Small Business Tax Inequity/ Scam on California Businesses

A few weeks ago I indicated that Small Business California was offering a new benefit to our members that being where appropriate sending their concerns and comments to state lawmakers. One of our new members took advantage of this and sent me a letter to the Governor requesting that he look into a tax inequity whereby large material suppliers/contractor pay a different tax on projects to the state than small construction contractors like his. On one job alone where he was the successful bidder his taxes on the project was $21525 and the taxes on the same project by a large material supplier/ contactor was $10700.
It is estimated that if this loophole was closed the state would save hundreds of millions of dollars and small businesses like his would have a level playing field
Small Business California sent a copy of the letter to two representatives of the Governor, Senator Steinberg’s office and Speaker Bass’s office. Barbara Kaufman in the Governor’s office in SF hand delivered the letter to Betty Yee the Chairwoman of the State Board of Equalization.
We of course are going to pursue this. While we may not be as successful with other letters we receive we offer to our members this benefit. If you are not a member please consider joining You can do so by going to our website at www.smallbusinesscalifornia.org
.The author of the letter Skip Brown of Delta Construction has authorized us to send this letter to others so if you would like a copy please let me know

See below information sent by Senator Benoit about a scam on California small businesses

Benoit Special Alert: New Scam Targeting California Businesses
Example Of A Scam Letter Sent
I have just become aware of a new scam directed at corporations and limited liability companies in California. This scheme, which has also been reported in Nebraska and Colorado, purports that certain documents must be filed with the Secretary of State’s office and only through the third party sending the solicitation.
I sought verification of this new pattern of criminal activity and found that, just last Friday, the Attorney General won a $1.2 million ruling against these rip-off artists – this is a massive scam that everybody should keep an eye out for.
The rip-off revolves around a deceptive letter sent by that third party, encouraging these businesses to comply with their California Corporations Code filing obligations by submitting substantial fees and documents to that third party.
The letter is often characterized by the following:
· Appears similar to a Secretary of State form (generally the Statement of Information form), containing an official-looking seal
· Implies that failing to return the form and pay the requested fee may place the business in legal jeopardy, or might cause the business’ filings with the California Secretary of State to be in default or noncompliant status
· Contains a reference to a “file number,” “Corp Number,” “Corporation Number,” or “Control Number” that does not match the number assigned to the entity by the California Secretary of State
· References or quotes Corporations Code sections inapplicable to the type of entity being solicited, such as Code sections applicable to corporations when soliciting a limited liability company
· References an “annual fee” or “annual payment” rather than a filing fee and that is far in excess of the filing fee for a Statement of Information
· Indicates the submitted information will be treated as private and confidential
Businesses are working around the clock to keep customers satisfied and their doors open. With intimidating official-looking letters, it’s not hard to see why many businesses have fallen prey to this type of ruse.

Here is some official information for any business receiving one of these letters: Statement of Information forms and instructions are available through the Secretary of State’s website here, and the fee required to file the statement is $25 for California stock and foreign corporations, and $20 for California nonprofit corporations and all limited liability companies.
If you receive one of these suspicious solicitations, you are encouraged to contact the Attorney General at the California Department of Justice, Public Inquiry Unit, P.O. Box 944255 (Sacramento 94244) or through the website here. You can also reach the Public Inquiry Unit, toll-free, at (800) 952-5225 or (916) 322-3360.
In this time of economic despair, it’s essential to be vigilant against the latest efforts of swindlers to make a quick dishonest buck. I hope this information will help avoid creating additional victims of this scam.
JOHN J. BENOITSenator, 37th Senate District
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Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA 94116
shauge@cal-insure.com
415-680-2188