Taxes

California Mugs Small Businesses of Legally Earned Tax Breaks

A court ruled against the program, so the state demands cash from companies that followed the rules

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Small business owners in California who were promised big tax breaks by the state government are now being ordered to pay possibly thousands in back taxes after a court ruling last year.

CBS Sacramento reports the state promised the tax breaks for opening certain kinds of businesses five years ago, but a court ruled the practice unconstitutional in December.

Now, the California Franchise Tax Board wants their money. The station reports an estimated 2,000 small businesses will be forced to pay up their retroactive taxes, totaling as much as $120 million. Some businesses will face a bill of as much as $200,000.