Approved 2001 Minutes – Thursday, May 10, 2001

The Board met at its offices at 5901 Green Valley Circle, Culver City, at 9:05 a.m. with Chairman Parrish, Mr. Klehs, Mr. Andal present and Ms. Mandel present on behalf of Dr. Connell in accordance with Government Code Section 7.9. Mr. Steve Kamp was present and observing on behalf of Mr. Chiang.

TAXPAYER BILL OF RIGHTS REIMBURSEMENT CLAIM HEARING

ADV Mouldings Technologies, Inc., TBR 00-006-B; SR AP 99-689905; 94641
1-3-95 to 6-30-98, $7,437.50 Claim for Refund

For Claimant: Peter D. Ashton, Representative
For Property Tax Department: Jeffery Graybill, Counsel

Contribution Disclosures pursuant to Government Code Section 15626: No contributions were disclosed.
Issues: Whether the Department’s position on Claimant’s petition for redetermination was reasonable. Whether the amounts claimed as fees are excessive.
Action: Upon motion of Mr. Klehs, seconded by Mr. Andal and duly carried, Mr. Klehs, Mr. Andal and Ms. Mandel voting yes, Mr. Parrish voting no, Mr. Chiang absent, the Board ordered that the claim be denied.

BUSINESS TAXES APPEALS HEARINGS

Brittni-Yen Ngyuen & Khiet Huy Nguyen, SR EA 99-432423; 89002251880
10-1-94 to 6-30-97, $25,104.68 Tax; $2,627.01 Penalty, Negligence

For Petitioner: Kevin O’Connell, Attorney
For Sales and Use Tax Department: Sharon Jarvis, Counsel

Contribution Disclosures pursuant to Government Code Section 15626: No contributions were disclosed.
Issues: Whether the tax liability should be based on a pro-forma Field Billing Order rather than the audit results because the information on which the audit was based was obtained illegally. Whether a reduction in tax is warranted based on petitioners’ allegations that the Department failed to compare petitioners’ sales to those of other liquor stores in the area. Whether relief from the 10% penalty for negligence 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 absent, the Board ordered that the negligence penalty be deleted otherwise redetermined as recommended by the Appeals Section.

Jacqueline A. & Garo Tutunjian, SR EH 23-879167; 89000433960
10-1-92 to 12-31-95, $39,287.95 Tax, $4,203.97 Penalty, Negligence

For Petitioner: Maria G. Aguiar Novack, 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 bank deposits, upon which total sales were based, included non-sale revenue from deposits of loans and other non-business funds received. 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 absent, the Board ordered that the petition be submitted for decision.

Holiday World Inc., SY EH 23-879641; 89000434060
1-1-95 to 6-30-96, $171,481.29 Tax

For Petitioner: Suzanne Beaudelaire, Representative
For Sales and Use Tax Department: Jeffery Graybill, Counsel

Contribution Disclosures pursuant to Government Code Section 15626: No contributions were disclosed.
Issue: Whether the Sales and Use Tax Department correctly imposed liability against petitioner for sales tax or collection of use tax, on petitioner’s sales of vehicles that it claims to have shipped to points outside this state.
Action: Upon motion of Mr. Klehs, seconded by Mr. Andal and unanimously carried, Mr. Parrish, Mr. Klehs, Mr. Andal and Ms. Mandel voting yes, Mr. Chiang absent, the Board ordered that the petition be submitted for decision.

The Board recessed at 10:45 a.m. and reconvened at 10:55 a.m. with Mr. Klehs, Mr. Andal and Ms. Mandel present. Mr. Steve Kamp was present and observing on behalf of Mr. Chiang.

BEJABA, Inc., SX AR 15-717992; 89000150640
7-1-94 to 6-30-97, $9,791.36 Tax, $00.00 Penalty

For Petitioner: James H. Bayse, President
For Sales and Use Tax Department: Kevin Hanks, Hearing Representative

Contribution Disclosures pursuant to Government Code Section 15626: No contributions were disclosed.
Issue: Whether the evidence shows that recorded sales tax is overstated due to including exempt deli sales as taxable on the sales tax worksheets.
Action: Upon motion of Mr. Andal, seconded by Mr. Klehs and unanimously carried, Mr. Klehs, Mr. Andal and Ms. Mandel voting yes, Mr. Parrish and Mr. Chiang absent, the Board ordered that the disputed measure be reduced by 50%.

Michael Patrick Gerrity, SR AC 99-642448; 40654
4-1-95 to 3-31-97, $40,737.66 Tax, $00.00 Penalty
Gerrity Grafix, Inc., SR AC 97-079736; 40676
4-1-97 to 3-31-98, $5,551.25 Tax

For Petitioner: No Appearance
For Sales and Use Tax Department: Sharon Jarvis, Counsel

Action: The Board took no action.

Tekadi Corporation, SR EA 99-757112; 50064
1-1-96 to 12-31-98, $12,985.91 Tax, $1,298.61 Penalty, Negligence
$1,298.59 Penalty, Finality

For Petitioner: Karl Cornell, Secretary/Treasurer
For Sales and Use Tax Department: Sharon Jarvis, Counsel

Contribution Disclosures pursuant to Government Code Section 15626: No contributions were disclosed.
Issues: Whether taxpayer has shown that certain disputed transactions are lump-sum contracts.
Whether relief from the penalty for negligence is warranted. Whether relief from the penalty for failure to timely pay the determination (finality penalty) is warranted.
Action: Upon motion of Mr. Klehs, seconded by Mr. Parrish and unanimously carried, Mr. Parrish, Mr. Klehs, Mr. Andal and Ms. Mandel voting yes, Mr. Chiang absent, the Board ordered that penalties be deleted.

Mr. Andal moved to grant the petition. No vote was taken.

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

Callaghan Auto Supply, Inc., SY EH 98-040599; 41889
10-1-95 to 9-30-98, $7,830.01 Tax

For Petitioner: Alan L. Callahan, President
Mike Smith, Sales Manager
For Sales and Use Tax Department: David H. Levine, Counsel

Contribution Disclosures pursuant to Government Code Section 15626: No contributions were disclosed.
Issue: Whether resale certificates that were pre-stamped by petitioner with a description of the property to be purchased for resale, were taken in good faith, and therefore, valid for claimed sales for resale of consumables to auto repair and body shops.
Action: Upon motion of Mr. Klehs, seconded by Mr. Mandel and unanimously carried, Mr. Parrish, Mr. Klehs, Mr. Andal and Ms. Mandel voting yes, Mr. Chiang absent, the Board ordered that the petition be submitted for decision.

Mr. Andal moved to grant the petition. The motion was seconded by Mr. Parrish but failed to carry, Mr. Parrish and Mr. Andal voting yes, Mr. Klehs and Ms. Mandel voting no, Mr. Chiang absent.

Upon motion of Mr. Klehs, seconded by Mr. Andal and unanimously carried, Mr. Parrish, Mr. Klehs, Mr. Andal and Ms. Mandel voting yes, Mr. Chiang absent, the Board ordered that the disputed measure be reduced by 50%.

FINAL ACTION ON PETITIONS HEARD MAY 10, 2001

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 absent, the Board ordered that the petition of Jacqueline A. & Garo Tutunjian, SR EH 23-879167; 89000433960, be redetermined as recommended by the Appeals Section.

Upon motion of Mr. Klehs, seconded by Mr. Andal and unanimously carried, Mr. Parrish, Mr. Klehs, Mr. Andal and Ms. Mandel voting yes, Mr. Chiang absent, the Board ordered that the petition of Holiday World Inc., SY EH 23-879641; 89000434060, be redetermined as recommended by the Appeals Section.

The Board directed the Appeals Section to draft a memorandum opinion.

Mr. Andal moved to grant the petition of Tekadi Corporation, SR EA 99-757112; 50064. The motion was seconded by Mr. Parrish but failed to carry, Mr. Parrish and Mr. Andal voting yes, Mr. Klehs and Ms. Mandel voting no, Mr. Chiang absent.

The Board directed staff to bring the matter back at the next Board Meeting.

The Board recessed at 12:10 p.m. and reconvened at 1:35 p.m. with Mr. Parrish, Mr. Klehs, Mr. Andal and Ms. Mandel. Mr. Steve Kamp was present and observing on behalf of Mr. Chiang.

BUSINESS TAXES APPEALS HEARINGS

REBCO West, Inc., SR EH 23-812550; 89000418700
7-1-93 to 6-30-96, $00.00 Tax, $00.00 Penalty, Finality

For Petitioner: Waived 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 payments made by taxpayer were properly applied to the liability.
Whether interest applied to liability was properly calculated. Whether taxpayer is entitled to reimbursement for costs associated with this appeal. Whether petitioner is entitled to partial abatement of interest assessed in the audit for alleged delays by the Department.
Action: Upon motion of Mr. Klehs, seconded by Mr. Andal and unanimously carried, Mr. Parrish, Mr. Klehs, Mr. Andal and Ms. Mandel voting yes, Mr. Chiang absent, the Board ordered that the petition be redetermined as recommended by the Appeals Section. Board directed staff to write to petitioner explaining how to request reimbursement for accountant’s fees.

Santa Ynez Band of Mission Indians, SC AR 97-068485; 37763
1-1-95 to 6-30-98, $350,964.22 Claim for Refund

For Petitioner: Glenn M. Feldman, Tribal Attorney
For Sales and Use Tax Department: Carla Caruso, Counsel

Contribution Disclosures pursuant to Government Code Section 15626: No contributions were disclosed.
Issue: Whether claimant had an obligation to collect use tax on its sales of food and beverage.
Action: Upon motion of Mr. Klehs, seconded by Mr. Andal and unanimously carried, Mr. Parrish, Mr. Klehs and Mr. Andal voting yes, Ms. Mandel abstaining, Mr. Chiang absent, the Board ordered that the penalties be deleted.

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

Adel M. Andrawis, SR EH 99-443277; 53485
7-1-95 to 12-31-98, $33,910.48 Tax
Rafat Andrawis & Adel M. Andrawis, SR EH 97-586532; 53487
7-1-95 to 12-31-98, $8,865.98 Tax

For Petitioner: Saad Marcos, Attorney
For Sales and Use Tax Department: Kevin Hanks, Hearing Representative

Contribution Disclosures pursuant to Government Code Section 15626: No contributions were disclosed.
Issues: Whether relief from the tax is warranted based on petitioners’ allegation that the Sales and Use Tax Department fraudulently obtained waivers of the statute of limitations. Whether the evidence establishes that disallowed claimed exempt food sales included nontaxable delivery charges.
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 absent, the Board ordered that the petition be submitted for decision.

Daniel Benhamou & Eric Margerie, SR AS 99-236354; 89002161160
7-1-94 to 12-31-96, $59,329.22 Tax, $17,110.35 Penalty, Negligence

For Petitioner: No Appearance
For Sales and Use Tax Department: Kevin Hanks, Hearing Representative

Action: The Board took no action.

John Clare Rexroth & Mary E. Rexroth, SR AR 99-437994; 89002254660
1-1-94 to 12-31-96, $29,542.75 Claim for Refund

For Petitioner: No Appearance
For Sales and Use Tax Department: David H. Levine, Counsel

Contribution Disclosures pursuant to Government Code Section 15626: No contributions were disclosed.
Issues: Whether claimants are entitled to a refund of tax based on misinformation in a prior audit. Whether claimants are entitled to a refund of the finality penalty assessed under Revenue and Taxation Code section 6565.
Action: Upon motion of Mr. Klehs, seconded by Mr. Andal and unanimously carried, Mr. Parrish, Mr. Klehs, Mr. Andal and Ms. Mandel voting yes, Mr. Chiang absent, the Board ordered that the claim for refund be denied as recommended by the Appeals Section.

John P. Wright & Bryan Keith Kest, SR AS 99-991064; 89002456160
4-1-97 to 6-30-97, $11,137.50 Tax, $1,113.75 Penalty, Failure to File

For Petitioner: Michael Mesnick, Representative
For Sales and Use Tax Department: Jeffery Graybill, Counsel

Contribution Disclosures pursuant to Government Code Section 15626: No contributions were disclosed.
Issues: Whether Mr. Bryan Keith Kest is relieved from liability for sales made after March 1997 on the basis that he withdrew from the partnership. Whether relief from the 10 percent penalty for failure to file a return is warranted.
Action: Upon motion of Ms. Mandel, seconded by Mr. Andal and unanimously carried, Mr. Parrish, Mr. Klehs, Mr. Andal and Ms. Mandel voting yes, Mr. Chiang absent, the Board ordered that the petition be submitted for decision.

FINAL ACTION ON PETITIONS HEARD MAY 10, 2001

Upon motion of Mr. Klehs, seconded by Mr. Andal and unanimously carried, Mr. Parrish, Mr. Klehs, Mr. Andal and Ms. Mandel voting yes, Mr. Chiang absent, the Board ordered that the claim for refund of Santa Ynez Band of Mission Indians, SC AR 97-068485; 37763, be denied.

The Board directed staff to start the regulatory process regarding Regulation 1616, Federal Areas.

Mr. Klehs moved to redetermine the petition Adel M. Andrawis, SR EH 99-443277; 53485, Rafat Andrawis & Adel M. Andrawis, SR EH 97-586532; 53487. No vote was taken.

Mr. Parrish moved to eliminate the statue of limitation document.

Mr. Andal seconded the motion but the motion failed to carry, Mr. Parrish voting yes, Mr. Klehs, Mr. Andal and Ms. Mandel voting no, Mr. Chiang absent.

Upon motion of Mr. Klehs, seconded by Mr. Andal and unanimously carried, Mr. Parrish, Mr. Klehs, Mr. Andal and Ms. Mandel voting yes, Mr. Chiang absent, the Board ordered that the petition of be redetermined as recommended by the Appeals Section.

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 absent, the Board ordered that the petition of John P. Wright & Bryan Keith Kest, SR AS 99-991064; 89002456160, be redetermined as recommended by the Appeals Section.

The Board adjourned at 2:45 p.m.


The foregoing minutes are adopted by the Board on August 1, 2001.