George Runner

George Runner, member of the California Board of Equalization, is urging the Franchise Tax Board to reverse a controversial staff decision that will seek millions in retroactive taxes from California entrepreneurs and small businesses.

“As an elected official and taxpayer advocate, I cannot remain silent while state tax officials punish California taxpayers who in good faith followed our laws,” Runner said.

The FTB’s staff action was made in response to the Second District Court of Appeal’s decision in Cutler v. Franchise Tax Board that the qualified small business stock exclusion was unconstitutional.

In the past, investors who chose to invest by stock in small California businesses could file for the exclusion. Now that this tax law has been revoked, any money those investors saved between 2008 and 2012 by filing for the stock exclusion will be required in retroactive taxes.

In a letter to the three members of the Franchise Tax Board, Runner calls this action “unwarranted and unfair to taxpayers.”

In his letter, Runner explains that the Second District Court of Appeal’s decision in Cutler v. Franchise Tax Board does not require FTB to take this action. He warns that it “sends entirely the wrong message to investors, entrepreneurs and job creators doing business in our state.”

He later elaborated in an interview that the decision in effect told taxpayers, “You can’t depend on our rules, because we may change them, and if we change them, we’re going to come back and get you later for the rules that you followed.”

Runner joins a growing bi-partisan chorus of California legislators, newspapers and concerned citizens decrying the controversial FTB staff action and calling for its reversal.

To read the FTB December 2012 staff action, click [here]. The text of Runner’s letter is available [here].

Runner encourages those interested in protesting to contact the Franchise Tax Board.

Elected in November 2010, George Runner represents more than nine million Californians as a member of the State Board of Equalization.