If you thought the ongoing tax issue whether marijuana business owners and consumers paying federal taxes would incriminate themselves by paying the taxes, there’s another tax problem on the horizon.
Adding to this hodgepodge of pot perplexity, is that the state taxes pouring in from the marijuana sales are forecasted to exceed the $67 million in annual revenue anticipated in the 2013 Blue Book analysis of Proposition AA – the sales and excise tax rates voters approved in November. The state is now forecasted to take in an estimated $107 million, $40 million more than expected.
Marijuana revenues are subject to the state’s Taxpayer Bill of Rights (TABOR). Lawmakers are required to take action if tax revenues from the new (state) legal marijuana industry exceed $67 million.
Colorado must lower the tax rate and refund the excess amount of revenues above the $67 million estimate or refer a measure to the ballot seeking permission from voters to let the state keep and spend all the tax revenue from recreational marijuana.
It’s unclear whether a refund would go out to all taxpayers, or just those who bought the recreational weed. If refunds are given, it would likely come out of the state’s general fund because much of the marijuana revenues have already been allocated for school construction and reimbursement for marijuana regulation expenses.
Some Colorado representatives think the state will try and take care of the decision internally. Others on Capitol Hill think simply lowering the sales and excise tax rates will bring the revenues back down to the $67 million original forecast.
There are no standardized sales prices, but recreational pot is generally selling at a lower rate than an original forecasted last year, even though the taxes generated are higher.
Colorado is embroiled in a legal battle if marijuana businesses pay federal taxes on their revenues, they would be incriminating themselves since the weed is not legal under federal law. Federal law trumps state law.
Federal law dictates if you don’t pay your income taxes and you don’t pay your employment taxes, you are subjecting yourself to criminal tax charges. The dilemma of paying taxes on an illegal substance is very precarious and questionable.
Another problem for the marijuana industry in Colorado is that some of Colorado’s largest banks won’t offer new loans to landowners with preexisting leases with pot businesses.
These bankers have told commercial loan clients they either have to evict marijuana businesses or seek refinancing elsewhere. Bankers are saying property used as collateral for those loans theoretically are subject to federal drug-seizure laws making the loans a risk.
Tyler Murray, LL.M., of the Gantenbein Law Firm, is an experienced Denver 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 received a Notice of Deficiency or other CP Notice for back taxes, contact premier 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. Visit our TAX WEBSITE for more information.
Tyler Murray is also a skilled, 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 litigation, offers in compromise, tax appeals, tax planning, tax audit defense services, filing tax returns, and estate taxes.
Gantenbein Law Firm practice also includes Colorado Real Estate Law, Colorado Foreclosure Defense, Federal and Colorado Tax Law, 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. For more information on these areas of practice, visit our WEBSITE