Approved 2001 Minutes – Thursday, June 21, 2001

The Board met at its offices at 450 N Street, Sacramento, at 9:30 a.m. with Chairman Parrish, Vice Chairman Chiang, Mr. Klehs, Mr. Andal and Dr. Connell present.

ANNOUNCEMENT OF CLOSED SESSION

The Board recessed in closed session with Mr. Parrish, Mr. Chiang, Mr. Klehs, Mr. Andal and Dr. Connell present.

CLOSED SESSION

The Board met to discuss and Revenue and Taxation codes 7093.5, 30459.1 and 50156.11 settlements and personnel matters.

The Board recessed at 9:35 a.m. and reconvened at 10:10 a.m. in open session with Mr. Parrish, Mr. Chiang, Mr. Klehs, Mr. Andal and Dr. Connell.

SPECIAL PRESENTATION

On behalf of the Board, Mr. Parrish presented to Patricia Sultanna, a retirement resolution extending its sincere and grateful appreciation for her dedicated service to the State Board of Equalization and the State of California.

EXECUTIVE DIRECTOR’S REPORT

James E. Speed, Executive Director, announced the appointment of Deborah Pellegrini to Chief, Board Proceedings Division.

RETURN PROCESSING AUTOMATION PROJECT CONTRACT

James E. Speed, Executive Director, made introductory remarks regarding Return Processing Automation Project Contract.

PUBLIC COMMENTS

Speaker: Raquez Silva, Sr. Labor Relations Representative, CSEA
Perry Kenny, President, CSEA

Dr. Connell moved to approve the staff recommendation, seconded by Mr. Andal but failed to carry, Dr. Connell and Mr. Andal voting yes, Mr. Parrish and Mr. Chiang voting no, Mr. Klehs not voting. Upon motion of Mr. Andal, seconded by Mr. Klehs and unanimously carried, Mr. Parrish, Mr. Chiang, Mr. Klehs, Mr. Andal and Dr. Connell voting yes, the Board denied the contract for the Return Processing Automation Project (RPAP) (Exhibit 6.5).

Exhibits to theses Minutes are incorporated by reference.

2001-02 TOBACCO PRODUCTS TAX RATE SETTING

Allan Stuckey, Deputy Director, Special Taxes, made introductory remarks regarding the 2001-02 Tobacco Products Tax Rate Setting.

PUBLIC COMMENTS

Speaker:
Dennis Loper, Executive Director, CA Distributors Association
Roger Ehlers, Tax Counselor, CA Distributors Association
Charles J. Janigian, President, CA Association of Retail Tobacconists, Inc.
Chris Micheli, Attorney, Carpenter Snodgrass & Associates, Cigar Association of America
Norman F. Sharp, President, Cigar Association of America, Pipe Tobacco Council
John Boyd, Owner, Boyds Tobacco
Jenny Buwalda, Owner, Tinder Box
Don Welsch, Owner, Briar Patch Smokeshop

Mr. Parrish moved to sustain the tax rate at 52.5% but the motion failed for lack of a second. Mr. Andal moved to sustain Alternative 1, seconded by Mr. Parrish but failed to carry, Mr. Parrish and Mr. Andal voting yes, Mr. Chiang, Mr. Klehs and Dr. Connell voting no. The Board recessed at 11:15 a.m. and reconvened at 11:20 a.m. with Mr. Andal, Mr. Parrish, Mr. Klehs, Mr. Chiang and Dr. Connell present.

Dr. Connell moved to adopt Alternative 4 and revert to Alternative 1, if Alternative 4 fails, leaving the tax rate at 52.5% until October 1. The motion was seconded by Mr. Klehs but the motion failed to carry, Mr. Klehs and Dr. Connell voting yes, Mr. Parrish, Mr. Andal and Mr. Chiang voting no (Exhibit 6.6).

The Board deferred consideration of this matter until later in the day.

PROPOSAL FOR EXPANDING THE INVESTIGATIONS DIVISION

Monte Williams, Chief, Investigations Division, made introductory remarks regarding the proposal for expanding the Investigations Division.

PUBLIC COMMENTS

Speakers: Perry Kenny, President, CA State Employees Association
Raquez Silva, Senior Labor Relations Representative, CSEA

Dr. Connell left the Boardroom and Ms. Mandel entered on behalf of Dr. Connell in accordance with Government Code Section 7.9.

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 Alternative 2 with the exception of funding for additional cars.

BUSINESS TAX APPEALS HEARING

Donald Lewis Smyth, SC OH 99-226088; 89002156260
10-1-94 to 6-30-97, $259,786.74 Tax, $21,941.46 Penalty, Failure to File
$ 4,037.37 Penalty, Negligence
The Staff of Life, Inc., SN OH 53-000555; 89000970830
1-1-95 to 6-30-97, $243,096.28 Tax, $21,866.88 Penalty, Failure to File
$ 2,442.89 Penalty, Negligence

For Petitioner: Eric Miethke, Attorney
Steven E. Schmidt, Attorney
Donald Lewis Smyth
For Sales and Use Tax Department: James M. Stillwell, Counsel

Contribution: Disclosures pursuant to Government Code Section 15626: No contributions were disclosed.
Issue: Whether petitioners are responsible for collecting California use tax on sales made in this state through distributors.

Action: 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 to delete the failure to file penalty as recommended by staff.

Upon motion of Mr. Andal, seconded by Mr. Parrish and duly carried, Mr. Parrish, Mr. Chiang and Mr. Andal voting yes, Mr. Klehs voting no, Ms. Mandel abstaining, the Board ordered to delete the negligence penalty and submit the remainder of the petition for decision. The Board recessed at 12:15 p.m. and reconvened at 1:40 p.m. with Mr. Parrish, Mr. Chiang, Mr. Klehs, Mr. Andal and Ms. Mandel present.

EQUAL EMPLOYMENT OFFICE FUNCTION

James E. Speed, Executive Director, made introductory remarks regarding the Equal Employment Office Function.

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 deferred consideration of this matter to the next Sacramento meeting (Exhibit 6.7).

2001-02 TOBACCO PRODUCTS TAX RATE SETTING

Upon motion of Ms. Mandel, seconded by Mr. Klehs and duly carried, Mr. Chiang, Mr. Klehs and Ms. Mandel voting yes, Mr. Parrish and Mr. Andal voting no the Board moved to adopt the tax rate described in Alternative 4 with the following findings. The tax rate for smokeless tobacco is equivalent to the tax on cigarettes because it is based on a comparison between the tax on one cigarette and the weight of the tobacco in one cigarette. Tax rate for other tobacco products is equivalent to the tax on cigarettes because it is based on a comparison between the tax on one cigarette and the wholesale cost of one cigarette. Also, the tax rate for smokeless tobacco is similar to flat taxes found in other excise tax programs and a special tax rate for the special rate for smokeless tobacco is warranted because it will discourage the increase use of such products by youth, consistent with the intent of Propositions 99 and Propositions 10. And further, if Alternative 4 is ruled invalid in full or in part, in a final court decision tax rates so determined shall be the rate as described in Alternative 1.

ADMINISTRATIVE MATTERS, CONSENT AGENDA

With respect to the Administrative Matters, Consent Agenda, upon a single 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 made the following orders:

Action: Adopt the following resolution extending its best wishes on their respective retirements and its appreciation for their service to the Board and the State of California (Exhibit 6.8).

Nelda M. Morgan, Office Assistant, Special Procedures Section, Headquarters
Patricia M. Sultana, Personnel services Supervisor II, Personnel Management Division, Transaction Unit, Headquarters

Action: Adopt the Board Meeting Minutes of April 18-19, 2001.

Action: Approve the extensions of Time to Complete and Submit 2001-02 Local Assessment Rolls Pursuant to Revenue and Taxation Code section 155 granted to Calaveras, Colusa, Humboldt, Orange, Siskiyou and Tulare Counties.

CHIEF COUNSEL MATTERS

Larry Augusta, Assistant Chief Counsel, Property Taxes Division, presented proposed Rule 305.3, Application for Equalization under Revenue and Taxation Code section 469, for authorization to publish (Exhibit 6.9).

PUBLIC COMMENT

Speakers:
Darlene J. Bloom, Orange County Clerk of the Board
Afaf Assad, Chief, CA Association of Clerks, Los Angeles County
Greg Turner, General Counsel, CA Taxpayers’ Association
Richard Dewberry, Attorney, Bewley, Lassleben & Miller
Larry Hoenig, Attorney, Pillsbury, Winthrop LLP
Eric Haagenson, Chief Appraiser, Los Angeles County
Diana Lackey, Assistant Assessor, Santa Clara County
Marcy Berkman, Deputy County Counsel, Santa Clara County
James J. Rees, Deputy County Counsel, Santa Clara County

Upon motion of Mr. Andal, seconded by Ms. Mandel and duly carried, Mr. Parrish, Mr. Andal and Ms. Mandel voting yes, Mr. Chiang and Mr. Klehs voting no, the Board approved the Cal Tax language in regards to Issue 1, Result of the Audit (subsection (b)(2)).

Upon motion of Mr. Andal, seconded by Ms. Mandel and duly carried, Mr. Parrish, Mr. Klehs, Mr. Andal and Ms. Mandel voting yes, Mr. Chiang voting no, the Board approved the Cal-Tax language in regards to Issue 2, Property of the Assessee (subsection (b)(5)).

Mr. Andal moved to adopt the CalTax Language in regards to Issue 3, Property Previously Equalized (subsection (b)(7)) and deleting all references to Example 7. The motion was seconded by Ms. Mandel but failed to carry, Mr. Andal and Ms. Mandel voting yes, Mr. Parrish, Mr. Chiang and Mr. Klehs voting no.

Upon motion of Mr. Parrish, seconded by Mr. Chiang and duly carried, Mr. Parrish, Mr. Chiang and Mr. Klehs voting yes, Mr. Andal and Ms. Mandel voting no, the Board approved the staff recommendation in regard to Issue 3.

The Board directed staff to publish the proposed Rule 305.3 as amended.

BUSINESS TAX APPEALS HEARINGS

Santa Rosa Rancheria Federal Indian Tribe, SR ARH 99-141880; 37320
7-1-96 to 9-30-99, $221,579.00 Claim for Refund

For Claimant: Conly J. Shulte, Attorney
For Sales and Use Tax Department: Carla Caruso, Counsel

Contribution: Disclosures pursuant to Government Code Section 15626: No contributions were disclosed.
Issues: Whether federal law precludes the Board from requiring claimant to collect use tax from non-Indians on tribal lands. Whether the State’s statute of limitations does not apply because it is in contradiction to federal law.

Action: Upon motion of Mr. Klehs, seconded by Mr. Andal and unanimously carried, Mr. Parrish, Mr. Chiang, Mr. Klehs and Mr. Andal voting yes and Ms. Mandel abstaining, the Board ordered that the claim for refund be submitted for decision and to be deferred until the regulatory process to Regulation 1616 is completed.

LEGAL APPEALS MATTERS, ADJUDICATORY

Green Motor Works, Inc., SR AC 13-882388; 30690
10-1-95 to 6-30-98, $97,762.50 Tax
Considered by the Board: Hearing Notice Sent – No Response
Contribution: Disclosures pursuant to Government Code Section 15626: No contributions were disclosed.

Action: Upon motion of Mr. Andal, seconded by Ms. Mandel and unanimously carried, Mr. Parrish, Mr. Chiang, Mr. Klehs, Mr. Andal and Ms. Mandel voting yes, the Board approved the revised staff recommendation.

Jim Miller, SR AA 14-776250; 89000130340
7-1-92 to 10-31-95, $10,380.40 Tax, $1,038.03 Penalty, Negligence
Considered by the Board: Hearing Notice Sent – No Response
Contribution: Disclosures pursuant to Government Code Section 15626: No contributions were disclosed.

Action: Upon motion of Mr. Andal, 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 petition be redetermined as recommended by Appeals Section.

Venus Laboratories, Inc., SR OHA 16-649664-040; 89000183560
1-1-93 to 12-31-95, $10,079.55 Tax
Considered by the Board: Hearing Notice Sent – No Response
Contribution: Disclosures pursuant to Government Code Section 15626: No contributions were disclosed.

Action: Upon motion of Mr. Andal, seconded by Mr. Parrish and duly carried, Mr. Parrish, Mr. Chiang and Mr. Andal voting yes, Mr. Klehs and Ms. Mandel voting no, the Board ordered that the markup on petitioner's section 6007 sales be reduced to 10 percent, otherwise redetermine as recommended by the Appeals Section.

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
Considered by the Board: Hearing Notice Sent – No Response
Contribution: Disclosures pursuant to Government Code Section 15626: No contributions were disclosed.

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 redetermined 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, Negligence
Considered by the Board: Hearing Notice Sent – No Response
Contribution: Disclosures pursuant to Government Code Section 15626: No contributions were disclosed.

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 redetermined as recommended by Appeals Section.

Vartouhi H. Dorian, SY AP 13-813611; 15524
1-1-95 to 3-31-98, $103,586.72 Tax, $10,358.68 Penalty, Negligence
Considered by the Board: Hearing Notice Sent – Appearance Waived
Contribution: Disclosures pursuant to Government Code Section 15626: No contributions were disclosed.

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 redetermined as recommended by Appeals Section.

Ampersand Label, Inc., SR EA 17-681575; 89000199810
1-1-94 to 12-31-96, $6,489.00 Tax, $00.00 Penalty, Negligence
Considered by the Board: Hearing Notice Sent – Appearance Waived
Contribution: Disclosures pursuant to Government Code Section 15626: No contributions were disclosed.

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 redetermined as recommended by Appeals Section.

Docusource, Inc., SR AC 18-740267; 36592
1-1-95 to 12-31-97, $54,324.04 Tax
Considered by the Board: May 9, 2001
Contribution: Disclosures pursuant to Government Code Section 15626: No contributions were disclosed.

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 redetermined as recommended by Appeals Section.

Simon Beresford Purll, SR EA 97-193531; 89002073570
7-1-95 to 3-31-98, $2,819.57 Tax, $260.82 Penalty, Failure to File
Considered by the Board: May 31, 2001
Contribution: Disclosures pursuant to Government Code Section 15626: No contributions were disclosed.

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 redetermined as recommended by Appeals Section.

SARBCO, Inc., SY AS 13-836817; 89000087120
10-1-92 to 12-31-95, $174,031.44 Tax, $00.00 Penalty, Negligence
Considered by the Board: May 8, 2001
Contribution: Disclosures pursuant to Government Code Section 15626: No contributions were disclosed.

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 redetermined as recommended by Appeals Section and to deny the petition for rehearing.

FRANCHISE AND INCOME TAX MATTERS, ADJUDICATORY

Samuel L. Flores, 98R-0910; 89002462360
1996, $2,960.00 Claim for Refund
Considered by the Board: Memorandum of Opinion
Contribution: Disclosures pursuant to Government Code Section 15626: No contributions were disclosed.

Action: Upon motion of Mr. Andal seconded by Mr. Chiang and duly carried, Mr. Chiang, Mr. Klehs and Mr. Andal voting yes, Ms. Mandel voting no, Mr. Parrish abstaining, the Board adopted a decision reversing the action of the Franchise Tax Board.

Ronald C. & Melinda L. Young, 37458
1988, $ 9,373.00 Assessment, $ 2,343.25 Penalty, Late Filing
1989, $42,093.00 Assessment, $10,523.25 Penalty, Late Filing
1990, $10,315.00 Assessment, $ 2,578.75 Penalty, Late Filing
Submitted for Decision: May 31, 2001

Action: The Board deferred consideration of this matter.

William L. Hanzel, 62135
1996, $645.00 Assessment
Submitted for Decision: November 28, 2000
Contribution: Disclosures pursuant to Government Code Section 15626: No contributions were disclosed.

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 adopted a decision sustaining the modified action of the Franchise Tax Board.

Mark D. Perry, 62413
1996, $7,233.00 Claim for Refund – Assessment
$1,808.25 Claim for Refund - Penalty, Demand
$1,446.60 Claim for Refund - Penalty, Accuracy-related
1997, $ 140.11 Claim for Refund - Assessment
Submitted for Decision: December 18, 2000
Contribution: Disclosures pursuant to Government Code Section 15626: No contributions were disclosed.

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 adopted a decision sustaining the action of the Franchise Tax Board and imposing a $750.00 frivolous appeal penalty.

Yuan-Chieh Jen, 83327;
1997, $1,332.00 Assessment, $333.00 Penalty, Failure to File
$333.00 Penalty, Failure to File upon Notice and Demand
Submitted for Decision: January 24, 2001
Contribution: Disclosures pursuant to Government Code Section 15626: No contributions were disclosed.

Action: Upon motion of Ms. Mandel, seconded by Mr. Andal and duly carried, Mr. Parrish, Mr. Chiang, Mr. Andal and Ms. Mandel voting yes, Mr. Klehs voting no, the Board adopted a decision to grant the appeal reversing the action of the Franchise Tax Board.

Diane Claussen, 87103
1994, $548.26 Claim for Refund
1995, $548.26 Claim for Refund
Submitted for Decision: May 8, 2001
Contribution: Disclosures pursuant to Government Code Section 15626: No contributions were disclosed.

Action: Upon motion of Mr. Andal, seconded by Mr. Klehs and duly carried, Mr. Parrish, Mr. Chiang, Mr. Klehs, Mr. Andal voting yes, Ms. Mandel voting no, the Board adopted a decision sustaining the action of the Franchise Tax Board.

Melinda Bowles (Morton), 90088
1988, $4,503.04 Assessment
Submitted for Decision: March 26, 2001
Contribution: Disclosures pursuant to Government Code Section 15626: No contributions were disclosed.

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 adopted a decision sustaining the action of the Franchise Tax Board.

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
Submitted for Decision: May 31, 2001
Contribution: Disclosures pursuant to Government Code Section 15626: No contributions were disclosed.

Action: Upon motion of Mr. Andal, seconded by Mr. Klehs and duly carried, Mr. Parrish, Mr. Chiang, Mr. Klehs, Mr. Andal voting yes, Ms. Mandel voting no, the Board ordered the petition for rehearing be denied.

SALES AND USE TAX MATTERS, ADJUDICATORY

Los Robles Hospital, SR AR 015-611138; 110768
7-1-97 to 6-30-00, $64,176.65 Claim for Refund
Contribution: Disclosures pursuant to Government Code Section 15626: No contributions were disclosed.

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 approved the refund as recommended by staff.

Apple Graphics Inc., SR AP 017-749062; 61224
1-1-97 to 6-30-00, $263,022.04 Claim for Refund
Contribution: Disclosures pursuant to Government Code Section 15626: No contributions were disclosed.

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 approved the refund as recommended by staff.

Riverside Community Hospital, SR EH 023-001516; 110643
4-1-97 to 3-31-00, $93,180.45 Claim for Refund
Contribution: Disclosures pursuant to Government Code Section 15626: No contributions were disclosed.

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 approved the refund as recommended by staff.

Boise Locomotive Company, SR S OH 097-077033; 60466
1-1-97 to 12-31-97, $505,726.29 Claim for Refund
Contribution: Disclosures pursuant to Government Code Section 15626: No contributions were disclosed.

Action: Upon motion of Mr. Andal, seconded by Mr. Klehs and duly carried, Mr. Parrish, Mr. Chiang, Mr. Klehs, Mr. Andal voting yes, Ms. Mandel voting no, the Board approved the refund as recommended by staff.

LEGAL APPEALS MATTERS, CONSENT

The Board deferred the following matters: Andronik Sogoyan, SR ARF 53-000057; 89000969520, FR ARF 53-000426; 89000970540.

With respect to the Legal Appeals Matters, Consent Agenda, upon a single motion of Mr. Andal, seconded by Mr. Klehs and unanimously carried, Mr. Parrish, Mr. Chiang, Mr. Klehs, Mr. Andal and Ms. Mandel voting yes, Ms. Mandel not participating in Cisco Systems, Inc., SR Y GH 019-718623; 3120, the Board made the following orders:

Cisco Systems, Inc., SR Y GH 019-718623; 31201
7-1-93 to 6-30-96, $00.00 Tax
Action: Redetermine as recommended by Appeals Section. Ms. Mandel not participating.

Uriel A. Pena and Hinguilberto Pena, SR GH 26-825040; 89000688730
1-1-95 to 7-31-95, $00.00 Tax, $634.52 Penalty, Negligence
Uriel A. Pena, SR BHA 52-007364; 89000966460
10-1-95 to 11-30-95, $00.00 Tax, $169.17 Penalty, Negligence
Action: Redetermine as recommended by Appeals Section.

Andronik Sogoyan, SR ARF 53-000057; 89000969520
4-1-90 to 6-30-92, $14,801.85 Tax, $20,516.47 Penalty, Fraud
$ 1,480.19 Penalty, Finality
FR ARF 53-000426; 89000970540
4-1-90 to 4-30-92, $197,425.38 Tax, $55,621.09 Penalty, Fraud
$19,742.54 Penalty, Finality
Action: Deny the petition for rehearing.

Wageh Daoud Ishak; SR AP 99-207233-010; 89002147770
1-1-94 to 12-14-96, $21,675.54; $00.00 Penalty, Negligence
Action: Deny the petition for rehearing.

Stanley Arnold Del Carlo, SR GH 99-713529; 17172
7-1-95 to 9-30-98, $41,255.49 Tax, $00.00 Penalty, Negligence
Action: Redetermine as recommended by Appeals Section.

Charter Aviation, SU KHD 99-961280; 89002448190
1-1-89 to 6-30-96, $34,082.03 Tax, $00.00 Penalty
Action: Deny the petition for rehearing.

FRANCHISE AND INCOME TAX MATTERS, CONSENT

The Board deferred the following matter: Michael W. & Dawn L. Cook, 92487.

With respect to the Franchise & Income Tax Matters, Consent Agenda, upon a single 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 made the following orders:

Bayard M. & Lois S. Ordlock, 53037
1983, $12,350.00 Assessment
1984, $15,442.00 Assessment
1986, $ 795.00 Assessment
1988, $ 48.00 Assessment
Action: Sustain the action of the Franchise Tax Board.

Robert A. Harvey, 83322
1994, $1,696.00 Assessment, $424.00 Penalty, Delinquent
$339.20 Penalty, Accuracy
Action: Sustain the action of the Franchise Tax Board.

Lenora Koopmeiners, 87463
1998, $3,414.00 Assessment, $853.50 Penalty, Late Filing
Action: Sustain the modified action of the Franchise Tax Board.

Dorothy V. Benson, 88343
1995, $158.94 Claim for Refund – Interest, $100.00 Penalty, Delinquent
Action: Sustain the modified action of the Franchise Tax Board.

Theodore R. Brownell, 88367
1996, $1,054.00 Assessment
Action: Sustain the action of the Franchise Tax Board.

Thomas J. & Helen White, 88383
1994, $1.00 or more Claim for Refund
Action: Sustain the modified action of the Franchise Tax Board.

Larry Whitley, Sr. 88384
1996, $486.00 Assessment
Action: Sustain the action of the Franchise Tax Board.

Presidential Worldwide Travel, 88583
1995, $1,378.32 Claim for Refund
Action: Sustain the action of the Franchise Tax Board.

Richard E. Campbell, 88626
1998, $1,187.00 Assessment
Action: Sustain the action of the Franchise Tax Board.

Michael W. & Dawn L. Cook, 92487
1985, $126.94 Claim for Refund
1986, $719.83 Claim for Refund
1989, $270.24 Claim for Refund
Action: The Board deferred consideration of this matter.

Mohammed Talle, 94423
1989, $1,058.28 Assessment
>Action: Sustain the action of the Franchise Tax Board.

Michael O. Daniels, 42874
1997, $5,812.00 Assessment, $1,453.00 Penalty, Failure to File
$1,453.00 Penalty, Demand
Action: Deny the petition for rehearing.

Blake L. Wingle, 43088
1997, $3,395.00 Assessment, $848.75 Penalty, Failure to File
Action: Deny the petition for rehearing.

Michael J. Mitchell, 48794
1997, $1.00 or more Claim for Refund
Action: Approve the modified action of the Franchise Tax Board.

David J. Tyner, 55043
1997, $345.00 Assessment
Action: Deny the petition for rehearing.

Richard E. Campbell, 55467
1997, $1,221.87 Claim for Refund
Action: Deny the petition for rehearing.

John Waugaman, 57245
1997, $5,276.00 Assessment, $2,638.00 Penalty
Action: Deny the petition for rehearing.

Robert H. Hale, 62134
1997, $6,847.00 Assessment, $1,711.75 Penalty, Delinquent
Action: Deny the petition for rehearing.

Jack A. Needham, 62141
1996, $313.00 Assessment
Action: Deny the petition for rehearing.

Stephanie C. Trisler, 76206
1996, $320.77 Claim for Refund
Action: Deny the petition for rehearing.

George & Diane L. Land, 77129
1996, $2,649.82 Claim for Refund
Action: Deny the petition for rehearing.

Peter K. & Mimi Buckley, 99A-0204; 89002467370
1992, $823,509.00 Assessment
1994, $ 77,882.00 Assessment
Action: Deny the petition for rehearing.

HOMEOWNER AND RENTER PROPERTY TAX ASSISTANCE MATTERS

With respect to the Homeowner and Renter Property Tax Assistance Matters, Consent Agenda, upon a single 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 made the following orders:

Cortney J. Feazell, 92543
2000, $240.00 Claim for Credit
Action: Sustain the action of the Franchise Tax Board.

Wanda Lipscomb, 94031
2000, $210.00 Claim for Credit
Action: Sustain the action of the Franchise Tax Board.

Dudley A. Nishimine, 94059
2000, $1.00 or more Claim for Credit
Action: Sustain the action of the Franchise Tax Board.

Quendra Brown, 97901
2000, $600.00 Claim for Credit
Action: Sustain the action of the Franchise Tax Board.

Marilyn Lang, 98391
1999, $1.00 or more Claim for Credit
Action: Sustain the action of the Franchise Tax Board.

Michael Bracy, 98428
2000, $600.00 Claim for Credit
Action: Sustain the action of the Franchise Tax Board.

Ronnie Nazarian, 98588
2000, $240.00 Claim for Credit
Action: Sustain the action of the Franchise Tax Board.

Mamie Rodgers, 98633
2000, $240.00 Claim for Credit
Action: Sustain the action of the Franchise Tax Board.

Jamari K. Simmons, 99753
2000, $600.00 Claim for Credit
Action: Sustain the action of the Franchise Tax Board.

Cashae Denise Washington, 99763
2000, $600.00 Claim for Credit
Action: Sustain the action of the Franchise Tax Board.

Margie McAuley, 78254
1998, $197.50 Claim for Credit
Action: Deny the petition for rehearing.

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

With respect to the Sales and Use Tax Matters, Credits, Cancellation and Refunds, Consent Agenda, upon a single motion of Mr. Klehs, seconded by Mr. Andal and unanimously carried, Mr. Parrish, Mr. Chiang, Mr. Klehs, Mr. Andal and Ms. Mandel voting yes, Ms. Mandel not participating in National Semiconductor Corporation, SR GH 026-612160; 115959, the Board made the following orders:

Ungermann-Bass, Inc., SR Y GH 026-713619; 116676
10-1-94 to 4-30-97, $645,517.45
Action: Approve credit and cancellation as recommended by staff.

Citicorp Vendor Finance, Inc., SR S OHB 030-675262; 88669
1-1-95 to 12-31-97, $1,355,570.17
Action: Approve credit and cancellation as recommended by staff.

Charter Financial Inc., SR S OHB 030-680387; 59964
7-1-95 to 6-30-98, $72,683.77
Action: Approve credit and cancellation as recommended by staff.

Mellon Leasing Corporation, SP H UT 084-007951; 109778
12-30-98, $83,707.34
Action: Approve credit and cancellation as recommended by staff.

Ultratech Stepper, Inc., SR GH 099-230279; 115184
4-1-00 to 6-30-00, $105,189.01
Action: Approve credit and cancellation as recommended by staff.

L.A. Unified School District, SR AA 011-296992; 51163
10-1-96 to 9-30-99, $634,172.70
Action: Approve refund as recommended by staff.

Dames & Moore Inc., SR S AA 011-300040; 97570
4-1-00 to 6-30-00, $74,188.31
Action: Approve refund as recommended by staff.

Dunn Bros. Commercial Printers Inc., SR AB 012-645440; 50333
10-1-96 to 12-31-99, $59,848.33
Action: Approve refund as recommended by staff.

Gene Tawa Inc., SR AB 012-733623; 88739
7-1-97 to 9-30-99, $121,616.26
Action: Approve refund as recommended by staff.

Jacobson & Atkins Advertising Inc., SR Y AC 013-842224; 52709
10-1-95 to 12-31-99, $518,550.01
Action: Approve refund as recommended by staff.

Inland Kenworth Inc., SR Y OH 014-606154; 99995
7-1-00 to 9-30-00, $233,452.64
Action: Approve refund as recommended by staff.

Southern California Graphics Corporation, SR AS 018-099312; 51353
10-1-96 to 12-31-99, $61,957.45
Action: Approve refund as recommended by staff.

Southwest Marine Inc., SR Y FH 025-680914; 89000526180
1-1-87 to 12-31-90, $1,540,588.07
Action: Approve refund as recommended by staff.

National Semiconductor Corporation, SR GH 026-612160; 115959
6-27-88 to 6-26-96, $6,126,466.25
Action: Approve refund as recommended by staff. Ms. Mandel not participating.

NEC Electronics U.S.A. Inc., SR Y GH 026-619802; 61928
10-1-96 to 12-31-98, $1,262,713.69
Action: Approve refund as recommended by staff.

Cylink Corporation, SR S GH 026-767436; 115164
4-1-97 to 3-31-00, $215,367.46
Action: Approve refund as recommended by staff.

Sacramento A-One Door, SR Z KH 028-051839; 110063
7-1-00 to 12-31-00, $136,582.73
Action: Approve refund as recommended by staff.

LTX Corporation, SR OHB 030-637051; 99251
4-1-00 to 6-30-00, $251,884.69
Action: Approve refund as recommended by staff.

Krupp Robins, Inc., SR S OH 030-667948; 37501
7-1-96 to 12-31-96, $131,983.07
Action: Approve refund as recommended by staff.

Betsy Ann Stoecker, SR EA 097-024059; 116148
7-1-97 to 9-30-00, $111,055.44
Action: Approve refund as recommended by staff.

Katherine Kawai Lam, SR AP 097-188888; 115295
10-1-97 to 12-31-98, $63,558.69
Action: Approve refund as recommended by staff.

RDO Truck Riverside Company, SR Y EH 097-576146; 97581
4-1-00 to 6-30-00, $69,976.06
Action: Approve refund as recommended by staff.

Fusionstorm, SC OHB 097-726626; 115598
1-1-98 to 3-31-00, $330,612.61
Action: Approve refund as recommended by staff.

G. P. Resources Inc., SR Y AB 098-014907; 100003
4-1-00 to 6-30-00, $146,309.61
Action: Approve refund as recommended by staff.

Thrifty Payless, Inc., SR Z OHB 099-357038; 56871
3-28-99 to 6-26-99, $1,433,820.78
Action: Approve refund as recommended by staff.

Resources Unlimited, Inc., SR AB 099-437618; 112113
1-1-00 to 3-31-00, $57,268.41
Action: Approve refund as recommended by staff.

M-Systems, Inc., SR CHA 099-543106; 87301
4-1-00 to 6-30-00, $52,411.38
Action: Approve refund as recommended by staff.

Marina Brothers, Inc., SR GH 099-652495; 100528
10-1-96 to 12-31-98, $66,632.06
Action: Approve refund as recommended by staff.

Weston Mason & Associates, SR AS 099-816655; 56916
1-1-97 to 12-31-99, $109,140.93
Action: Approve refund as recommended by staff.

Ecometry Corporation, SC OHC 099-852367; 82097
10-1-99 to 3-31-00, $59,203.50
Action: Approve refund as recommended by staff.

DPAS Acquistion Corporation, SR BHA 099-858938; 99992
1-1-98 to 12-31-99, $60,222.15
Action: Approve refund as recommended by staff.

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

With respect to the Sales and Use Tax Matters, Redeterminations, Relief of Penalty and Denials of Claims for Refund, Consent Agenda, upon a single 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 made the following orders:

Dun & Bradstreet Inc., SC OHB 011-273141; 89000008790
4-1-93 to 3-31-96, $120,641.68
Action: Redetermine as recommended by staff.

Minolta Corporation, SR S OHB 011-609084; 57675
10-1-95 to 12-31-98, $94,290.40
Action: Redetermine as recommended by staff.

Ralph’s Grocery Company, SR Y AA 014-743151; 82947
1-30-95 to 4-26-98, $146,092.70
Action: Redetermine as recommended by staff.

Versant Corporation, SR CHA 019-763124; 77559
7-1-96 to 6-30-99, $124,255.52
Action: Redetermine as recommended by staff.

Celerity Power Services Inc., SR JHF 021-835561; 75704
1-1-97 to 9-30-99, $199,029.98
Action: Redetermine as recommended by staff.

Rogers Corporation, SR S OHB 030-637766
7-1-95 to 6-30-98, $85,039.95
Action: Redetermine as recommended by staff.

Integrated Technology Corporation, SC OH 030-651698; 88690
7-1-96 to 12-31-98, $51,554.25
Action: Redetermine as recommended by staff.

Mitel Communications Solutions, Inc., SR Z OHB 030-701862; 89000886730
10-1-94 to 6-30-98, $53,233.51
Action: Redetermine as recommended by staff.

Gary F. Miller, SP H UT 082-677213; 17896
8-15-97, $194,979.00
Action: Redetermine as recommended by staff.

Aircraft Ventures LLC, SP H UT 084-011350; 92787
4-4-97, $726,000.00
Action: Redetermine as recommended by staff.

Tyler Ranch Inc., SP S UT 084-011906; 99920
12-3-94, $114,441.25
Action: Redetermine as recommended by staff.

Royal Star Sportfishing Inc., SB G UT 084-016577; 112590
7-23-99, $110,825.00
Action: Redetermine as recommended by staff.

McKessonHBOC Inc., SP H UT 084-19707; 106437
2-17-99, $1,168.750.00
Action: Redetermine as recommended by staff.

Sterling Jewelers Inc., SR Y OHA 030-703133; 115666
10-1-00 to 12-31-00, $117,279.42
Action: Approve relief of penalty as recommended by staff.

Jacobs Electronics Inc., SC OHC 097-756997; 116432
1-1-93 to 9-30-00, $50,298.35
Action: Approve relief of penalty as recommended by staff.

Cardiovascular Concepts Inc., SR GH 099-636345; 58311
1-1-97 to 12-31-98, $84,044.00
Action: Deny claim for refund as recommended by staff.

G. S. of San Diego, Inc., SR Y OHC 099-855785; 16924
4-1-96 to 6-30-99, $57,363.04
Action: Deny claim for refund as recommended by staff.

Allegiance Healthcare Corporation, SR Z OHA 099-972272; 19075
10-1-96 to 9-30-98, $82,937.57
Action: Deny claim for refund as recommended by staff.

SPECIAL TAXES MATTERS, CREDITS, CANCELLATIONS & REFUNDS, CONSENT

With respect to the Special Taxes Matters, Credits, Cancellations & Refunds, Consent Agenda, upon a single motion of Mr. Andal, seconded by Mr. Klehs and unanimously carried, Mr. Parrish, Mr. Chiang, Mr. Klehs and Mr. Andal voting yes, Ms. Mandel not participating, the Board made the following order:

City of Anaheim, EU ET 031-000002; 115223
1-1-98 to 12-31-00, $61,680.86
Action: Approve the refund as recommended by Staff. Ms. Mandel not participating.

BUSINESS TAXES APPEALS HEARINGS

Yu Kyu & Seung Hee Kim, SR DHJ 99-357159; 89002215500
4-1-94 to 3-31-97, $37,867.72 Tax, $00.00 Penalty, Negligence

For Petitioner: Kornelia Davidson, Attorney
Abraham Brown, Attorney
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 taxable sales were computed in accordance with the facts.

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.

Glaziner Bros., Inc., SR KHB 28-833951; 89000769770
1-1-95 to 12-31-97, $13,227.92

For Petitioner: Abe Golomb, Representative
For Sales and Use Tax Department: Kevin Hanks, Hearing Representative

Contribution: Disclosures pursuant to Government Code Section 15626: No contributions were disclosed.
Issues: Whether petitioner has met its burden of establishing that a certain item was nonrecurring and that it should be removed from the mark-up factor analysis, resulting in a lower measure of tax per the cost accountability test. Whether an adjustment to the measure of tax in Item D should be allowed for shrinkage. Whether petitioner has met its burden of establishing that the ex-tax purchases of materials were subject to sales tax, rather than use tax. Whether the lack of a customer’s signature on some of petitioner’s time and material contracts qualifies the contracts as lump sum contracts, thereby reducing petitioner’s use tax liability.

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 submitted for decision; granting the petitioner 30 days to submit additional documentation, the Department 30 days to review the documentation and the Appeals Section 30 days thereafter to bring the matter back to the Board with a final recommendation.

Edward Short, SB UT 84-001200; 89001165260
5-31-98, $474.00 Tax, $47.40 Penalty, Negligence

For Petitioner: Appearance Waived
For Sales and Use Tax Department: Robert Tucker, Counsel

Contribution: Disclosures pursuant to Government Code Section 15626: No contributions were disclosed.
Issues: Whether petitioner’s claim that the previous owner "swindled him" warrants relief from the tax. Whether relief from the negligence penalty is warranted.

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 Appeals Section recommendation and the negligence penalty be deleted.

Port City Aviation, Inc., SR KH 28-854385; 89000774750
4-1-94 to 6-30-94, $00.00 Tax, $00.00 Penalty, Negligence
SR KH 28-854385; 89000774760
4-1-95 to 3-31-98, $5,019.83 Tax, $560.67 Penalty, Negligence

For Petitioner: Appearance Waived
For Sales and Use Tax Department: Sharon Jarvis, Counsel

Contribution: Disclosures pursuant to Government Code Section 15626: No contributions were disclosed.
Issues: Whether relief from the penalty for fraud is warranted for 89000774750. Whether unreported parts sales included non-sales items for 89000774760. Whether relief from the negligence penalty is warranted for 89000774760

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 petition be redetermined as recommended by the Appeals Section.

John W. Blasingame, Lloyd McFarlin & Kathryn J. Coleman, SR KH 52-007169; 89000966380
3-31-96, $5.572.25 Tax, $557.23 Penalty, Failure to File
$ 00.00 Penalty, Fraud

For Petitioner: Appearance Waived
For Sales and Use Tax Department: Sharon Jarvis, Counsel

Contribution: Disclosures pursuant to Government Code Section 15626: No contributions were disclosed.
Issues: Whether relief from the fraud penalty is warranted. If so, whether the Notice of Determination was issued timely. Whether relief from the failure to file penalty is warranted.

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 petition be redetermined as recommended by the Appeals Section.

Crompton Instruments, Inc., SY EA 24-807204; 89000464870
1-1-94 to 8-15-95, $73,650.02 Tax, $9,880.46 Penalty, Negligence

For Petitioner: Kevin J. McHugh, Director of Taxes
Kenneth Andsager, CPA
Margo A. Metcalf, Sales Tax Administrator
For Sales and Use Tax Department: Robert Tucker, Counsel

Contribution: Disclosures pursuant to Government Code Section 15626: No contributions were disclosed.
Issues: Whether the test of disallowed ex-tax sales includes certain valid exempt and nontaxable sales. Whether relief from the negligence penalty is warranted.

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.

LEGISLATIVE COMMITTEE

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 approved the committee report with the exception of AB81.

PROPERTY TAX COMMITTEE

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 approved the committee report.

CUSTOMER SERVICES & ADMINISTRATIVE EFFICIENCY COMMITTEE

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 approved the committee report.

BUSINESS TAXES COMMITTEE

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 approved the committee report.

FINAL ACTION ON PETITIONS HEARD JUNE 21, 2001

Mr. Klehs moved to redetermine the petition of Donald Lewis Smyth, SC OH 99-226088; 89002156260, The Staff of Life, Inc., SN OH 53-000555; 89000970830 as recommended by the Appeals Section. The motion seconded by Mr. Andal but failed to carry, Mr. Klehs and Mr. Andal voting yes, Mr. Parrish and Ms. Mandel voting no, Mr. Chiang absent.

The Board deferred consideration of this matter to the next adjudicatory calendar.

The Board adjourned at 4:20 p.m.

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