California has passed AB 1412, which eliminates retroactive taxation on taxpayers who received a benefit under the previous Qualified Small Business Stock Incentives program. The program permitted deferral of income and credits for investments in start ups. In Cutler v. Franchise Tax Board (208 Cal. App.4th 1247 (2012), a California Appeals court struck down the incentive for unconstitutionally discriminating against non-California corporations. The new bill revives the program without the offending provisions.

In response to the Cutler decision, the California Franchise Tax Board had issued a Notice stating their intention to retroactively asses taxpayers who had benefited from the program. Assembly Bill 1412, signed by Governor Jerry Brown on October 4, 2013, repeals the underlying provision, and bars retroactive assessment by the Franchise Tax Board. Taxpayers who have already been assessed and paid have can claim a refund or credit within 180 days of the effective date of the bill.