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State to refund deposits to firms

Posted: April 9, 2014 2:00 a.m.
Updated: April 9, 2014 2:00 a.m.
 

Santa Clarita businesses are set to receive more than $50,000 in refunds from the California State Board of Equalization.

Until now, new companies were required to pay the state agency $2,000 to $50,000, as security, before they could begin selling.

The purpose of the security was to cover taxable sales the state might have lost if the business defaulted during its first three years of operation.

Of the more than 5,000 businesses statewide that are receiving the security deposit refunds, 18 of them are located in Santa Clarita.

State board member, George Runner, referred to the desposit as a “California-style shake down” of businesses.

“Rather than encourage new business start-ups, the government robbed them of the capital they needed to be successful, only to sit on it for three years before returning it,” Runner said.

Runner said he took a close look at the program and didn’t it made sense overall. The security deposit was rarely applied, and the program diverted staff away from assignments that could yield real revenue for the state. He urged the other BOE members revoke the policy.

Going forward, the board will require security only when a business has a history of non-payment or poses a high compliance risk, he said.

To date, after the December vote to stop the practice, nearly 10,000 companies with a total security of $95.4 million in security deposits have been identified as eligible for release.

For those companies that made cash payments, refunds will be begin to be mailed out this month.

“If we want jobs and revenue, the best way to bring it about is by helping business owners be successful in our state,” Runner said.

 

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