Apparently This Is the IRS Being Funny About Taxes

Posted on by Adrienne Gonzalez

We can’t come up with a better explanation for their Tax Quotes page. Treasury regulations forbid the IRS from implying that inclusion of a quote here means they are at all endorsing tax revolt and/or humor in any form.

“Taxes are what we pay for civilized society.” — Oliver Wendell Holmes, Jr., U.S. Supreme Court Justice

“I am proud to be paying taxes in the United States. The only thing is – I could be just as proud for half the money.” — Arthur Godfrey, entertainer

“People who complain about taxes can be divided into two classes: men and women.” — Unknown

“No government can exist without taxation. This money must necessarily be levied on the people; and the grand art consists of levying so as not to oppress.” — Frederick the Great, 18th Century Prussian king

“Like mothers, taxes are often misunderstood, but seldom forgotten.” — Lord Bramwell, 19th Century English jurist

“The best measure of a man’s honesty isn’t his income tax return. It’s the zero adjust on his bathroom scale.” — Arthur C. Clarke, author

“Next to being shot at and missed, nothing is really quite as satisfying as an income tax refund.” — F. J. Raymond, humorist

A tax loophole is “something that benefits the other guy. If it benefits you, it is tax reform.” — Russell B. Long, U.S. Senator

“The hardest thing in the world to understand is the income tax.” — Albert Einstein, physicist

“Taxation with representation ain’t so hot either.” — Gerald Barzan, humorist

“Income tax has made more liars out of the American people than golf.” — Will Rogers, humorist

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Just So You’re Aware: The IRS Won’t Allow You to Deduct Your Pot as a Medical Expense

Apparently there’s been a bit of unnecessary confusion out there about the deductibility of marijuana for medical purposes. The Wall St. Journal article that we linked to this morning discusses the problems employers are encountering wie.g. can’t use HSA funds; they don’t care if you’ve got a card, if you test positive you’re fired).

But the question of deducting the cost of your White Widow et al. that you legally purchase in states like California and Colorado has been making the rounds. After a little discussion, it’s pretty clear that the IRS is not going allow you deduct your pot for tax purposes simply because it’s still illegal at the Federal level. Doctor’s note be damned.


The confusion arose due to the following letter that was sent to New York Senator Chuck Schumer, who had sent a letter to the IRS inquiring about a constituent using a “herb” to treat migraine headaches:

Pot

Talk about a vague response from the IRS. Tax Girl explains:

As with many facets of how to treat medical marijuana for tax and other purposes, it appears that those in charge are merely tiptoeing around the question. In the letter, the term “marijuana” is never used explicitly – the term used is “herb”. While it’s my understanding that the specifics of the case involved medical marijuana used for the treatment of migraines, that isn’t specifically stated in the sanitized version of the letter. No use of “marijuana”, just the term “herb.” That could be St. Johns Wort or milk thistle as far as the IRS is concerned.

Fortunately TaxProf Paul Caron clears up for us in a couple of updates from his latest post on this issue:

Update #2: Rev. Rul. 97-9, 1997-1 CB 77, specifically precludes a medical expense deduction for medical marijuana:

An amount paid to obtain a controlled substance (such as marijuana) for medical purposes, in violation of federal law, is not a deductible expense for medical care under § 213. This holding applies even if the state law requires a prescription of a physician to obtain and use the controlled substance and the taxpayer obtains a prescription.

So the IRS in Info. 2010-0080 either was (1) signalling a retreat from its position in Rev. Rul. 97-9 by not mentioning the federal legality of the substance; (2) implicitly referring only to legal herbs (and hence not covering marijuana).

Update #3: I am told by an enterprising reporter that the herb in question in Info. 2010-0080 is Petadolex, so it appears that interpretation #2 above controls and the conclusion in Rev. Rul. 97-9 denying a medical expense deduction for medicial marijuana still obtains.

So there you have it. Regardless if you have glaucoma, cancer, HIV, chronic pain, high anxiety or any ailment that marijuana can effectively alleviate, don’t bother trying to include it on Schedule A. We’d ask the IRS to implore a little common sense here but legally, as long as marijuana remains illegal at the federal level that’s not going to happen. And from a more practical standpoint, we’re still talking about the IRS.

Don’t Bogart That Deduction: Is Medical Marijuana a Medical Expense? [TaxProf Blog]
Just Say No: Pot Not Allowed as Medical Expense [Tax Girl]

The IRS Is Giving Small Nonprofits One Final Chance to File Their 990s

Remember the IRS’ failed outreach to small nonprofits back in the spring? Yeah, the May 17th deadline threw a lot small NFPs for a loop and they up and missed the filing deadline completely.

IRS Commish Doug Shulman figured that, despite the unprecedented outreach, the whole snafu was his bad and that nonprofits shouldn’t worry their pretty little heads about missing the deadline, the Service will still take your 990, tardiness notwithstanding.

But that can’t go on forever now, can it? Accordingly, the IRS set a new deadline today to file the 990s and it’s set for a much more memorable October 15th.

WASHINGTON — Small nonprofit organizations at risk of losing their tax-exempt status because they failed to file required returns for 2007, 2008 and 2009 can preserve their status by filing returns by Oct. 15, 2010, under a one-time relief program, the Internal Revenue Service announced today.

The IRS today posted on a special page of IRS.gov the names and last-known addresses of these at-risk organizations, along with guidance about how to come back into compliance. The organizations on the list have return due dates between May 17 and Oct. 15, 2010, but the IRS has no record that they filed the required returns for any of the past three years.

“We are doing everything we can to help organizations comply with the law and keep their valuable tax exemption,” IRS Commissioner Doug Shulman said. “So if you do not have your filings up to date, now’s the time to take action and get back on track.”

It’s simple people. If your gross receipts are under $25,000, get yourself a 990-N (e-Postcard), fill it out and you’re done. If you have receipts up to $500k, you’ll have to fill out either Form 990 or 990-EZ which will probably take you all of 15 minutes.

Get it? No more blowing this off. OCTOBER 15TH is the drop dead date. After that, Shulman & Co. will be busting down the doors to inform you that you’re no longer tax exempt. And trust us, you don’t want to deal with that.

IRS Offers One-Time Special Filing Relief Program for Small Charities; Oct. 15 Due Date to Preserve Tax-Exempt Status [IRS]