Letters + Opinion » The Week in Weed

Don't Get Caponed



"But in this world nothing can be said to be certain, except death and taxes," said Ben Franklin. But there's a way to avoid at least one of those: grow weed.

"B-b-but sales tax!" some cry, as though paying 8 percent of the cost of that flat screen at Target comes anywhere near the income tax that even poverty-level earners must fork over to the big, bad, Franklinstein's monster of a government.

Yes, you, the most community-minded of the stoniest generation, developed off-the-grid public services, funneling money into firehouses, community centers and parks.

But if that's not enough to assuage your fiduciary guilt, please know that the Internal Revenue Service offers (actually, it demands by law) an option for you to report all of your ill-gotten gains this tax season (which is coming right up on April 15 — www.irs.gov).

There it is, in the tax code: "Income from illegal activities, such as money from dealing illegal drugs, must be included in your income on Form 1040, line 21, or on Schedule C or Schedule C-EZ (Form 1040) if from your self-employment activity."

Reporting your illegal income isn't just for the civic-minded. It's for the stay-out-of-jail-minded, too.

"Of course, there's the old story of Al Capone," says local CPA John Fullerton. "He ended up in prison not because of prostitution, murder or gambling or any of that. He ended up in jail because he didn't file tax returns — or filed fraudulent tax returns."

There are two basic options for Humboldt's underground businessmen and businesswomen: Schedule C (mentioned above) refers to people who report as self-employed. Schedule F is for farmers.

There's no box to check saying whether your income was gathered illegally — it's just expected to be part of your total reported earnings, explains CPA Tom Martin. Years ago, when he was learning tax preparation, Martin was told an anecdote about a scheming gambler who reported his self-employment income as "gaming." Earning illicit money isn't a good idea, Martin says, but not reporting it is just going to compound your problems if you're caught.

Reporting illegal earnings is unlikely to catch the attention of law enforcement. Local agencies don't get to see tax returns, Fullerton said, and the DEA and FBI probably aren't going to be sifting through tax documents to identify potential criminals. But get busted and there's a good chance the feds will pull your returns to see if you reported all your earnings.

"I certainly would not suggest anyone earn money illegally, but if they do [report] they would have one less thing to worry about," Fullerton said.

A Bronx tax preparation office was busted March 21 for allegedly dealing marijuana, according to a New York TV news station. Four people were arrested after drug and tax agents raided 420 Multi Services, Inc. — which had apparently been operating for 10 years. Despite the title, nearby businesses told the station they "never suspected anything."

Print may be dead, but that doesn't mean hard-hitting journalism hasn't just moved to the web. Take, for example, patriotic news blog American Live Wire's recent sterling assessment of the nation-encompassing debate on marijuana, titled "Marijuana legalization has 2 sides." Write on.

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