Hi - as the author of the article, I don't think I was misleading, nor do I think I misunderstand the issues. The FTB has a number of options and tools at its disposal to craft an alternative to this "nuclear option". They could have changed the rule going-forward and allowed post 2008 QSB exclusions under revised terms. Yes, that may have cost them some $$$, but probably not as much as you think, and certainly not as much as they will now collect. Maybe this was the easiest remedy for them in the short term, but the remedy they've inacted will have significant long term negative implications. -Brian
This is entirely wrong. North Carolina and later Pennsylvania were nailed years ago for similarly unconstitutional schemes favoring in-state companies and had to similarly solve them with retroactive taxes on their own citizens. The only options acceptable to the feds when a state is found to have systematically screwed over the citizens of the other 49 states like this are retroactive correction in one direction or the other - there is no option to stop doing it now and keep the ill-gotten gains from the past.
From the law:
(1) The term "qualified small business" means any domestic
corporation (as defined in Section 7701(a)(4) of the Internal Revenue
Code) which is a C corporation if all of the following apply:
Because the act explicitly qualifies that the exemption applies only if ALL conditions are met there is no question of legislative intent or judicial remedy that could be applied. There is no possibility of "revised terms" because that would mean essentially rewriting the statute to make some conditions
optional, which was not the intent of the law.
Thus the entire statute(18152.5) is unworkable as explained by the FTB:
allowed post 2008 QSB exclusions under revised terms.
I'm not at all sure that the FTB has the authority to do that. It's a statute that was struck down, not an agency rule. If the CA legislature wants to make it up to everyone, it could craft some legislation to that effect, but I don't see how the FTB is empowered to start issuing checks on its own authority.
While you seem to imply that the FTB could simply change the rules, everyone else on this thread seems to think the FTB is not able to alter the rules at all (as that would require the legislative authority they do not have). Are you sure the FTB has the power you ascribe?
In the original article, he didn't even mention the amount of tax breaks given by the code thus far.
I doubt the purpose of the article is to inform, as much as it is to tell you that you should be outraged about something anti-entrepreneurial done by California.
