California legislature considering 3% withholding of fees paid to independent contractors

California legislators are reportedly considering adding language to a state budget bill that would mandate a 3% withholding of fees paid to independent contractors, possibly including fees paid to pool service professionals.

This proposal could be included in a budget bill to be sent to Governor SCHWARZENEGGER within the next week or so as part of the 8th Special Legislative Session currently underway to address California’s budget deficit.

“Such a proposal only robs working capital from law abiding independent contractors and forces people into the underground economy,” said John NORWOOD, SPEC President. “The pool and spa industry, and the service industry in particular, is in a perfect position to mount a campaign to oppose this proposal. Service professionals live and work in every legislative district in California.”

SPEC is requesting that every member of the spa and pool industry, pool service technicians in particular, immediately contact their state Senator or Assembly Member to voice opposition to this ill-conceived proposal.

Below is a sample letter SPEC has prepared for industry professionals that can be personalized and used to fax or e-mail immediately to their legislators in opposition to this proposal. DON’T WAIT – send it now! SPEC members can determine the Senator and Assembly Member(s) representing their district by visiting http://www.leginfo.ca.gov/yourleg.html, and entering the zip code of your place of business or residence. From there, you will be presented with the link to each legislator’s website, where you can either cut and paste the personalized sample letter and e-mail, or obtain the fax or mailing address.

The California Chamber of Commerce, along with some 100 associations and organizations, is implementing an all out campaign to oppose this flawed idea and the pool and spa industry must have their voice heard as well.

“This is an extremely important issue that SPEC members need to take seriously. A budget fix bill must be sent to the Governor within the next couple of weeks. If we jump on this issue now we can likely stop such a proposal from being considered this year,” NORWOOD concluded.

                                                                                                                                          [DATE]
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, effectively providing interest-free loans to the state. Even if we, as independent contractor, owes no state taxes, 3% would still be withheld, affecting our cash flow and impacting our business.

In an already difficult time for many businesses, including the hard hit swimming pool and spa industry of which I am a member, this proposal adds one more burden that could push us over the edge.

I believe this proposal is unreasonable and should be rejected by the Legislature. I would appreciate hearing from you at your earliest convenience as to your position on this ill-conceived proposal.

Sincerely,


Press release from www.calspec.org