Marijuana Taxes a Catch 22 for Coloradoan Business Owners

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If you have federal tax or Colorado business tax issues, contact Denver tax attorney Tyler Murray, LL.M. for immediate tax assistance.

A hearing on whether paying taxes on marijuana sales will set weed owners up for federal prosecution has failed, leaving marijuana business owners and consumers up in the air.

Advocates for the legalization of marijuana were suing to halt state and local government from collecting certain taxes on those sales. Their argument was marijuana is still illegal under federal law. Federal law takes precedence over state law. Paying taxes on the sales would be admitting to breaking federal law.

Colorado Judge John Madden, Denver District Court, held an almost day long hearing on the matter. He eventually ruled there wasn’t enough evidence to show that tax collections needed to be stopped right away with an injunction. Madden further stated, “I can’t find that there’s immediate, irreparable injury based on the testimony today.”

The argument from the marijuana business owners and consumers was that taxes must be stopped because they violate the Fifth Amendment rights against self-incrimination. By paying the taxes on marijuana sales, the business owners and consumers acknowledge they are violating federal law.

The attorneys for the business owners argued, “These taxes are gift-wrapped open-and-shut federal prosecution.”

The judge asked “How can a party be able to receive a preliminary injunction that would assist in violating federal law?” In other words, if an injunction were given to the marijuana business owners, the injunction would help the owners cover up a federal crime.

Attorneys for the state argued “Getting rid of the taxes is not going to prevent the federal government from prosecuting.”

If marijuana business owners were to present testimony in court voicing their concern their tax payments are self-incriminating, their testimony would actually incriminate them. They would have to give testimony on information on their marijuana sales. They would be testifying they are breaking the federal law.

Adding to the Catch-22, if the government collects taxes on marijuana sales, would they essentially be collecting illegal money? Would this be a form of money laundering? The conflicting state and federal laws are certainly creating chaos and confusion.

Last year, the Colorado Court of Appeals (Coats v. Dish Network) ruled that since marijuana remains against federal law, employers can use that standard rather than state law as a rationale for banning off-the-job worker use, and are not bound by Colorado’s Lawful Activities Statute.

Colorado officials predicted tax revenue from pot sales to be $33.5 million in the first 6 months. To date, the revenue from pot taxes fall $21.5 million shy of that prediction.

Marijuana business owners are fearful the same Colorado Court of Appeals may rule against them as well and federal law would, once again, prevail. This is part of the same federal law that makes it illegal to sell marijuana prescriptions to medical patients at a pharmacy in Colorado.

Premier Denver tax attorney Tyler Murray, LL.M., of the Gantenbein Law Firm, is a skilled tax attorney, located in Denver and serving all of Colorado. Along with being a licensed lawyer, Tyler Murray has a Masters in Law in Tax.  If you have questions on Colorado business tax or Federal tax implications, or want to set up your business in Colorado with the lowest tax liability, contact experienced Denver tax attorney Tyler Murray at (303) 618-2122 for a one-hour consultation where he will discuss your situation and go over all your options with you. Tyler Murray is also an exceptional and efficient Denver tax audit lawyer, helping his clients with alternative resolutions to tax audits and tax debt relief. His Colorado tax attorney practice also includes tax planning, offers in compromise, tax audit defense services, filing tax returns, tax appeals and tax litigation.

Gantenbein Law Firm practice also includes Colorado Real Estate Law, Federal and Colorado Tax Law, Colorado Foreclosure Defense, Colorado Business Formation & Representation,  Colorado Business Law and  Colorado Family Law. This combination is exceptional in that it provides our clients a complete and full perspective of the most common issues surrounding your unique assets or tax issues.

Please visit our website for more information: www.gantenbeinlaw.com

 

 

 

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About theglawfirm1

Gantenbein Law Firm is a Denver, Colorado Tax Law Firm, servicing all of Colorado. Gantenbein Law Firm also specializes in Colorado Real Estate Law, Colorado Foreclosure Defense, Wills & Trusts, and Business Law.
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