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Small businesses in California fight retroactive tax

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    William La Jeunesse reports from Los Angeles

  • Duration 2:18
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-- anger boiling over in the state of California State officials hit hundreds of small businesses.

With the retroactive tax increase.

After the tax authority decided anyone who profited from selling a startup company.

And the past five years needs to cough up more money.

We'd like to NASA's live in LA to sort through this with -- now -- -- good morning.

A -- government needs money sometimes it seems there are no limits to what it will do in Cyprus it means taking money out of your bank account arbitrarily in California it means you follow law.

Only to have the state changed the rules then the -- back taxes interest and penalties for five years.

This notice is the first they heard that to Brian over street it felt like a punch in the gut compliments of California.

A six figure bill for back taxes.

That's what's most -- -- about this whole situations it's not only a five -- look back.

It's including interest on money you had no idea you even out.

Over street and hundreds like him recently got a letter from the state.

Telling him due -- a court ruling a 50% tax break for small business and start up investors was no longer available.

And anyone who claimed it in the last five years.

Had to pay up retro activity is -- is an issue of fairness and credibility for California -- California's tax leaders say what the state is doing is unfair.

Overreacting and over reaching hoping to claw back some 120 million dollars for cash strapped California the problem right now we have -- what's the revenue was identified.

Those folks up in Sacramento we'll figure out how to spend it already pro business lawmakers are trying to rescind the latter.

Fearing high tech investors who helped build the State's venture capital economy.

Willfully to lower tax states.

The game is -- you can't possibly win because we have the right to change the rules and you after the fact.

And and that's what's not fair.

And some lawmakers now agree and have convinced the taxman to offer -- temporary reprieve while Sacramento tries to work out a solution.

But if it wasn't for these concerned effort.

Bill by these guys to unwind the decision.

They would have been penalized.

For the states mistake back to you.

-- California.

You -- that -- their way him good luck with you later thank you.

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