Marijuana, Religion, and Taxation

Some bits and pieces from here and there:

  • Marijuana has been decriminalized, at least to some extent, in many jurisdictions in America. This has brought the industry above-board, and has exposed it to taxation. Under federal law, businesses involved in the marijuana trade cannot deduct their business expenses from their gross profits when figuring their income tax. This is a result of the great piling-on of the Just Say No era, when politicians were falling all over themselves to come up with new ways to stick it to dope smokers. This puts above-ground marijuana vendors in a bind, as “it is conceivable that [this law] could require [such] a business to pay more in tax than its total profits for the year.” Tax professor Benjamin M. Leff has a possible solution: organize as a 501(c)(4) social welfare organization. Meanwhile, marijuana purchasers should be aware that the federal government is making a big profit on anything they purchase in the above-ground market, and should for that reason prefer to purchase from the same underground dealers they’ve trusted for years.
  • A number of American churches want to keep their tax-exempt nonprofit status without heeding the legal ban on political endorsements that accompanies it. 1,600 of them backed up this opinion with civil disobedience — defiantly making overtly political stands from the pulpit, and sometimes even recording them and turning the recordings over to the IRS. So far the agency has done nothing in response, and many are speculating that it feels that in a churches vs. IRS battle, the IRS is most likely to end up with a black eye, no matter what the law says. But now the Freedom From Religion Foundation is forcing the issue. The Foundation has filed a lawsuit asserting that the IRS is illegally permitting religious non-profit groups to engage in political activity it forbids to non-religious non-profits.
  • The IRS commissioner sent a memo to agency employees about the expected impact of “sequester” budget cuts. Excerpt:

    We will continue operating under a hiring freeze, reduce funding for grants and other expenditures and cut costs in areas such as travel, training, facilities and supplies. In addition, we will need to review contract spending to ensure only the most critical and mandatory requirements are fully funded.

    Despite current and planned efforts to cut expenses, our greatest expense, by far, is employee pay. As our budget is reduced for the remainder of the fiscal year, it appears a number [5–7 per employee this year] of furlough days will be necessary given the size of the anticipated budget cut to the IRS.

    Colleen M. Kelley, president of the National Treasury Employees Union, noted that “the IRS is operating this filing season with 5,000 fewer employees than just two years ago. Now, IRS employees face potential furloughs and the loss of pay for a week or more; and all federal workers are continuing to function under the threat of at least a partial government shutdown when the current continuing resolution expires on .” In addition, she says, “IRS employees… have had their pay frozen for over two years.”

Here’s a bit more about the tireless paleocon tax resister Vivien Kellems. This comes from the edition of The News of the Tonawandas:

Miss Kellems Refuses to Pay Social Security

 Vivien Kellems, veteran campaigner against “socialistic” federal tax laws, refused today to pay the new Social Security tax on self-employed persons and recruited four other small employers to join her tax strike.

Miss Kellems, who owns a cable grip factory here, sent a letter to Secretary of the Treasury John W. Snyder with her income tax return, pointing out that she had not included the $81 due for the new tax. She told Snyder that she carried “adequate insurance” and did not wish “further coverage.”

“It will clarify the whole matter if you will please indict me and let us submit this law to the Supreme Court, in the traditional American manner, in order to test its constitutionality,” she told Snyder.

Has 4 Followers

Miss Kellems made public similar letters to Snyder written by John F. Andrews, a Beach City, O., auctioneer; Ralph Bly of the Bly Auto Supply Co., Shelby, O.; Thomas Gaskins, owner of Cypress Knee Products, Palmdale, Fla.; and Mrs. Mary D. Cain, owner-editor of the weekly Summit Sun, Summit, Miss.

Because they are their own bosses, the small business owners are required to pay their own Social Security taxes by means of the self-employment tax. They are supposed to deduct Social Security taxes from their employes’ wages, too, but Gaskins told Snyder he would not do that for his two employes.

“The reason for not paying is because we believe this law to be unconstitutional,” he wrote. “for those of us who still have confidence in our own ability (to take care of personal security), such a socialistic thing should not be forced upon us.”

Treasury Department spokesmen in Washington said that “several” persons have refused to pay Social Security taxes. They said revenue agents would be assigned to investigate as soon as their tax returns, which are due at , are checked.

She Withholds Now

Miss Kellems announced the names of her fellow dissidents yesterday in Bridgeport, Conn., at a rally of the Liberty Belles, a national women’s action organization which she founded . One of the Liberty Belles’ objectives is to repeal the personal income tax and the Social Security law.

Miss Kellems’ feud with the Internal Revenue Department dates from when she refused to deduct income tax from the pay checks of her employes because “no one has paid me to be a tax collector.” She asked the government to prosecute her for criminal violation of the revenue code, but the Treasury Department merely attached her property, taking $7819 it said she owed in back taxes and fines.

The 55-year-old manufacturer sued the government for return of her property in a Hartford, Conn., Federal Court and recovered $6133. The government asked for a dismissal of the verdict but was rejected. Miss Kellems claimed a “moral victory” and then complied with the withholding tax law.