Just how good is the IRS? It’s so efficient that not only is it targeting anti-tax groups, it’s also going after businesses that actually want to pay taxes. The IRS is currently enforcing a 1982 addition to the tax code that disallows anyone selling a controlled substance from taking standard business deductions (like rent and payroll). Their target is those state-legalized medical marijuana dispensaries, even though there are places that trying their best to keep on the right side of the law, and going as far as to help provide information for those who are looking medical marijuana card, for example there are states like Ohio, who try their best to do something like this with their ohio marijuana card.
There’s a dispensary a few miles from my house, near downtown. It’s located on a booming four-lane highway in a house that was once literally rotting into the ground. Before it became a dispensary, the only thing the house was good for was smoking crack and dumping bodies. But it’s been nicely restored and is now a functioning business that pays rent, purchases inputs, and employs a number of people.
But like those geriatric, anti-marijuana guys in Congress, the IRS totally gets it. They look at this promising new industry and say “Rents, new jobs, economic activity, and tax receipts? We’ve already got way too much of those.”
The impetus for the 1982 tax change now being used to drive dispensaries out of business is quite funny. Some drug dealer successfully claimed that his yacht, weapons purchases, and bribes were business expenses. The article I read didn’t go into detail, but I can imagine how this happened:
Some guy reviewing the unusual case at the IRS considered similar situations. He envisioned a financier sitting on a company-owned yacht used for “business development” purposes. The financier was doling out a huge campaign contribution (ie bribe) to a congressional candidate. So the IRS agent picked up his rubber stamp and marked the drug-dealer’s file APPROVED.
Fortunately, a bunch of good people are working to change this tax law, which was intended to foil guys with names like Freeway Kilo Kenny. I hope they succeed. Because the next time I drive past that house-turned-dispensary, I don’t want to see a grandmother with glaucoma heading into the house with a bandana wrapped around her face to combat the smell. And given the traffic, there’s no way I could slow down and shout “Hey, grandma, watch out for all the used needles on the ground!!”
In the end, though, you gotta feel for the day-to-day workers at the IRS. It must suck being lorded over by a congress and a President who think the drug war still makes sense after so many years of utter failure.