Sacramento – Assemblymember Bob Wieckowski (D-Fremont) has announced his opposition to a Franchise Tax Board staff decision to retroactively deny benefits dating back to 2008 for Qualified Small Business (QSB) tax exclusions. The FTB's decision will stick some California entrepreneurs and start-up investors with huge retroactive tax bills.
The FTB issued its notice on Dec. 21, 2012 after the Second District Court of Appeal reversed a trial court's decision and found that the QSB exclusion violated the U.S. Constitution's commerce clause.
The exclusion was passed by the Legislature in 1999 to spark venture capital investment into small businesses. It allowed investors in small businesses (under $50 million in gross assets and with 80 percent of their payroll costs and assets in California) to exclude 50 percent of the state's capital gains tax on the sale of their stocks.
"I was stunned by this decision because it sends the wrong message to the early investors and entrepreneurs who built companies and hired workers here in California," Wieckowski said. "The Legislature years ago acted to put these incentives in place. To come back now and retroactively seek taxes all the way back to 2008 is pretty draconian."
Wieckowski is working with the Bay Area Council to stop the FTB's decision penalizing California's start-up companies. Other legislators and business advocates are also seeking to reverse the FTB's notice.
"We should explore all options and search for a better solution," he said. "Access to venture capital is critical for our state and my district. "We are number one in innovation and venture capital, but if this is allowed to stand it will strip away any certainty investors and small business owners possess."
Wieckowski introduced a "Made in California" legislative agenda in his first term. He's focused on job creation by streamlining a clean technology program to get grants out to businesses more quickly, eliminating burdensome regulations, working to increase job hiring credits, and protecting local businesses from deceptive advertising by larger national firms.
He represents the 25th Assembly District, which includes San Jose, Santa Clara, Fremont, Milpitas and Newark.
CONTACT: Jeff Barbosa, 916-319-2025