Resolving the Tax Code Problem
People in California voted on Tuesday to hike the income tax rate on people who make more than $250,000 a year. This is President Barack Obama’s solution to trim the $1 trillion deficit. That’s the easy part though. The difficult part is to come up with the ways to increase the revenues to the U.S. treasury which is a complete reformation of the U.S. tax code. This is difficult in a way that changes in taxes will definitely affect everyone.
Up to now, it is still a guess on how this will be done but Dave Camp, Midland Representative, Republican and Max Baucus, Montana’s Sen., a Democratic, are working on it for 2 years now. They are trying to come up with a tax package that will lower the rate across the board and will lessen the deductions, loopholes, credits etc. For now, they come up for an agreement that included $600 billion in new tax collections and they are still working on it until now.
People are now thinking that these two individual are working on an idea conceived when both of them are under the committee responsible to lower the deficit. More than 100 business leaders including Chairman and CEO of The Dow Chemical Co., Andrew Liveris, signed off on a letter just before the Tuesday election which calling for a balanced approach to deficit reduction. Many believed that the deficit decreased matters. Millions of jobs are at risk in having a tax code that is known to be fair.
Categories: Federal Tax, Tax Law Tags: federal tax, tax code, tax reform
IRS on Medical Marijuana Dispensaries
In Washington and Colorado, marijuana is already legal and in 18 other states medicinal cannabis is already allowed. Of course, state-licensed dispensaries will be different in each of these lands. Legislatures and state voters are ok with this but it does not follow that the federal government has the same opinion, especially the IRS.
Robert W. Wood, Forbes contributor and tax attorney states that the IRS still sees these marijuana dispensaries as drug traffickers but they don’t have any deductions in their taxes. This hurts because businesses are paying their taxes on their net income not on their gross income. Since 1996, medical marijuana is already legal in California. Dispensaries have been fighting against intractable tax policies for years.
The judicial branch, in tax court, is allowing the purveyors to subtract other expenses definite from distributing marijuana which means cannabis outlets can subtract for a 2nd business of care giving. If 10% of the business’s premises are used, the company can deduct most of its rent.
IRS is also fighting for pot deductions in tax court. Martin Olive is a California businessman who is selling vaporizers at his shop. The IRS presented him a large bill and the tax court upheld it. The bottom line here is that dispensaries will walk a tight rope when it comes to IRS deductions. They need to assure the IRS that they are maintaining two businesses, one care giving—under one roof. Because of increased legalization, businesses have better chances to have their case for deductions be heard in federal courts.
Categories: Federal Tax, Tax Law Tags: federal tax, medical marijuana, tax court
Fraud in Federal Tax
The former owner of the Decatur-based racing fuel company, Evan Knoll, has been arrested for violating the conditions of his bond in federal tax. A three page motion was filed October 29, 2012 by Assistant U.S. Attorney Michael A. MacDonald taking Knoll into custody last November1, 2012 in his hometown. He threatened a government witness and asked to return some of his firearms from a friend that is taking care of them. He will be sentenced on November 21, 2012 in U.S. District Court in Grand Rapids. July 25, 2012, he pleaded guilty on 1 count of bank fraud and 8 counts of filing a false claim against the government.
Knoll owned several businesses like Services Inc. in Decatur and General Sales. He also had a Knoll Gas, Torco Racing Fuels Inc., EWK, LLC, Knoll Gas Motorsports Inc. and eRaceFuels Inc. it is said that Knoll is claiming for refunds of up to $110 million in federal gasoline excise taxes. It was learned that Knoll had used derogatory names and threatened physical harm against the government witness.
John Karafa, Knoll’s attorney is already aware of this information. According to MacDonald, the federal probation officer contacted the prosecutors saying that Knoll had violated the terms of his bond stating that he does posses firearms or any harmful weapons. MacDonald also said that the person who is in charge of the alleged firearms contacted the Van Buren County Sheriff’s Office after Knoll asked to have his firearms back because he is going to sell it. This was granted by U.S. Magistrate Ellen S. Carmody. Knoll is help for federal custody.
Categories: Federal Tax, Income Tax, Tax Law Tags: federal tax, federal tax fraud