The tactic is the latest in the Internal Revenue Service’s efforts at ensuring the otherwise-legitimate businesses cannot claim federal tax deductions, the companies say. Once done, the IRS uses section 280E of the Revenue Code in denying any business tax deductions, a move that raises the business’s tax bill by multiples. Federal tax agents are trawling a Colorado database designed to track pot from seed to sale as a way of proving licensed marijuana businesses are illegally trafficking in the drug. That’s especially true since the U.S. Justice Department has said it would not prosecute legitimate marijuana businesses as long as they comply with state laws. Because marijuana remains illegal under federal law, medical and recreational pot businesses are precluded from claiming otherwise-legitimate tax deductions, and the IRS has been auditing handfuls of them to ensure compliance.
Federal tax agents are trawling a Colorado database designed to track pot from seed to sale as a way of proving licensed marijuana businesses are illegally trafficking in the drug.
The tactic is the latest in the Internal Revenue Service’s efforts at ensuring the otherwise-legitimate businesses cannot claim federal tax deductions, the companies say. The tax code prevents businesses that traffic in illegal drugs from claiming deductions.
At least six businesses, most recently the owners of Rifle Remedies, a medical marijuana business in Silt, have separately filed petitions in U.S. District Court to quash IRS summonses for state records that...
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