Legislation that would rescind a retroactive state tax on business owners passed its first test Wednesday in Sacramento.
The state Senate Governance and Finance Committee voted 6-1 to approve SB 209, which would reverse a Franchise Tax Board ruling that affects up to 2,500 business owners.
The owners claimed a tax exemption for the sale of small businesses within the past five years. Late last year the tax board retroactively ended the exemption after losing an appellate court lawsuit.
As a result, the owners could owe up to $150 million in taxes and interest.
Healdsburg business owner Brian Overstreet has helped lead a statewide coalition of business owners who say it is unfair to retroactively tax them for following what was then the law.
"It was a long exhausting day but the outcome was a good one," said Overstreet, CEO of AdverseEvents. He testified Wednesday before the committee.
The bill, authored by state Sen. Ted Lieu, D-Torrance, next will be heard by the Senate Appropriations Committee.