Approved 2001 Minutes - Wednesday, February 14, 2001
Wednesday February 14, 2001
The Board met at its offices at 450 N Street, Sacramento, at 10:35 a.m. with Chairman Parrish, Vice Chairman Chiang, Mr. Klehs, and Mr. Andal present, Ms. Mandel present on behalf of Dr. Connell in accordance with Government Code Section 7.9.
TAXPAYER BILL OF RIGHTS REIMBURSEMENT CLAIM HEARING
George & Donna Archer, TBR 00-004-F; 61409
1989, $41,543.75 Claim for Reimbursement
| For Claimant: | Eric J. Coffill, Partner |
| For Property Tax Department: | Terry Collins, Supervising
Tax Counsel Jozel Brunett, Tax Counsel |
Contribution Disclosures pursuant to Government Code section 15626: No contributions were disclosed.
Issues: Whether respondent’s actions taken in the underlying appeal were "unreasonable".
If respondent’s actions are found to have been unreasonable, what is the appropriate hourly rate for reimbursement of attorney fees under Revenue and Taxation Code Section 21013.
Action: Upon motion of Mr. Klehs, seconded by Mr. Andal and unanimously carried, Mr. Parrish, Mr. Chiang, Mr. Klehs, Mr. Andal and Ms. Mandel voting yes, the Board ordered that the Claim for Reimbursement be denied.
CORPORATE FRANCHISE AND PERSONAL INCOME TAX APPEALS HEARINGS
Jeff & Elaine Thomson, 76295
1992, $1.00 or more Assessment
| For Appellant: | Jeff Thomson Jeff Curcio, Attorney |
| For Franchise Tax Board: | Kathleen Cooke, Tax Counsel Jozel Brunett, Tax Counsel |
Contribution Disclosures pursuant to Government Code Section 15626: No contributions were disclosed.
Issue: Whether appellants have shown that respondent improperly denied appellants’s request to abate interest.
Action: Mr. Andal moved to deny the petition, direct the staff to assist the appellant in filing a Board of Control Claim and encouraged the Franchise Tax Board to write a letter in support of the Claim. The motion was seconded by Mr. Parrish but failed to carry, Mr. Parrish and Mr. Andal voting yes, Mr. Chiang and Mr. Klehs voting no, Ms. Mandel not participating.
Mr. Klehs made a substitute motion that the appeal be submitted for decision. The motion was seconded by Mr. Andal and unanimously carried, Mr. Parrish, Mr. Chiang, Mr. Klehs, Mr. Andal and Ms. Mandel voting yes.
Peter K. & Mimi Buckley, 99A-0204; 89002467370
1992, $823,509.00 Assessment
1994, $ 77,882.00 Assessment
| For Appellant: | James P. Kleier, Representative |
| For Franchise Tax Board: | Richard Gould, Tax Counsel |
Contribution Disclosures pursuant to Government Code Section 15626: No contributions were disclosed.
Issue: Whether appellants have shown that they can increase their basis in corporate stock gains recognized upon transfer of partnership assets to the corporation, and taxed by a foreign country, while appellants were not California residents.
Action: Upon motion of Mr. Klehs, seconded by Ms. Mandel and unanimously carried, Mr. Parrish, Mr. Chiang, Mr. Klehs, Mr. Andal and Ms. Mandel voting yes, the Board ordered that the appeal be submitted for decision.
Mazen M. & Haifa Mardini, 98A-0730; 89002465510
1991, $15,157.00 Assessment, $6,275.65 Penalty, Accuracy-related
1992, $26,873.00 Assessment, $5,374.60 Penalty, Accuracy-related
1993, $17,569.00 Assessment, $3,513.80 Penalty, Accuracy-related
1994, $ 9,914.00 Assessment, $1,982.80 Penalty, Accuracy-related
| For Appellant: | Mazen M. Mardini, M.D. Haifa Mardini |
| For Franchise Tax Board: | Renel Sapiandante, Tax Counsel |
Contribution Disclosures pursuant to Government Code Section 15626: No contributions were disclosed.
Issues: Whether appellant has substantiated his entitlement to business deductions related to overseas farming and printing businesses that he had claimed for the appeal years.
Whether appellant has established that he "materially participated" in those overseas farming and printing businesses during the appeal years.
Whether appellant has established reasonable cause to abate the accuracy-related penalties imposed for the appeal years.
Appellant’s Exhibit: Declaration by Mazen Al-Baroudi (Exhibit 2.1)
Respondent’s Exhibit: Regulations 1.469-11 (C)(3) (Exhibit 2.2)
Action: Upon motion of Mr. Andal, seconded by Mr. Klehs and unanimously carried, Mr. Parrish, Mr. Chiang, Mr. Klehs, Mr. Andal and Ms. Mandel voting yes, the Board ordered that the accuracy related penalty be deleted as recommended by the Appeals Section.
Upon motion of Mr. Klehs, seconded by Mr. Andal and unanimously carried, Mr. Parrish, Mr. Chiang, Mr. Klehs, Mr. Andal and Ms. Mandel voting yes, the Board ordered that with regards to issue 1 the petition be granted.
Upon motion of Mr. Andal, seconded by Mr. Klehs and unanimously carried, Mr. Parrish, Mr. Chiang, Mr. Klehs, Mr. Andal and Ms. Mandel voting yes, the Board ordered that with regards to issue 2, the farming and printing business be combined for purposes of determining whether taxpayers materially participated in the activities.
Upon motion of Mr. Klehs, seconded by Mr. Andal and unanimously carried, Mr. Parrish, Mr. Chiang, Mr. Klehs, Mr. Andal and Ms. Mandel voting yes, the Board ordered that the remainder of the appeal be submitted for decision.
Exhibits to these Minutes are incorporated by reference.
McKittrick Ranch, 98A-0954; 89002464250
1986, $192,880.00
| For Appellant: | No Appearance |
| For Franchise Tax Board: | Ann Hodges, Tax Counsel |
Action: The Board took no action.
CDA Cable, Inc., 27319
1985, $73,031.00 Assessment
1988, $43,369.00 Assessment
1989, $ 737.00 Assessment
1990, $30,141.00 Assessment, $16,692.00 Claim for Refund
1991, $23,267.00 Assessment, $23,509.00 Claim for Refund
1992, $18,099.00 Assessment, $15,293.00 Claim for Refund
1993, $12,191.63 Assessment, $13,891.00 Claim for Refund
| For Appellant: | No Appearance |
| For Franchise Tax Board: | Jon Jensen, Tax Counsel |
Action: The Board took no action.
Shakey’s International, Ltd. 99R-0312; 89002469240
1986, $ 28,612.00 Claim for Refund
1987, $198,571.00 Claim for Refund
| For Appellant: | No Appearance |
| For Franchise Tax Board: | Jon Jensen, Tax Counsel |
Action: The Board took no action.
FINAL ACTION ON APPEALS HEARD FEBRUARY 14, 2001
Upon motion of Mr. Andal, seconded by Mr. Klehs and unanimously carried, Mr. Parrish, Mr. Chiang, Mr. Klehs, Mr. Andal and Ms. Mandel voting yes, the Board ordered that the appeal of Peter K. & Mimi Buckley, 99A-0204; 89002467370, be denied.
The Board recessed at 12:05 p.m. and reconvened at 1:40 p.m. with Mr. Parrish, Mr. Chiang and Dr. Connell present. Ms. Jean Alexander was present and observing on behalf of Mr. Klehs.
PUBLIC HEARINGS
PROPERTY TAXES, STATE ASSESSEE PRESENTATIONS ON CAPITALIZATION RATES & OTHER FACTORS AFFECTING VALUES
Mr. Peter Michaels, Cooper, White & Cooper, made a presentation to the Board for various assessees.
Dr. Connell left the Boardroom. Ms. Mandel entered the Boardroom on behalf of Dr. Connell in accordance with Government Code Section 7.9.
PROPOSED AMENDMENTS TO SALES AND USE TAX REGULATION 1705, RELIEF FROM LIABILITY
Mr. Parrish announced the public hearing of Sales and Use Tax Regulation 1705, Relief from Liability.
Janice Thurston, Assistant Chief Counsel, Business Taxes, reported Regulation 1705, is proposed to be amended to interpret, implement and make specific Revenue and Taxation Code section 6596. Amendments are proposed to provide that an agreement between the Board and qualified taxpayers executed under defined conditions so that the taxpayer may report use tax liability based upon a validated percentage for purchases subject to use tax from out-of state vendors not engaged in business in this State, constitutes a written communication within the meaning of 6596.
Speakers: Speakers were invited to address the Board, but there were none.
Action: Upon motion of Ms. Mandel, seconded by Mr. Chiang and unanimously carried, Mr. Parrish, Mr. Chiang and Ms. Mandel voting yes, Mr. Klehs and Mr. Andal absent, the Board adopted the amendments to Regulation 1705, Relief from Liability, as published (Exhibit 2.3).
PROPOSED AMENDMENTS TO REGULATIONS 4018 – 4095, CIGARETTE AND TOBACCO PRODUCTS TAX LAW
Mr. Parrish announced the public hearing of Cigarette and Tobacco Products Tax Law.
Janice Thurston, Assistant Chief Counsel, Business Tax Section, reported the Board is proposing to amend twenty-three current regulations, adopt two new regulations, and delete four existing regulations to clarify the application of the Cigarette and Tobacco Products Tax Law by (1) adding necessary references to tobacco products, (2) updating the regulations to reflect statutory changes and Board and Industry practice; (3) adding records and relief from liability regulations consistent with Sales and Use Tax regulations; and (4) making other changes for clarity and consistency.
Speakers: Speakers were invited to address the Board, but there were none.
Action: Upon motion of Ms. Mandel, seconded by Mr. Chiang and unanimously carried, Mr. Parrish, Mr. Chiang and Ms. Mandel voting yes, Mr. Klehs and Mr. Andal absent, the Board adopted the amendments to Regulations 4018-4092, Cigarette and Tobacco Products Tax Law, as published (Exhibit 2.4).
PROPOSED AMENDMENTS TO REGULATIONS 5020-5091, RULES OF PRACTICE
Mr. Parrish announced the public hearing of the Rules of Practice.
Jean Ogrod, Assistant Chief Counsel, Administration and Settlement Section, reported the proposed amendments to the Rules of Practice will: (1) add the new Ballast Water Management Fee and Natural Gas Surcharge and delete the Hazardous Spill Prevention Fee, (2) add the Timber Yield Tax and the Private Railroad Car Tax to the Taxpayers’ Bill of Rights provision; (3) provide guidance regarding the appeals conference procedures; (4) revise certain procedures to reflect statutory changes and Board practices; and (5) make other changes for clarity and consistency.
Speakers: Gabriel Bolton, Field Representative, CASE
Rosmaire Duffy, Senior Labor Representative, CSEA
Action: Upon motion of Mr. Chiang, seconded by Mr. Parrish and unanimously carried, Mr. Parrish, Mr. Chiang and Ms. Mandel voting yes, Mr. Klehs and Mr. Andal absent, the Board approved further changes to the published version of Regulations 5020-5091 Rules of Practice, and ordered that the changed version be placed in the rulemaking file for 15 days. A copy of the changed version is incorporated in these minutes by reference (Exhibit 2.5).
BUSINESS TAXES APPEALS HEARINGS
FAST N EASY, INC., SY KH 28-838860; 89000770840
10-1-94 to 12-31-97, $33,470.48 Tax
| For Petitioner: | No Appearance |
| For Sales and Use Tax Department: | Warren Astleford, Counsel |
Action: The Board took no action.
Krupakar T. Reddy, Vanitha Buddam & Reddy J. Buddham
SR GH 97-111129; 89002058680; 16241
Bushan Reddy Baddam, Krupakar T. Reddy & Reddy J. Buddham
SR GH 97-111149; 89002058690, -700
Krippakar T. Reddy & Reddy J. Buddham
SR CH 99-207408; 89002147880, -890
7-1-93 to 6-30-97, $216,547.36 Tax, $21,654.84 Penalty, Negligence
| For Petitioner: | No Appearance |
| For Sales and Use Tax Department: | Kevin Hanks, Hearing Representative |
Action: The Board took no action.
Charter Aviation, SU KHD 99-961280; 89002448190
1-1-89 to 6-30-96, $34,082.03 Tax, $00.00 Penalty, Failure to File
| For Petitioner: | Bill Charter, President Kevin Charter, Secretary |
| For Sales and Use Tax Department: | Jeffery Graybill, Counsel |
Contribution Disclosures pursuant to Government Code Section 15626: No contributions were disclosed.
Issues: Whether turbine engines purchased and installed outside California were purchased for use out of state such that petitioner’s use of the engines in this state is not subject to use tax.
Whether petitioner’s use of the aircraft in the performance of a government contract on a part-time basis for fire watching qualifies for an exemption from the tax.
Mr. Klehs entered the Boardroom.
Action: Mr. Parrish moved to redetermine taxable measures. The motion failed for lack of a second.
Upon motion of Mr. Parrish, seconded by Mr. Klehs and unanimously carried, Mr. Parrish, Mr. Chiang, Mr. Klehs and Ms. Mandel voting yes, Mr. Andal absent, the Board ordered that the petition be submitted for decision.
The Board adjourned at 2:50 p.m.
The foregoing minutes are adopted by the Board on April 19, 2001.