Abstract

http://ssrn.com/abstract=2339333
 


 



A Response to Professor Leff’s Tax Planning 'Olive Branch' for Marijuana Dealers


Philip T. Hackney


Louisiana State University Law Center

October 6, 2013

Iowa Law Review Bulletin, Vol. 99, 2014

Abstract:     
Professor Benjamin Leff argues in a forthcoming article entitled Tax Planning for Marijuana Dealers that a tax-exempt social welfare organization described in Internal Revenue Code section 501(c)(4) may sell medical marijuana without putting its exempt status in jeopardy. He argues that (1) the “public policy” doctrine applicable to charitable organizations under section 501(c)(3) does not apply to social welfare organizations, and (2) a social welfare organization may consider “community” law and ignore federal law in considering whether its activity meets the idea of social welfare. I argue that Leff is wrong and that the public policy doctrine applicable to charitable organizations applies to social welfare organizations equally. Tax-exempt organizations derive exempt status primarily by supplying significant public benefits. Violating federal, state or local law causes public harm; thus, any tax-exempt organization, including a social welfare organization, may not violate established public policy as a substantial purpose. Additionally, the “community” requirement for social welfare organizations is to ensure the organization is dedicated to a public purpose rather than a private one. Violating any law, including federal, is more likely to ensure an organization is operating for a private rather than public purpose. Contrary to Leff’s claim therefore, this article argues that a social welfare organization may not sell medical marijuana and maintain its exempt status.

Number of Pages in PDF File: 13

Keywords: section 501(c)(3), section 501(c)(4), social welfare, social welfare organization, charitable organization, marijuana, public policy doctrine, illegality doctrine, Bob Jones University v. Commissioner, charitable trust, tax exempt organization

JEL Classification: K34, L3, L31

Accepted Paper Series





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Date posted: October 13, 2013 ; Last revised: March 25, 2014

Suggested Citation

Hackney, Philip T., A Response to Professor Leff’s Tax Planning 'Olive Branch' for Marijuana Dealers (October 6, 2013). Iowa Law Review Bulletin, Vol. 99, 2014. Available at SSRN: http://ssrn.com/abstract=2339333

Contact Information

Philip T. Hackney (Contact Author)
Louisiana State University Law Center ( email )
Baton Rouge, LA
United States
2255782148 (Phone)
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