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Tax Relief

Tax Relief does not endorse drug use

Because tax doesn’t have to be taxing. A less-than-serious look back at some of the quirkier tax stories from the past month.

Don’t tax my weed delivery!

The US Internal Revenue Service (IRS) won its case against two Californian cannabis distributors over the tax treatment of posting weed by FedEx.

The Ninth Circuit Court of Appeals ruled in favour of the taxman and against the Organic Cannabis Foundation and the Northern California Small Business (NSCB) Assistants. The decision is a blow for potheads and their local providers.

The two taxpayers were trying to overturn the IRS claim that they were subject to Section 280E of the Internal Revenue Code, which denied them tax deductions on deliveries of special brownies and other pot-related goods. Together, the two businesses face a combined tax bill of almost $2 million.

Although legal in the weed-friendly state of California, cannabis is still a controlled substance at the federal level in the US. The fact that the substance is legal in some states and illegal at the federal level means certain agricultural businesses can be denied access to tax deductions.

Until US law changes, cannabis distributors will continue to face a tax disadvantage. "Wait, what's happening?" asked one connoisseur of organic products. "Can we still get a delivery tonight?" The short answer is yes, but it will cost more.

Tax gon’ give it to ya?

Convicted tax-dodger Earl Simmons, the rapper known as DMX, has got himself into hot water over his taxes once again. The Yonkers rapper has been issued with a tax warrant for almost $225,000 from the State of New York.

The case goes back to when Simmons was released from prison in January 2019 after serving almost a year for 14 federal counts of tax fraud. He was ordered to pay $2.3 million in restitution to the US government and handed three years of supervised release after his prison term. He has since fallen behind on his payments.

"We're working on resolving it," said attorney Murray Richman, who represents DMX. "We will, of course, eventually resolve it, which we've done in the past because we resolved the IRS situation. We'll work out a payment schedule, work out a real number and we'll be there."

It's not the first time either. DMX failed to pay taxes from 2002 to 2005 and from 2010 to 2015. He eventually pleaded guilty to one count of tax fraud, but he denied all other charges. Simmons claimed that he didn't knowingly dodge taxes.

DMX stresses that he was just living a "cash lifestyle". Nevertheless, Simmons can now join the ranks of such famous US tax dodgers as cigar aficionado Al Capone and Sinbad (the comedian, not the sailor).

PwC sued for ‘ineffective’ tax advice

Multimillionaire John Hargreaves, founder of UK retail chain Matalan, has sued the Big Four firm for allegedly giving him "ineffective" tax avoidance advice.

Hargreaves claims PwC advised him on how to move to the renowned tourism hub Monaco, where he could avoid paying capital gains tax and income tax in the UK. The Big Four firm has said it believed its tax advice was sound and that it will be defending its record.

The case goes back to 2000 when Hargreaves was looking to sell £237 million ($262 million) worth of shares in Matalan when the company went public in 1998. The Big Four firm reportedly advised Hargreaves to move to the alleged tax haven and offload the shares in one bulk transaction.

HM Revenue & Customs, the UK tax authority, launched an investigation soon after it turned out Hargreaves was working at Matalan's head office in Liverpool three days a week. After a lengthy court battle, Hargreaves was forced to pay out £35 million to the British taxman.

Hargreaves won in another case against HMRC over £84 million in taxes concerning his move to Monte Carlo. The judge threw out the case because it was just too old. Fortunately, Hargreaves faces no claims of being "ineffective" in the courts.

More from across our site

Tax professionals have called on the UK government to reconsider its online sales tax as it would affect the economy at the worst time.
Tax professionals have called on companies to act urgently to meet e-invoicing compliance targets as the EU plans to ramp up digitisation.
In the wake of India’s ambitious 25-year plan for economic growth, ITR has partnered with leading tax commentators to discuss what the future will look like for India and for the rest of the world.
But experts cast doubt on HMRC's data and believe COVID-19 would have increased the revenue shortfall.
EY’s plan to separate its auditing and consulting businesses might lessen scrutiny from global regulators, but the brand identity could suffer, say sources.
Multinationals are asking world leaders to put a scale on carbon pricing to tackle climate change at the 48th G7 summit in Germany, from June 26 to 28.
The state secretary told the French press that the country continues to oppose pillar two’s global minimum tax rate following an Ecofin meeting last week.
This week the Biden administration has run into opposition over a proposal for a federal gas tax holiday, while the European Parliament has approved a plan for an EU carbon border mechanism.
12th annual awards announce winners
Businesses need to improve on data management to ensure tax departments become much more integrated, according to Microsoft’s chief digital officer at a KPMG event.
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