After Tax Break is Tossed, CA Squeezes Businesses For Years of Retroactive Taxes

Surprise! We changed the rules!

SACRAMENTO — For almost two decades, California has provided a hefty tax break for residents owning shares of small businesses that keep most of their workers and assets in the state.

Not anymore. A court has thrown out the incentive, and now, to the frustration and anger of about 2,000 taxpayers, the state tax collector wants the money back, plus interest.

The Franchise Tax Board is going after four years' worth of these tax breaks. It recalculated the back taxes of people who benefited and mailed out a holiday surprise.