Monday, February 08, 2010

Insurance Industry IK Withholding Letter

Thank you to all that responded saying you would send a letter of opposition to the 3% withholding for independent contractors. Please see sample letter below.

I think the easiest way for you to send is to go to
Click on legislator and put in your zip code. Go to your Senator and Assemblypersons site. Click on legislators contact site. It will ask you for personal information but in the comments say you are a small business owner and give the name of your company and why you oppose. Feel free to change the letter below anyway that works for you.

If you are a business group and would like to sign an opposition letter please let me know. I have 12 associations so far that will be signing letter

Dear Assembly Member / Senator _____:

I am a small business owner in your district. My company, _____, employs ____ persons. We have been in business in ______ since ____.

I am writing to oppose the independent contractor withholding proposal. This is another budget gimmick that does not generate more revenue to the State of California. Instead, it merely accelerates monies that will already be paid to the State and imposes an onerous burden upon small businesses like my company.

Under this proposal, businesses in this state would be required to collect taxes from other businesses and we would serve as a collection agent for the State. The new expense of withholding and remitting these monies to the Franchise Tax Board would be a cost borne by small businesses like my company. Moreover, small businesses would effectively be providing interest-free loans to the state. Even if an independent contractor owes no state taxes, 3% will still be withheld, affecting our cash flow and impacting our business.

I believe this proposal is unreasonable and should be rejected by the Legislature. I would appreciate hearing from you at your earliest convenience whether you will oppose this harmful idea.


We now have 956 people responding to our survey. If you haven’t completed please do so within the next week. As always forward to others and if you are an association please send to members. It would really be great even if you have sent to send one more time.

Scott Hauge
Small Business California
2311 Taraval Street
San Francisco, CA 94116

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