the location of the shop. This relates to the universal American value of consent of the governed. The locals have elected the government officials who ultimately decide what they can and cannot do, the amount they are taxed on what they can do, and how and where one is allowed to run a business. This proves that even when a business is making money for the government, they still are essentially under the control of those who rule their town, state, and country. The idea of federalism is a major factor in the general legalization of marijuana. Each states has a right to legalize recreational marijuana even though it is still federally illegal. That being said, there are several federal restrictions that come with these freedoms due to the supremacy clause that gives the federal government supreme law of the land. For example, the states who choose to legalize marijuana are required to sell only to those over the age of 21 and have a proper ID, as well as only allowing people to smoke in private. Another issue Brian and Caitlin discovered was the inability to join a local bank since their business is considered a federally illegal profit. While the value of individual freedom is technically fulfilled
The IRS usually do not need to validate ordinary business transactions since both the involved parties behave on their own self-interests. However, the IRS is skeptic of any transactions when it comes to evasion of estate taxes and international subsidiaries. When two unrelated companies enter in a transaction, they are involved in arm’s length transaction. However, such is not the case for related companies as they may try to distort the price of the transaction to avoid tax burden. As the boundary of tax evasion and tax avoidance is very thin, especially when it comes to estate tax and international subsidiaries, people often tend to topple over to the evasion side. The case of Estate of H.A. True, Jr. v Commissioner of Internal Revenue in 2005 illustrates the difficulty of obtaining the objective of tax avoidance and how expensive the failed effort of tax avoidance can be (Journal of Financial Service Professionals). Numerous cases of tax avoidance and evasion such as XILINX Inc. and H.A. True illustrate the confusion surrounding the arm’s length standards (ALS) and its application to cost sharing agreements (CSAs). In case of XILINX, the court altered its decisions few times considering the uncertainties of the arm’s length standards. Meanwhile the company believed to have satisfied the standards. Due to the complexity of the arm’s length standards, these cases were compared to other similar transactions. However, it is rare to find two identical cases which meet all the criteria. In both of these cases, the court couldn’t pin point what the actual standards of the arm’s length standards were, giving rise to opportunities of tax evasion. To put the arm’s length standards to a simplest form, the standard requires the two related parties to structure their transactions in such a manner as they would if they were two unrelated parties in similar
Gibbons V. Ogden, Heart of Atlanta, the Daniel Ball, and Solid Waste V. Army Corps of Engineers are all cases that have one thing common, Commerce; but, how do any of these cases relate to the legalization of marijuana in states like Colorado and Washington? There are a variety of different types of commerce, but the two main types that I have studied are interstate commerce and intrastate commerce. Interstate commerce is essentially the trade between goods across state borders, and intrastate is quite similar to interstate state commerce, but the buying and selling happens within state borders. Although these cases may not have anything to do with the legalization of marijuana in Colorado and
On August 2nd, 1937, United States president Franklin D. Roosevelt signed into law the Marihuana Tax Act of 1937. The law was passed only 83 days after being introduced in the House of Representatives as House Resolution 6906. This law sought to place prohibitive regulations requiring medical professionals to obtain a one dollar tax stamp in order to continue prescribing cannabis sativa as medicine. However, physicians who wished purchase the tax stamp were also required to divulge an abnormal amount of detail regarding the patient, the condition being treated, the amount prescribed and the date of the prescription. Failure to follow these strict rules while prescribing marijuana resulted in harsh penalties to both the medical professional and the patient. According to the text of the Marihuana Tax Act of 1937, “Any person who is convicted of a violation of any provision of this Act shall be fined not more than $2,000 or imprisoned not more than five years, or both, in the discretion of the court.”
Today’s economy is struggling and it is in dire need of relief. As of 2013, the United State’s debt was $17 trillion, and if marijuana were to be legalized than it would help raise more money. It could be taxed and distributed for consumption sold like alcohol and tobacco. Taxes on cigarettes amounted to more than $43.3 Billion in 2012 (RJReynolds). The legalization of marijuana could possibly one day make that money helping to reduce this nation's debt. But, as the United States continues to prohibit the use of marijuana, it will make the taxpayers pay more money each year on the illegal usage of the drug. The marijuana prohibition costs both state and federal governments more than $20 billion a year (CATO Institute). One drug policy could change how much it wastes on the prohibition but the government has done so. A study by the CATO institute showed that...
In America,—the so called “home of the free” and well-known for being just and right—the federal law states that it is illegal to possess, grow, sell, or anything else related to marijuana—a natural, safe, and beneficial substance. If anyone is found guilty of these actions, they could face a fine anywhere from one thousand dollars to four million dollars and/or serve a prison sentence anywhere from fifteen days to life. However, the sale, use and even abuse of alcohol or tobacco—which is scientifically tested not natural, safe, or beneficial—is not seen to the government as illegal and is only punishable if sold to a minor or if the use of the substances causes a crime to occur. The illegal status of marijuana is an unjust law. The DEA (Drug Enforcement Administration) currently lists marijuana as a schedule 1 drug under the Controlled Substance Act (CSA). The CSA states that, “Schedule I drugs are classified as having a high potential for abuse, no currently accepted medical use in treatment in the...
Since 1978, 32 states have abandoned the federal prohibition to recognize legislatively marijuana's important medical properties. Federal law, however, continues to define marijuana as a drug "with no accepted medical use," and federal agencies continue to prohibit physician-patient access to marijuana. This outdated federal prohibition is corrupting the intent of the state laws and depriving thousands of glaucoma and cancer patients of the medical care promised them by their state legislatures.
In all states with medical marijuana, you have to have either a prescription from your doctor or a note from your doctor giving the okay. The most common things people get prescribed medical marijuana for are, AIDS, Glaucoma , and Cancer. Now by saying that, does not mean that the cannabis is going to cure it, it will just take most of the pain away, and help you cope with the illness. California was the first state to legalize marijuana for medical purposes, which took place in 1996.
Many activists have this notion that by placing a tax on marijuana the way United States does on alcohol, tobacco, and on the owners that grow and distribute medical marijuana that the generated funds can be used for pulling America out of its financial debt. As crazy as this idea may sound it actually makes a great deal of sense to legalize and tax marijuana. For example, Colorado and Washington are trying to establish a bill that would place a fifteen percent tax rate on recreational use and an excise tax on pot transfers between pot growers and sellers (Bowen) since the voters legalized it for recreational and medical use. Furthermore, the State of Colorado has already ge...
Taxes in the United States include payroll taxes, property taxes, sales taxes, and a multitude of others. These taxes may be imposed on individuals, business entities, estates, trusts, or other forms of organizations. In general, there is a lot of inquiry on the current tax system. With endless loopholes, a regressed economy, and corruption there has been widespread anger on the current structure of taxation. Consequently, the wealthy have managed to become even richer despite the economic crisis. Furthermore, many taxpayers in the upper class have found loopholes to avoid substantial taxation or otherwise known as tax evasion. (Stewart 2013) Tax evasion has only grown over the years and with the national debt has become a major issue. What is more, is the intense complexity of the entire taxation process. Addressing all the issues and problems regarding the taxation structure is a meticulous and arduous process. With this in mind, politicians from both parties have tried to address individual issues within the taxation paradigm. Being that the United States has the highest corporate tax in the globe, politicians have tried to change policy regarding taxation on businesses. (Sullivan 2013) How...
The most widely discussed benefit of legalizing cannabis is the tax revenue that can be gained on the state and federal level. With the legalization and sale of cannabis in all of the United States, the local, state, and federal governments will be able to gross millions and potentially billions of dollars each year that can be used to fund schools, support communities, and provide a variety of help in multiple other areas. The medicinal marijuana sales alone in only the state of Colorado from 2011-2012 reached over $219 million dollars and earned just under $6 million dollars in state sales tax (colorado.gov). Medicinal marijuana in Colorado was without an excise tax, but was still able to reel in approximately $6 million in taxes. The medicinal marijuana laws are still in effect in Colorado, but with the addition to recreational marijuana sales, the state, local, and federal governments should be able to bring in even more tax revenue (sos.state.co.us). The curren...
Let’s begin with US revenue gain that would occur from legalizing marijuana. Marijuana Offers Extreme US revenue boost in several different ways. Shouldn’t we want to collect revenue due to taxation other then criminalization? Marijuana is too expensive for our justice system and should inst...
The controversy dealing with marijuana stems from the legalization of the drug for medical use.
McDonald's Corporation is the largest fast-food operator in the World and was originally formed in 1955 after Ray Kroc pitched the idea of opening up several restaurants based on the original owned by Dick and Mac McDonald. McDonald's went public in 1965 and introduced its flagship product, the Big Mac, in 1968. Today, McDonald's operates more than 30,000 restaurants in over 100 countries and have one of the world's most widely known brand names. McDonald's sales hit $57 billion company-wide and over $25 billion in the United States in 2006 (S&P).