Approved 2001 Minutes - Tuesday May 8, 2001

The Board met at its offices at 5901 Green Valley Circle, Culver City, at 9:00 a.m. with Chairman Parrish, Mr. Chiang and Mr. Klehs present and Ms. Mandel present on behalf of Dr. Connell in accordance with Government Code Section 7.9.

LEGAL APPEALS MATTERS, CONSENT

The Board deferred the following matters, Green Motor Works, Inc., SR AC 13-882388; 30690 and Francisco J. & Ana Maria Rodriguez, SX AS 12-670112-010; 89000044040.

With respect to the Legal Appeals Matters, Consent Agenda, upon a single motion of Mr. Klehs, seconded by Mr. Chiang and unanimously carried, Mr. Parrish, Mr. Chiang, Mr. Klehs and Ms. Mandel voting yes, Mr. Andal absent, the Board made the following orders:

Hyang Im Kwon & Seong J. Kwong, 103001 12-22-00
Action: Determine the staff properly seized cigarettes.

Yoram Yehuda & Gal Blum, SR AC 13-862430; 18583
7-1-94 to 9-30-94, $504.73 Tax, $51.37 Penalty, Negligence
Yoram Yehuda & Jacob Tikosky, SR AC 97-160007; 18584
10-1-94 to 6-5-98, $25,745.86 Tax, $2,635.85 Penalty, Negligence
Action: The Board deferred consideration of this matter.*

Green Motor Works, Inc., SR AC 13-882388; 30690
10-1-95 to 6-30-98, $97,762.50 Tax
Action: The Board deferred consideration of this matter.

Jim Miller, SR AA 14-776250-010; 89000130340
7-1-92 to 10-31-95, $10,380.40 Tax, $1,038.03 Penalty, Negligence
Action: The Board deferred consideration of this matter.*

Jesus P. Renteria, SR AA 14-786665; 17135
7-1-95 to 6-30-98, $37,746.51 Tax, $3,774.68 Penalty, Negligence
Action: Redetermine as recommended by Appeals Section.

Joseph P. Bonafede, SR EA 17-776500; 89000214310
7-1-94 to 6-30-97, $170,891.22 Tax, $00.00 Penalty, Negligence
Action: Redetermine as recommended by Appeals Section.

Ulises H. & Berta L. Cantarero, SR AP 17-818185; 28422
7-1-95 to 6-30-98, $8,069.77 Tax, $806.99 Penalty, Negligence
Action: Redetermine as recommended by Appeals Section.

Jacobson Enhanced Technology, Inc., SR AS 18-740955; 89000248770
4-1-94 to 6-30-97, $$00.00 Tax, $00.00 Penalty
Action: Redetermine as recommended by Appeals Section.

Pioneer New Media Technologies, Inc., SR AB 30-681203; 16870
4-1-95 to 3-31-98, $00.00
Action: Redetermine as recommended by Appeals Section.

Certa Industrial, Inc., SR EH 97-502058; 51417
4-1-94 to 12-31-98, $120,644.01 Tax, $62,365.57
Thomas W. Moore, SR EH 97-6247222; 57414
1-1-95 to 12-31-98, $103,942.51 Tax,
$10,394.25 Penalty, Failure to File
$51,971.26 Penalty, Failure to Obtain a Seller’s Permit
Action: Redetermine as recommended by Appeals Section.

Robert Shakarian, SR AA 99-112514; 89002108220
8-1-92 to 6-30-95, $37,241.00 Tax, $68,721.83 Penalty, Fraud
Robert Shakarian, SR AA 99-112514; 89002108240,
8-92 to 12-93, $17,356.60 Tax
Robert Shakarian, SR AA 99-112514; 89002108210
8-92 to 12-93, $17,356.60 Claim for Refund
Robert Shakarian, FV AA 99-112539; 89002108270
8-1-92 to 6-30-95, $178,606.00 Tax, $178, 606.10 Penalty, Fraud
Action: Redetermine as recommended by Appeals Section.

Chartchai Putthiporn, SR AP 99-542229; 89002300820
7-1-94 to 3-31-98, $47,465.83 Tax, $11,866.50 Penalty, Fraud
Action: Redetermine as recommended by Appeals Section.

Quality Services International, Inc., SR AS 99-640425; 89002339880
4-1-95 to 3-31-98, $00.00 Tax, $00.00 Penalty
Action: Redetermine as recommended by Appeals Section.

Power Bottle USA, SR AS 99-662414; 15622
1-1-95 to 12-31-97, $23,070.91 Tax, $00.00 Penalty
Action: The Board deferred consideration of this matter.*

Ace Auto Incorporated, SR EH 99-816174; 89002403260
4-1-93 to 6-30-96, $00.00 Tax, $18,310.30 Penalty, Fraud
Action: Redetermine as recommended by Appeals Section.

Varitouhi H. Dorian, SY AP 13-813611; 15524
1-1-95 to 3-31-98, $103,586.72 Tax, $10,358.68 Penalty, Negligence
Action: The Board deferred consideration of this matter.*

Fastener Innovation Technology, SR AB 16-671933; 89000186570
7-1-94 to 6-30-97, $00.00 Tax
Action: Redetermine as recommended by the Appeals Section.

Ampersand Label, Inc., SR EA 17-681575-010; 89000199810
1-1-94 to 12-31-96, $6,489.00 Tax, $00.00 Penalty
Action: The Board deferred consideration of this matter.*

Karen Sarkisyan, SN AS 52-006258; 89000965860
1-1-90 to 12-31-97, $18,313.97 Tax, $00.00 Penalty
Action: Redetermine as recommended by Appeals Section.

Gregory L. Darling, SR AB 99-699967; 19524
10-1-95 to 9-30-98, $00.00 Tax, $00.00 Penalty
Action: Redetermine as recommended by Appeals Section.

Francisco J. & Ana Maria Rodriguez, SX AS 12-670112-010; 89000044040
4-1-92 to 6-30-95, $00.00 Tax, $00.00 Penalty
Action: The Board took no action.

CCC & D Corporation, SR EH 99-397711; 89002233820
1-1-95 to 12-31-97, $00.00
Action: Redetermine as recommended by Appeals Section.

Omni Plastics, Inc., SR AA 14-657819; 89000110090
4-1-94 to 9-30-97, $00.00 Tax, $00.00 Penalty
Action: Redetermine as recommended by Appeals Section.

David E. & Audrey M. Zinke, SB UT 82-663547; 58112
11-23-96, $00.00 Tax
Action: Redetermine as recommended by Appeals Section.

American Fence Company, Inc., SR OH 99-501958; 29273
7-1-94 to 12-31-97, $149,693.76 Tax
Action: Redetermine as recommended by Appeals Section.

Heritage Home Brokers, Inc., SR EA 24-802418; 89000463970
7-1-93 to 6-30-96, $34,320.08 Tax, $3,432.01 Penalty, Negligence
Action: Deny the petition for rehearing.

Linda Anne Sarkissian, SR AP 40-646100; 89000936410
4-1-93 to 6-30-96, $14,401.29 Tax, $4,991.46 Penalty, Finality
Action: Deny the petition for rehearing.

Lysander Yachting, Ltd., SB UT 82-676859; 101507
9-30-96, $85,250.00 Tax, $00.00 Penalty
Action: Deny the petition for rehearing.

Sarbco, Inc., SY AS 13-836817, 89000087120
10-1-92 to 12-31-95, $174,031.44 Tax, $0.00 Penalty
Action: The Board deferred consideration of this matter.*

Todd M. Lutes & M. Naser Aboui, SR KH 99-834839, 32192
1-2-96 to 12-31-98, $7,050.48 Tax
Action: Redetermine as recommended by Appeals Section.

FRANCHISE AND INCOME TAX MATTERS, CONSENT

The Board deferred consideration of the following matters: Reitman Atlantic Corporation, 56334, Diane Clausen, 87103, and William L. Hanzel, 62135.

With respect to the Franchise & Income Tax Matters, Consent Agenda, upon a single motion of Mr. Klehs, seconded by Mr. Chiang and unanimously carried, Mr. Parrish, Mr. Chiang, Mr. Klehs and Ms. Mandel voting yes, Mr. Andal absent, the Board made the following orders:

Reitman Atlantic Corporation, 56334
12-1-93, $80,536.14 Assessment, $20,134.03 Penalty, Delinquent
$20,134.00 Penalty, Demand
Action: The Board deferred consideration of this matter.

Robert S. & Phoebe H. Armstrong, 87439
1996, $3,089.00 Assessment
Action: Sustain the action of the Franchise Tax Board.

Bennett (deceased) & Elsie Bakkenson, 80276
1983, $4,059.00 Assessment
Action: Sustain the action of the Franchise Tax Board.

J. E. Carlyle, 82032
1995, $1.00 or more Assessment
Action: Sustain the action of the Franchise Tax Board.

Diane Clausen, 87103
1994, $548.26 Claim for Refund
1995, $548.26 Claim for Refund
Action: The Board deferred consideration of this matter.

James D. & Deborah O. Deboer, 80328
1991, $26,984.00 Assessment, $5,396.80 Penalty, Accuracy-related
1992, $14,475.00 Assessment, $2,895.00 Penalty, Accuracy-related
1993, $15,030.00 Assessment, $3,006.00 Penalty, Accuracy-related
Action: Sustain the modified action of the Franchise Tax Board.

Roger B. Emerson, 77962
1996, $920.00 Assessment
Action: Sustain the modified action of the Franchise Tax Board.

William L. Hanzel, 62135
1996, $645.00 Assessment
Action: The Board deferred consideration of this matter.

Dennis C. Hudson, 83325
1996, $1,670.00 Assessment
Action: Sustain the action of the Franchise Tax Board.

Patricia A. Hunt, 87453
1996, $854.00 Assessment
Action: Sustain the action of the Franchise Tax Board.

Daniel C. & Rosina M.S. Kimball, 83333
1996, $1,387.00 Assessment
Action: Sustain the action of the Franchise Tax Board.

Lily Jane Lutz, 88633
1989, $707.00 Claim for Refund
Action: Sustain the action of the Franchise Tax Board.

Dan O. Martin, 79928
1998, $2,502.00 Assessment
Action: Sustain the action of the Franchise Tax Board.

Juan & Carmen Martinez, 79929
1996, $1,173.00 Assessment
Action: Sustain the action of the Franchise Tax Board.

Charles J. Mataya, 88693
1996, $367.00 Assessment
Action: Sustain the action of the Franchise Tax Board.

Robert B. & Nancy V. McAllister, 76283
1996, $604.00 Assessment
Action: Sustain the action of the Franchise Tax Board.

Richard & Danna McCuan, 88696
1992, $1.00 or more Assessment
Action: Sustain the action of the Franchise Tax Board.

Armand Molina, 87106
1996, $124.00 Assessment
Action: Sustain the action of the Franchise Tax Board.

Raymond C. Newbert, 56348
1997, $3,935.00 Assessment, $983.75 Penalty, Delinquent
$983.75 Penalty, Failure to File
Action: Reverse the action of the Franchise Tax Board with regard to the penalties otherwise sustain the action of the Franchise Tax Board.

Terren S. Peizer, 89002464860; 98A-0999
1991, $494,993.00 Assessment
1992, $ 48,874.00 Assessment
Action: Sustain the action of the Franchise Tax Board.

Dorothy L. Pieracy, 62414
1994, $3,965.75 Claim for Refund
Action: Sustain the action of the Franchise Tax Board.

Antonio Roa, 87063
1996, $763.00 Assessment
Action: Sustain the action of the Franchise Tax Board.

Sylvester E. & Audrey C. Saunders, 88561
1996, $1,038.00 Assessment
Action: Sustain the action of the Franchise Tax Board.

Robert R. Slocum, 61493
1996, $86.00 Assessment
Action: Sustain the action of the Franchise Tax Board.

William A. & Denise M. White, 59262
1996, $653.00 Assessment
Action: Sustain the action of the Franchise Tax Board.

Edward W. Wulu, 88385
1997, $427.00 Assessment
Action: Sustain the action of the Franchise Tax Board.

Richard & Eleanor Young, 76273
1988, $14,825.00 Claim for Refund
Action: Dismiss for lack of jurisdiction.

Timothy J. Bettner, 49347
1991, $1,429.01 Claim for Refund
Timothy J. Bettner, 51507
1997, $918.00 Assessment
Action: Deny the petition for rehearing.

Stephen & Suzanne Diamond, 89002467110
1993, $247,734.00 Assessment
Action: Grant the petition for rehearing.

Thomas J. Gumina, 96R-0347, 89002462770
1983, $4,131.00 Claim for Refund
Action: Deny the petition for rehearing.

Michael M. Johnson, 61417
1995, $749.00 Assessment
Action: Deny the petition for rehearing.

Gene & Virginia Koepke, 29236
1992, $24,071.00 Assessment
1993, $ 6,617.00 Assessment
Action: Deny the petition for rehearing.

Manuel Lujan, 58827
1995, $258.00 Assessment, 51.60 Penalty, Negligence
Action: Deny the petition for rehearing.

HOMEOWNER AND RENTER PROPERTY TAX ASSISTANCE MATTERS, CONSENT

With respect to the Homeowner and Renter Property Tax Assistance Matters, Consent Agenda, upon a single motion of Mr. Chiang, seconded by Mr. Klehs and unanimously carried, Mr. Parrish, Mr. Chiang, Mr. Klehs and Ms. Mandel voting yes, Mr. Andal absent, the Board made the following orders:

Allen D. Alexander, 93488
2000, $240.00 Claim for Credit
Action: Sustain the action of the Franchise Tax Board.
Gabriel Arenivas, 93489
2000, $240.00 Claim for Credit
Action: Sustain the action of the Franchise Tax Board.

Jesse Cobarrubias, 49745
1999, $235.00 Claim for Credit
Action: Reverse the action of the Franchise Tax Board.

Roberta F. Dayton, 93554
2000, $1,308.75 Claim for Credit
Action: Sustain the modified action of the Franchise Tax Board.

Reiana Hunter, 88786
2000, $240.00 Claim for Credit
Action: Sustain the action of the Franchise Tax Board.

Fred Johnson, 83836
2000, $284.65 Claim for Credit
Action: Reverse the action of the Franchise Tax Board.
Roijan L. Law, 92113
2000, $240.00 Claim for Credit
Action: Sustain the action of the Franchise Tax Board.

Clementine & Richard Nejman, 90019
2000, $1.00 or more Claim for Credit
Action: Sustain the action of the Franchise Tax Board.

SALES AND USE TAX MATTERS, CREDITS, CANCELLATIONS, AND REFUNDS, CONSENT

The Board deferred consideration of the following matter: Boise Locomotive Company, SR S OH 097-077033.

With respect to the Sales and Use Tax Matters, Credits, Cancellations and Refunds, Consent Agenda, upon a single motion of Mr. Klehs, seconded by Mr. Chiang and unanimously carried, Mr. Parrish, Mr. Chiang, Mr. Klehs and Ms. Mandel voting yes, Mr. Andal absent, the Board made the following orders:

System Software Associates, Inc., SC OHA 030-679274; 113094
4-1-99 to 9-30-99, $101,722.00
Action: Approve credit and cancellation as recommended by staff.

Howard C. Birndorf, SB G UT 084-011008; 112103
2-8-99, $381,203.10
Action: Approve credit and cancellation as recommended by staff.

JTech Communications, Inc., SC OHC 097-091529; 112286
10-1-90 to 6-30-97, $299,485.48
Action: Approve credit and cancellation as recommended by staff.

Hani’s Chevron, SR Y EH 097-181050; 112068
4-1-90 to 6-30-90, $52,106.29
Action: Approve credit and cancellation as recommended by staff.

Micro Therapeutics, Inc., SR EAA 099-529893; 48862
1-1-96 to 12-31-98, $81,555.76
Action: Approve credit and cancellation as recommended by staff.

Sierracities.com, Inc., SC OHC 099-652992; 111752
1-1-98 to 9-30-99, $76,621.67
Action: Approve credit and cancellation as recommended by staff.

Youngs Market Company, SR Y AA 011-658452; 110692
7-1-96 to 9-30-97, $51,639.96
Action: Approve refund as recommended by staff.

International Video Conversions, Inc., SR AC 013-800196; 79365
4-1-97 to 3-31-99, $80,845.61
Action: Approve refund as recommended by staff.

Lagraphico.com, Inc., SR AC 013-842161; 109327
7-1-95 to 6-30-98, $78,260.84
Action: Approve refund as recommended by staff.

Los Robles Hospital, SR AR 015-611138; 110678
7-1-97 to 6-30-00, $64,176.65
Action: The Board deferred consideration of this matter.*

Apple Graphics Inc., SR AP 017-749062; 61224
1-1-97 to 6-30-00, $263,022.04
Action: The Board deferred consideration of this matter.*

Riverside Community Hospital, SR EH 023-001516; 110643
4-1-97 to 3-31-00, $93,180.45
Action: The Board deferred consideration of this matter.*

The Orman Grubb Company, SR EA 024-765614; 111681
10-1-97 to 9-30-00, $151,545.93
Action: Approve refund as recommended by staff.

Holopono, Inc., SR JHF 027-833630; 112115
7-1-00 to 9-30-00, $76,438.74
Action: Approve refund as recommended by staff.

Marquette Electronics Inc., SR S OHC 030-617021; 94309
1-1-00 to 3-31-00, $152,071.61
Action: Approve refund as recommended by staff.

Exxon Mobil Corporation, SR Z OHC 030-621930; 94311
7-1-92 to 12-31-96, $178,577.19
Action: Approve refund as recommended by staff.

Federated Financial Reserve Corporation, SR S OHA 030-640046, 90604
4-1-99 to 12-31-99, $96,552.51
Action: Approve refund as recommended by staff.

Bloomberg Inc., Ltd. Ptn., SR S OHB 030-680512; 110705
10-1-97 to 9-30-00, $55,316.91
Action: Approve refund as recommended by staff.

Bloomberg Inc. Ltd. Ptn., SR S OHB 030-680512; 111047
7-1-98 to 9-30-00, $57,989.22
Action: Approve refund as recommended by staff.

Bloomberg Inc. Ltd. Ptn., SR S OHB 030-680512; 110566
1-1-99 to 9-30-00, $176,020.40
Action: Approve refund as recommended by staff.

Shiseido Cosmetics America Ltd., SR S OHB 030-698672; 109797
10-1-99 to 3-31-00, $79,209.93
Action: Approve refund as recommended by staff.

Albert & Patricia Nichols Trust, SP I UT 084-010429; 109425
6-19-97, $131,239.99
Action: Approve refund as recommended by staff.

Emerzian Woodworking, Inc., SR S ARF 097-010231; 110767
1-1-97 to 12-31-99, $239,126.12
Action: Approve refund as recommended by staff.

Countrywide Home Loans, Inc., SU S AC 097-049876; 111348
10-1-97 to 12-31-00, $310,094.42
Action: Approve refund as recommended by staff.

Boise Locomotive Company, SR S OH 097-077033, 60466
1-1-97 to 12-31-97, $503,603.05
Action: The Board deferred consideration of this matter.

Coram Healthcare Corporation of Southern California, SR Y OH 097-080787; 19475
1-1-96 to 12-31-97, $51,906.80
Action: Approve refund as recommended by staff.

Monterey Newspapers, Inc., SR AR 097-129605; 110393
10-1-97 to 9-30-00, $75,840.77
Action: Approve refund as recommended by staff.

Qanta Airways Ltd., SR X AB 098-039255; 109811
1-1-97 to 12-31-99, $152,962.49
Action: Approve refund as recommended by staff.

Wallace Computer Services Inc., SR Z OHA 099-005163; 46778
1-1-97 to 9-30-00, $331,447.23
Action: Approve refund as recommended by staff.

El Camino Hospital, SR GH 099-194913; 91252
10-1-97 to 9-30-00, $56,217.45
Action: Approve refund as recommended by staff.

Network Appliance Corporation, SR Y GH 099-200470, 94306
4-1-00 to 6-30-00, $132,850.10
Action: Approve refund as recommended by staff.

Two Visions, SR BH 099-209129; 110642
1-1-97 to 12-31-98, $124,000.02
Action: Approve refund as recommended by staff.

Aera Energy LLC, SC OHC 099-721904; 36407
1-1-99 to 3-31-99, $159,619.14
Action: Approve refund as recommended by staff.

Philips Electric North America Corporation, SR S OHB 099-854909; 76039
7-1-99 to 12-31-99, $105,973.08
Action: Approve refund as recommended by staff.

SALES AND USE TAX MATTERS, REDETERMINATIONS, RELIEF OF PENALTY, DENIALS OF CLAIMS FOR REFUND AND DENIALS OF RELIEF OF PENALTY, CONSENT

With respect to the Sales and Use Tax Matters, Redeterminations, Relief of Penalty, Denials of Claims for Refunds and Denials of Relief of Penalty, upon a single motion of Mr. Klehs, seconded by Mr. Chiang and unanimously carried, Mr. Parrish, Mr. Chiang, Mr. Klehs and Ms. Mandel voting yes, Mr. Andal absent, the Board made the following orders:

Patrick J. Schallert, Jr., SR AC 013-857702; 89000092130
7-1-92 to 6-30-93, $109,635.74
Action: Redetermine as recommended by staff.

Spartan Tank Lines, Inc., SR GH 026-110862; 31843
7-1-94 to 9-30-97, $113,558.10
Action: Redetermine as recommended by staff.

Richard A. Kayne, SR AS 052-006498; 15587
4-1-95 to 6-30-95, $399,803.69
Action: Redetermine as recommended by staff.

R. Scott Bell, SB G UT 082-670293; 106433
4-17-97, $63,937.50
Action: Redetermine as recommended by staff.

Genesis Aviation II Inc., SP I UT 084-010611; 88164
12-3-97, $272,250.00
Action: Redetermine as recommended by staff.

MDFC Equipment Leasing Corporation, SP H UT 084-010676; 93484
6-29-99, $224,152.50
Action: Redetermine as recommended by staff.

Blue Sky Group Inc., SP H UT 084-012075; 94365
7-13-99, $580,800.00
Action: Redetermine as recommended by staff.

Pelican Air LLC, SP H UT 084-016762; 93133
12-16-99, $527,549.74
Action: Redetermine as recommended by staff.

Honeywell Inc., SR Z OHA 098-016065; 51434
1-1-95 to 12-31-97, $988,996.06
Action: Redetermine as recommended by staff.

Schallert Enterprises, Inc., SR AC 099-818643; 89002403990
7-1-93 to 6-30-95, $122,880.22
Action: Redetermine as recommended by staff.

Ross Stores Inc., SR Y CHA 020-603846; 113722
1-1-01 to 1-31-01, $343,741.98
Action: Grant relief of penalty as recommended by staff.

Hanson Aggrgts Pacific Southwest Inc., SR Z FH 025-681448; 110558
10-1-00 to 10-31-00, $51,000.00
Action: Grant relief of penalty as recommended by staff.

Thompson Publishing Corporation, SR FH 025-846654; 110557
4-1-00 to 4-02-00, $103.759.50
Action: Grant relief of penalty as recommended by staff.

Apple Computer Inc., SR Y GH 026-690675; 110706
7-1-00 to 9-30-00, $192,711.20
Action: Grant relief of penalty as recommended by staff.

Corporate Software & technology, SC OHB 097-207942; 111697
7-1-00 to 9-30-00, $79,579.40
Action: Grant relief of penalty as recommended by staff.

Dollar Tree Stores, Inc., SR Y OHB 097-519588; 110696
10-1-00 to 10-31-00, $56,100.00
Action: Grant relief of penalty as recommended by staff.

Conagra Grocery Products Company, SR Y OHA 024-608595; 79090
7-1-94 to 12-31-97, $170,006.56
Action: Deny the claim for refund as recommended by staff.

Exxon Mobil Corporation, SR Z OHC 030-621930; 110593
7-1-92 to 12-31-96, $922,970.00
Action: Deny the claim for refund as recommended by staff.

Telesys Software, Inc., SR BHA 097-171748; 56200
7-1-97 to 3-31-98, $99,413.00
Action: Deny the claim for refund as recommended by staff.

Pacific Gas & Electric Company, SR Z BH 098-001535; 89002085340
1-1-94 to 12-31-96, $532,146.94
Action: Deny the claim for refund as recommended by staff.

Pacific Gas & Electric Company, SR Z BH 098-001535; 111383
1-1-94 to 12-31-96, $300,000.00
Action: Deny the claim for refund as recommended by staff.

Color-Box Inc., SR ARF 099-653366; 41399
1-1-96 to 12-31-98, $83,641.72
Action: Deny the claim for refund as recommended by staff.

Intermall, Inc., SR BHA 099-748786; 110667
7-1-00 to 9-30-00, $74,860.20
Action: Deny the relief of penalty as recommended by staff.

ANNOUNCEMENT OF CLOSED SESSION

The Board recessed immediately in closed session with Mr. Parrish, Mr. Chiang, Mr. Klehs, Mr. Andal and Ms. Mandel present.

CLOSED SESSION

The Board met to discuss personnel matters.

The Board recessed at 9:05 a.m. and reconvened at 9:30 a.m. in open session with Mr. Parrish, Mr. Chiang, Mr. Klehs, Mr. Andal and Ms. Mandel present.

EQUAL EMPLOYMENT OPPORTUNITY, EXAMINATION, AND RECRUITMENT FUNCTIONS

James Speed, Executive Director, made introductory remarks regarding Equal Employment Opportunity, Examination, and Recruitment Functions.

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 approved the Equal Employment Opportunity, Examination, and Recruitment Functions plan with recommendations to staff.

WORKPLAN TO ADDRESS THE COOPERATIVE PERSONNEL SERVICES REPORT ON THE EQUAL EMPLOYMENT OPPORTUNITY OFFICE

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 approved the Workplan to Address the Cooperative Personnel Services Report on the Equal Employment Opportunity Office with recommendation to staff.

TOBACCO RATE SETTING FOR FISCAL YEAR 2001-2002

Allan Stuckey, Deputy Director, Special Taxes, made introductory remarks regarding the Tobacco Rate for fiscal year 2001-2002.

Public Speakers: Barbara Matthews, Assembly Member, California State Assembly
Robert L. Shepherd, Attorney, UST
Roger Ehlers, Attorney, McCutchen, Doyle, Brown & Enersen
Dennis Loper, Executive Director, CA Distributors Association

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 to defer this matter to the next Board Meeting (Exhibit 5.1).

Exhibits to these Minutes are incorporated by reference

The Board recessed at 10:45 a.m. and reconvened at 10:55 a.m. with Mr. Parrish, Mr. Andal and Ms. Mandel.

ADMINISTRATIVE MATTERS, CONSENT

With respect to the Administrative Matter, Consent Agenda, upon a single motion of Mr. Andal, seconded by Mr. Parrish and unanimously carried, Mr. Parrish, Mr. Andal and Ms. Mandel voting yes, Mr. Klehs and Mr. Chiang absent, the Board made the following orders:

Action: Adopt the following resolution extending its best wishes on his respective retirements and its appreciation for their service to the Board and the State of California (Exhibit 5.2).

Keld Sorensen, Senior Forest Property Appraiser, Timber Tax Section,
County Property Tax Division, Redding District Office

LEGAL APPEALS MATTERS, CONSENT

With respect to the Legal Appeals Matters, Consent Agenda, upon a single motion of Mr. Andal, seconded by Mr. Parrish and unanimously carried, Mr. Parrish, Mr. Andal and Ms. Mandel voting yes, Mr. Chiang and Mr. Klehs absent, the Board deferred the following items: Yoram Yehuda & Gal Blum, SR AC 13-862430; 18583, Yoram Yehuda & Jacob Tikosky, SR AC 97-160007; 18584, Jim Miller, SR AA 14-776250-010; 89000130340, Power Bottle USA, SR AS 99-662414; 15622,Varitouhi H. Dorian, SY AP 13-813611; 15524, Ampersand Label, Inc., SR EA 17-681575-010; 89000199810 and Sarbco, Inc., SY AS 13-836817, 89000087120.

SALES AND USE TAX MATTERS, CREDITS, CANCELLATIONS, AND REFUNDS, CONSENT

With respect to the Sales and Use Tax Matters, Credits, Cancellations and Refunds, Consent Agenda, upon a single motion of Mr. Andal, seconded by Mr. Parrish and unanimously carried, Mr. Parrish, Mr. Andal and Ms. Mandel voting yes, Mr. Chiang and Mr. Klehs absent, the Board deferred the following items: Los Robles Hospital, SR AR 015-611138; 110678, Apple Graphics Inc., SR AP 017-749062; 61224, Riverside Community Hospital, SR EH 023-001516; 110643

FRANCHISE AND INCOME TAXES HEARINGS

Mehrdad Meyer Kamran, 89010
1992, $10,903.00 Assessment
For Appellant: Mehrdad Meyer Kamran
For Franchise Tax Board: Jean Cramer, Tax Counsel
Mark McEvilly, Tax Counsel

Contribution Disclosures pursuant to Government Code Section 15626: No contributions were disclosed.

Issues: Whether appellant has shown that certain settlement proceeds received during 1992 should be excluded from gross income for that year.

Whether appellant has shown that respondent’s proposed assessment of additional tax was untimely.

Appellant’s Exhibit: United States Tax Court (Exhibit 5.3)
Trial Memorandum (Exhibit 5.4)
Settlement Agreement (Exhibit 5.5)
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 appeal be submitted for decision.

Shauna E. Sorensen, 96A-0818; 89002459330
1979, $16,335.00 Assessment, $816.75 Penalty, Negligence
For Appellant: Shauna Sorensen
For Franchise Tax Board: Mark McEvilly, Tax Counsel
Contribution Disclosures pursuant to Government Code Section 15626: No contributions were disclosed.
Issues: Whether appellant should be granted relief as an innocent spouse.
In the alternative, whether appellant’s state tax liability should be reduced to 11 percent of what she paid to settle the underlying federal tax assessment.
Appellant’s Exhibit: Miscellaneous Document (Exhibit 5.6)
Respondent’s Exhibit: Miscellaneous Documents (Exhibit 5.7)

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 appeal be granted.

Krishnan S. & Abha Krishna, 83335
1994, $42,086.00 Assessment
For Appellant: No Appearance
For Franchise Tax Board: Terry Collins, Supervising Tax Counsel

Action: The Board took no action.

Jerome & Sandra M. Cabakoff, 79142
1996. $7,092.00 Assessment
For Appellant: No Appearance
For Franchise Tax Board: Terry Collins, Supervising Tax Counsel

Action: The Board took no action.

The Board recessed at 11:40 a.m. and reconvened at 1:30 p.m. with Mr. Parrish, Mr. Chiang, Mr. Andal and Ms. Mandel.
Byron Reynolds, 57322
1997, $3,375.00 Assessment, $295.27 Penalty, Delinquent
$843.75 Penalty, Demand
1998, $1,472.79 Assessment, $368.20 Penalty, Delinquent
$1,083.50 Penalty, Failure to File
For Appellant: Byron Reynolds
For Franchise Tax Board: Mark McEvilly, Tax Service Manager
Contribution Disclosures pursuant to Government Code Section 15626: No contributions were disclosed.
Issues: Whether appellant has filed invalid and/or untimely tax returns so as to make him liable for respondent’s assessment of penalties.
Whether appellant earned income so as to make him liable for respondent’s assessment of tax.
Whether this Board should impose a frivolous appeal penalty.
Appellant’s Exhibit: Declaration (Exhibit 5.8)
Miscellaneous Documents (Exhibit 5.9)

Action: Upon motion of Mr. Andal, seconded by Mr. Chiang and unanimously carried, Mr. Parrish, Mr. Chiang, Mr. Andal and Ms. Mandel voting yes, Mr. Klehs absent, the Board ordered that the appeal be submitted for decision.

Stanley J. Clay, 59764
1996, $477.00 Assessment, $95.40 Penalty, Accuracy-related
For Appellant: Stanley Juan Clay
Maria Clay
For Franchise Tax Board: Mark McEvilly, Tax Counsel
Contribution Disclosures pursuant to Government Code Section 15626: No contributions were disclosed.
Issue: Whether appellant has demonstrated that respondent’s assessment which was based upon federal changes, is incorrect. Whether appellant has demonstrated that respondent’s assessment of an accuracy-related penalty is incorrect.
Appellant’s Exhibit: 1996 - IRS Tax Form 1040 (Exhibit 5.10)

Action: Upon motion of Mr. Andal, seconded by Mr. Parrish and unanimously carried, Mr. Parrish, Mr. Chiang, Mr. Andal and Ms. Mandel voting yes, Mr. Klehs absent, the Board ordered that the penalty be deleted and the remainder of the appeal be submitted for decision.

Upon motion of Mr. Chiang, seconded by Mr. Andal and unanimously carried, Mr. Parrish, Mr. Chiang, Mr. Andal and Ms. Mandel voting yes, Mr. Klehs absent, the Board ordered the action of the Franchise Tax Board be sustained and directed the staff to assist appellant with the Board of Control Claim.

James V. Castiglia, Jr., 59760
1991, $702.00 Assessment, $175.50 Penalty, Late Filing
$140.40 Penalty, Accuracy-related
For Appellant: James V. Castiglia, Jr.
For Franchise Tax Board: Jean Cramer, Tax Counsel
Contribution Disclosures pursuant to Government Code Section 15626: No contributions were disclosed.
Issues: Whether appellant has shown that respondent erroneously issued a Notice of Proposed Assessment (NPA). Whether the Board has jurisdiction to determine the 1991 NPA amount was discharged in bankruptcy; if so, whether appellant has shown that said amount was discharged. Whether appellant has shown that interest should be abated.

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 appeal be submitted for decision.

FINAL ACTION ON APPEALS HEARD MAY 8, 2001

Upon motion of Mr. Klehs, seconded by Mr. Parrish and unanimously carried, Mr. Parrish, Mr. Chiang, Mr. Klehs, Mr. Andal and Ms. Mandel voting yes, the Board ordered that the action of the Franchise Tax Board be sustained in the appeal of Mehrdad Meyer Kamran, 89010.

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 action of the Franchise Tax Board be sustained in the appeal of Byron Reynolds, 57322.

Upon motion of Mr. Andal, seconded by Mr. Chiang and unanimously carried, Mr. Parrish, Mr. Chiang, Mr. Klehs, Mr. Andal and Ms. Mandel voting yes, the Board ordered that the action of the Franchise Tax Board be sustained in the appeal of James V. Castiglia, Jr., 59760.

BUSINESS TAXES APPEALS HEARINGS

J.G. Boswell Company, SY AP 98-034163; 89002091030
1-1-95 to 12-31-97, $21,673.96 Tax
For Petitioner: No Appearance
For Sales and Use Tax Department: Warren Astleford, Counsel
Contribution Disclosures pursuant to Government Code Section 15626: A disqualifying contribution to Mr. Klehs was disclosed. No contributions were disclosed.
Issues: Whether the sale and use of leafcutter bees are exempt from sales and tax on the grounds that the bees are a form of animal life the products of which ordinarily constitute food for human consumption. Whether the leafcutter bees produce fertilizer used to grow food for human consumption and are thereby exempt from the tax.

Action: Upon motion of Mr. Andal, seconded by Mr. Parrish and unanimously carried, Mr. Parrish, Mr. Chiang, Mr. Andal and Ms. Mandel voting yes, Mr. Klehs not participating, the Board ordered that the petition be granted, as to the disputed items, in accordance with the revised recommendation of the Appeals Section. The Board directing Appeals Section to prepare a draft memorandum opinion for the July Sacramento Board Meeting.

Tammy Rae Taylor, SR EA 99-462907; 89002266610
1-1-95 to 12-31-96, $4,773.42 Tax, $00.00 Penalty
Tammy Taylor Nails, Inc., SR EA 97-251311; 49961
1-1-97 to 12-31-97, $-$4,039.73 Tax Overstatement
For Petitioner: No Appearance
For Sales and Use Tax Department: Warren Astleford, Counsel

Action: The Board took no action.

Charles R. Matulik, Robert G. Matulik, Jr., & Donald W. McDaniels,
SR EH 23-718070-020; 89000406750
10-1-92 to 3-31-95, $101,503.66 Tax, $8,937.78 Penalty, Negligence
For Petitioner: Waived Appearance
For Sales and Use Tax Department: Kevin Hanks, Hearing Representative

Action: The Board took no action.

John Lindsay Dorman, SR AP 99-202576; 89002145410
7-1-94 to 12-31-97, $14,545.22 Tax
For Petitioner: Ameet Gandhi, Attorney
John Lindsay Dorman
For Sales and Use Tax Department: Jeffery Graybill, Counsel
Contribution Disclosures pursuant to Government Code Section 15626: No contributions were disclosed.
Issue: Whether unreported taxable sales of processed film are overstated.

Action: Upon motion of Mr. Andal, seconded by Mr. Parrish and unanimously carried, Mr. Parrish, Mr. Chiang Mr. Andal and Ms. Mandel voting yes, Mr. Klehs voting no, the Board ordered that the protested tax be reduced by 15% and the remainder of the petition be submitted for decision.

Ezzat Ashouri, SR AC 99-477984; 89002273770
7-1-95 to 9-30-96, $13,355.86 Tax, $1,335.58 Penalty, Negligence
For Petitioner: No Appearance
For Sales and Use Tax Department: Kevin Hanks, Hearing Representative
Contribution Disclosures pursuant to Government Code Section 15626: No contributions were disclosed.
Issues: Whether audited cost of goods sold is excessive. Whether relief from the negligence penalty is warranted.

Action: Upon motion of Mr. Andal, seconded by Mr. Klehs and unanimously carried, Mr. Parrish, Mr. Klehs, Mr. Andal and Ms. Mandel voting yes, Mr. Chiang not participating, the Board ordered that the petition be redetermined as recommended by the Appeals Section.

Lightning Dubbs, Inc., SR AS 11-797620; 32799
1-1-95 to 12-31-97, $00.00 Tax, $10,770.73 Penalty
For Petitioner: No Appearance
For Sales and Use Tax Department: Kevin Hanks, Hearing Representative

Action: The Board took no action.

Adil Abdosh Abdurhman, SR AB 11-793712; 89000031120
10-1-94 to 3-31-98, $77,039.66 Tax, $7,804.36 Penalty, Negligence
For Petitioner: Eric Sarksian, CPA
For Sales and Use Tax Department: Kevin Hanks, Hearing Representative
Contribution Disclosures pursuant to Government Code Section 15626: No contributions were disclosed.
Issues: Whether the evidence shows that audited taxable markup is excessive. Whether the evidence shows that an adjustment to the shelf test is warranted. Whether documentation presented supports an adjustment for inventory fluctuations. Whether relief from the negligence penalty is warranted.

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 petition be submitted for decision.

BBSC, LLC, SR AB 97-190631; 40882
12-30-97 to 6-26-98, $27,675.25 Tax
For Petitioner: No Appearance
For Sales and Use Tax Department: Jeffery Graybill, Counsel
Contribution Disclosures pursuant to Government Code Section 15626: No contributions were disclosed.
Issue: Whether petitioner is entitled to an allowance for returned merchandise credit on a certain sale.

Action: Upon motion of Mr. Andal, seconded by Mr. Parrish and unanimously carried, Mr. Parrish, Mr. Chiang, Mr. Klehs, Mr. Andal and Ms. Mandel voting yes, the Board ordered that the petition be redetermined in accordance with the revised recommendation of the Appeals Section.

Union Oil Company of California, SZ EAA 98-001147; 89002085070
1-1-90 to 12-31-92, $498,031.02 Claim for Refund
For Petitioner: No Appearance
For Sales and Use Tax Department: Jeffrey H. Graybill, Counsel
Contribution Disclosures pursuant to Government Code Section 15626: No contributions were disclosed.
Issue: Whether claimant’s return of precious metals in satisfaction of its metal leases is subject to use tax.

Action: Upon motion of Mr. Andal, seconded by Mr. Chiang and unanimously carried, Mr. Parrish, Mr. Chiang, Mr. Klehs, Mr. Andal and Ms. Mandel voting yes, the Board ordered that the petition be redetermined in accordance with the revised recommendation of the Appeals Section.

FINAL ACTION ON PETITIONS HEARD MAY 8, 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 petition of John Lindsay Dorman, SR AP 99-202576; 89002145410, be redetermined as recommended by the Appeals Section.

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 petition of Adil Abdosh Abdurhman, SR AB 11-793712; 89000031120, be redetermined as recommended by the Appeals Section.

The Board adjourned at 2:55 p.m.
The foregoing minutes are adopted by the Board on August 1, 2001.