About 2,000 small business owners and investors in the Golden State who lawfully took a tax break that was later struck down have the taxman knocking at their doors. Following a state appeals court decision invalidating a 20-year-old state tax, the Los Angeles Times reports, California tax collectors are trying to get $120 million from people who profited by selling stakes in small businesses. The paper’s Marc Lifsher writes:

The Franchise Tax Board is going after four years’ worth of these tax breaks. It recalculated the back taxes of people who benefited and mailed out a holiday surprise.

“It’s a surreal situation,” said Brian Overstreet of Healdsburg in the Sonoma County wine country. He said investors learned they owed taxes only in late December when the board sent out letters telling them the so-called qualified small-business capital gains tax incentive had been deemed unconstitutional.

“California is not a banana republic,” said one critic, state Sen. Ted Lieu (D-Torrance). “California government should not punish innocent, law-abiding taxpayers retroactively just because it may have the power to do so.”

Read more at Bloomberg