SACRAMENTO—Business owners who have fled California often say their decision to leave wasn’t just about tax rates, but about the punitive attitudes sometimes found among tax and regulatory authorities here. A new wrinkle in a high-profile, 22-year-old tax case gives fodder to those who make such claims.
In 1970, a young Southern California electrical engineer and inventor named Gilbert Hyatt filed a patent application for an innovative microprocessor chip. That was a year before Intel patented its chip, which led to the personal-computer revolution.
Twenty years later, after a complex legal battle over the origins of that technology, the U.S. patent office awarded Hyatt the patent for a microprocessor — a shocking and still controversial decision (that was later partially overturned) that would provide Hyatt with a multimillion-dollar windfall. He moved to Las Vegas, where he said he was a full-time resident before he received the earnings.
California’s Franchise Tax Board (FTB) saw a newspaper article congratulating Hyatt for his patent and decided to seek $7.4 million in back taxes, claiming that he was still a resident of California when the money came in. That sounds like a simple enough dispute that could quickly be resolved, but what followed has been an ordeal that has consumed a good bit of Hyatt’s adult life.
On Friday, Hyatt, now 76, filed a federal lawsuit accusing the state of violating his constitutional rights in pursuit of a sum that now tops $55 million as interest and penalties have accrued. He’s asking for an injunction forbidding the state from pursing its claim any further. After all these years and legal expenses, he just wants California to leave him alone already.
Reason.Com has the rest of the story is HERE: http://reason.com/archives/2014/04/11/this-is-how-california-harasses-entrepre
This kind of action by the FTB makes the ERC’s job to create jobs more challenging.