In re: Feinberg

Petitioners Neil and Andrea Feinberg and Kelly McDonald run Total Health Concepts (THC), a Colorado marijuana dispensary. Colorado has legalized the sale of marijuana, but this permissible use runs in defiance of federal criminal law. Officials at the IRS have refused to recognize business expense deductions claimed by companies like THC on the ground that their conduct violates federal criminal drug laws. Petitioners have challenged the IRS’s policy after the agency disallowed their business expense deductions. Among other things, petitioners argued that the agency lacked authority to determine whether THC trafficked in an unlawful substance and, as a result, they suggested that their deductions should have been allowed like those of any other business. As the litigation progressed, the IRS issued discovery requests asking the petitioners about the nature of their business. Petitioners resisted these requests, asserting that their Fifth Amendment privilege against self-incrimination relieved them of the duty to respond. The IRS responded to petitioners’ invocation of the Fifth Amendment by moving to compel production of the discovery it sought. Ultimately, the tax court sided with the IRS and ordered petitioners to produce the discovery the agency demanded. Because the tax court proceedings were still ongoing and no final order existed that would give the Tenth Circuit jurisdiction over this appeal, petitioners sought a writ of mandamus. The Tenth Circuit concluded after review that petitioners did not carry their burden for mandamus relief, and denied their petition. View "In re: Feinberg" on Justia Law