During the previous month, around 2,500 investors in small business in California, including certain funded Silicon Valley technology start ups, have gotten an unpleasant surprise with the advent of new investment gains tax bills that go back to the year 2008.
Back in January, you’ve heard about the background story on retroactive taxes, namely the Qualified Small Business Stock Incentive or how the state went back on a certain business tax break as well as their investors, and would now want that cash. However, investors are not doling out the $128 million estimate the state’s seeking to get back without fighting.
One of the partners in Reed Smith LLP, a state tax cluster, Marty Dakessian, stated their firm is currently shaping a coalition in order to repulse the California Franchise Tax Board verdict to put an end to the incentives. It was stated on the coalitions website that the group is dedicated to pursuing both legislative as well as legal methods in preventing the aggression of the FTB.
The California Business Defense, one more advocacy group formed by a few entrepreneurs, is also doing some lobbying on the issue. One of the group’s organizers as well as CEO of AdverseEvents, which is a medical information firm, Brian Overstreet, has said that numerous entrepreneurs have joined in the cause because of tax bills that have reached over $100,000 for each.
Derived from past rulings in similar conditions, Dakessian stated that the FTB can still grant refunds to out-of-state businesses which are categorized against by the incentives, rather than taxing investors in California business.
He further said that it’s vital that people not just be spectators and that there’s a solution.
Apart from a potentially lengthy as well as costly lawsuits brought by the taxpayers against the FTB, the coalition has helped in gathering 38 bipartisan signatures on a letter coming from state lawmakers asking the FTB it make use of its authority in order to reverse the course. It was sent to the FTB on the 19th of February.
Dakessian stated that the action got partially prompted by small business investors calling about getting notices of proposed assessments, i.e. new tax bills, for about $7,000, with additional interest up to $15,000 to $20,000.
Dakessian, who’s based in Southern California, further stated that it’s already happening and that oftentimes it happens to the high-tech industry people as well as entrepreneurs. Likewise, he also said that most of the calls they’re getting come from them.