The IRS has asked a federal judge to dismiss Harborside‘s court challenge of industry-loathed tax rule 280E.
WeedWeek
- Harborside is appealing a 2018 Tax Court decision which found it owes $11M in back taxes for operations between 2007 and 2012.
- The Oakland-based retailer claims it should have been allowed to deduct more of its expenses. The IRS disagrees.
- More broadly, Harborside argues 280E is unconstitutional, essentially because it is being taxed for revenue while the Constitution allows taxes on income. Harborside says it was operating at a loss for much of the time in question.
- In its brief before the Ninth Circuit Court of Appeals, the IRS argues the government can tax gross income. It adds that Harborside’s Constitutional argument should have been brought before the tax court and not introduced on appeal.
- Harborside’s lawyer, James Mann told WeedWeek “We continue to be optimistic about the outcome [of the case],” he said. “I actually am confident we will prevail on both of the grounds of the appeal.”
Quick Hit
- In a rare respite, a new California law means pot taxes won’t go up for a year. ????WW California has more.
Sacramento Bee
