February 5, 2013 > Wieckowski opposes Franchise Tax Board decision
Wieckowski opposes Franchise Tax Board decision
Assemblyman Bob Wieckowski (D-Fremont) announced his opposition on February 1, 2013 to a Franchise Tax Board staff decision to retroactively deny benefits dating back to 2008 for Qualified Small Business (QSB) tax exclusions. The FTBÕs decision will burden some California entrepreneurs and start-up investors with huge retroactive tax bills.
The FTB issued its notice on December 21, 2012 after the Second District Court of Appeal reversed a trial courtÕs decision and found the QSB exclusion violated the U.S. ConstitutionÕs commerce clause.
The exclusion was passed by the Legislature in 1999 to encourage venture capital-investment in small businesses. It allowed investors in small businesses (under $50M in gross assets and with 80 percent of their payroll costs and assets in California) to exclude 50 percent of the stateÕs capital gains tax on the sale of their stocks.
ÒI 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,Ó Wieckowski said. ÒThe Legislature acted years ago years ago to put these incentives in place. To come back now and retroactively seek taxes all the way back to 2008 is pretty draconian.Ó
Wieckowski is working with the Bay Area Council to stop the FTBÕs decision penalizing CaliforniaÕs start-up companies. Other legislators and business advocates are also seeking to reverse the FTBÕs notice.
ÒWe should explore all options and search for a better solution,Ó he said. ÒAccess to venture capital is critical for our state and my district. ÒWe are leaders in innovation and venture capital investment but if this is allowed to stand it will strip away any certainty investors and small business owners possess.Ó
Wieckowski, who represents the 25th Assembly District, which includes San Jose, Santa Clara, Fremont, Milpitas and Newark, introduced a ÒMade in CaliforniaÓ legislative agenda in his first term. He is focused on job creation by streamlining a clean technology program to enable grants to reach businesses more quickly, eliminating burdensome regulations, working to increase job hiring credits and protecting local businesses from deceptive advertising by larger national firms.