Following up on yesterday's post
, which noted, based on an article
in yesterday's Wall Street Journal (and an IRS Publication
and MSNBC article
), that folks living in states that have legalized medical marijuana cannot use their health care flexible spending accounts to purchase the marijuana with pre-tax dollars because marijuana is still illegal under federal law. But reader Roger E. McEowen
(Leonard Dolezal Professor in Agricultural Law and Director of the Center for Agricultural Law and Taxation, Iowa State University) notes
that the IRS last month released a letter to Sen. Chuck Schumer (Info. 2010-0080
) sanctioning the treatment of an "herb" as a medical expense:
I am responding to your letter, dated March 3, 2010, on behalf of your constituent, _____, [who] asked whether the cost of an herb prescribed by her doctor to treat migraine headaches qualifies as a medical care expense for purposes of her health care flexible spending account. ...
The cost of an herb may be an expense for medical care if the taxpayer can substantiate that he or she:
- Has a medical condition (disease, illness or injury);
- Is purchasing the herb to treat or alleviate the medical condition;
- And would not have purchased the herb “but for” the medical condition.
Update #2: Rev. Rul. 97-9, 1997-1 CB 77, specifically precludes a medical expense deduction for medical marijuana:
An amount paid to obtain a controlled substance (such as marijuana) for medical purposes, in violation of federal law, is not a deductible expense for medical care under § 213. This holding applies even if the state law requires a prescription of a physician to obtain and use the controlled substance and the taxpayer obtains a prescription.
So the IRS in Info. 2010-0080 either was (1) signalling a retreat from its position in Rev. Rul. 97-9 by not mentioning the federal legality of the substance; (2) implicitly referring only to legal herbs (and hence not covering marijuana).
Update #3: I am told by an enterprising reporter that the herb in question in Info. 2010-0080 is Petadolex, so it appears that interpretation #2 above controls and the conclusion in Rev. Rul. 97-9 denying a medical expense deduction for medicial marijuana still obtains.