Approved Minutes june 29, 200

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

BUSINESS TAXES HEARINGS

Ibrahim Ayyoub, SR AP 99-217732-010; 89002152730

2-17-93 to 12-31-95, $9,977.24

For Petitioner: Mark Hathaway, Attorney
For Sales and Use Tax Department: Warren Astleford, Counsel

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

Issues: Whether petitioner's argument that the issuance of the notice of determination was unconstitutional warrants relief from the tax.

Whether the notice of determination was barred by the statute of limitations.

Whether petitioner is entitled to a credit against the measure of tax and a refund of self-reported tax due to a loss of inventory destroyed by fire.

Whether any portion of the amounts claimed on returns for bad debts is allowable.

Whether the measure of tax is excessive.

During hearing of this petition, Chairman Andal entered the Boardroom.

Action:Upon motion of Mr. Klehs, seconded by Mr. Parrish and unanimously carried, Mr. Andal, Mr. Parrish, Mr. Klehs, Mr. Chiang and Ms. Mandel voting yes, the Board ordered that the petition be redetermined with a ten percent reduction.

Acute Care Alternative, Inc., SS AA 99-302874-010; 89002190930

10-1-93 to 12-31-96, $45,239.08

For Petitioner: No Appearance
For Sales and Use Tax Department: Janice Thurston, Counsel

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

Action:The Board took no action.

Fidel Martinez Martinez, SR AB 99-421752-010; 89002246130

7-1-94 to 6-30-97, $32,858.12

For Petitioner: Fidel Martinez, Owner
Juan Medina, Manager
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 the audit allowance of 5 percent of purchases used for complimentary drinks is sufficient.

Whether relief from the negligence penalty is warranted.

Action:Upon motion of Mr. Chiang, seconded by Mr. Klehs and unanimously carried, Mr. Andal, Mr. Parrish, Mr. Klehs, Mr. Chiang and Ms. Mandel voting yes, the Board ordered a 1% pilferage allowance.

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

Mauricio Orlando Orsorio, Jr., SR AA 99-443402-010; 89002257380

4-1-95 to 7-31-97, $6,991.13

For Petitioner: Mauricio Orsorio, Jr.
Ludmilla Orsorio
For Sales and Use Tax Department: Richard Goodrich, Hearing Representative

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

Issues: Whether audited taxable sales were computed in accordance with the facts.

Whether the cost of self-consumed beverages was computed in accordance with the facts.

Whether relief from the negligence penalty is warranted.

Action:Upon motion of Mr. Andal, seconded by Mr. Klehs and unanimously carried, Mr. Andal, Mr. Parrish, Mr. Klehs and Mr. Chiang voting yes, Ms. Mandel abstaining, the Board ordered that the measure of tax be lowered to reflect the original audit results.

Mr. Andal moved that the negligence penalty be deleted. The motion was seconded by Mr. Parrish but failed to carry, Mr. Andal and Mr. Parrish voting yes, Mr. Klehs, Mr. Chiang and Ms. Mandel voting no.

Upon motion of Mr. Klehs, seconded by Mr. Chiang and duly carried, Mr. Klehs, Mr. Chiang and Ms. Mandel voting yes, Mr. Andal and Mr. Parrish voting no, the Board ordered that the petition be redetermined with regard to the negligence penalty.

Optivus Technology, Inc., SR EH 99-482047-010; 89002275710

5-1-93 to 9-30-96, $105,573.71

For Petitioner: No Appearance
For Sales and Use Tax Department: Warren Astleford, Counsel

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

Action:The Board took no action.

Achievers Unlimited, Inc., SC OHC 99-620328-010, -020, SS OH 99-748619-010; 89002331450, 89002331470, 89002380730

10-1-92 to 5-31-95, $188,834.26

For Petitioner: R. Gary Hanger, COO
Mark L. Pomeranz, Counsel for Achievers
For Sales and Use Tax Department: Jeffrey Graybill, Counsel

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

Issues: Whether relief from the tax is warranted based on petitioner's allegation that it does not have nexus in the State of California.

Whether the liabilities are barred by the statute of limitations.

During hearing of this petition, Mr. Klehs left the Boardroom.

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

The Board recessed from 10:10 a.m. to 10:25 a.m. and reconvened with

Mr. Andal, Mr. Parrish, Mr. Klehs, Mr. Chiang and Ms. Mandel present.

BUSINESS TAXES HEARINGS

Gutierrez Restaurants, Inc., SR DH 99-501080-010, 020, 030; 32159, 33091

11-18-93 to 12-31-94, $3,487.72

Alice and Heliodoro Gutierrez, SR AC 13-834226; 89000086550, SR ARH 22-820125-010,

SR AC 13848556-010; 89000386850, 8900089730

8-1-88 to 12-31-94, $58,402.79

For Petitioner: Barri Sibbald, C.P.A.
For Sales and Use Tax Department: Richard Goodrich, Hearing Representative

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

Issues: Whether the evidence establishes that an unstated portion of the additional bank deposits represents nontaxable sales of merchandise to other restaurants.

Whether relief should be granted based on petitioner's argument that audited taxable sales exceed the capacity of the restaurant.

Whether relief should be granted based on petitioner's argument that taxable sales were properly recorded on sales tickets and accurately recorded on sales worksheets.

Whether relief should be granted based on petitioner's argument that taxable sales were properly reported based on a "no-change" audit performed by the Internal Revenue Service.

Whether relief should be granted based on petitioner's argument that the waiver of limitation dated January 7, 1997, was not signed by a corporate officer or a person with power of attorney.

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

FINAL ACTIONS ON CASES HEARD JUNE 28, 2000

Upon motion of Mr. Klehs, seconded by Mr. Chiang and duly carried, Mr. Klehs, Mr. Chiang and Ms. Mandel voting yes, Mr. Andal and Mr. Parrish voting no, the Board ordered that the petition of Michael P. Maher, SA UT 84-002330-001, 89001166060 be redetermined as recommended by the Appeals Section.

FINAL ACTIONS ON CASES HEARD JUNE 29, 2000

Upon motion of Mr. Andal, seconded by Mr. Klehs and unanimously carried, Mr. Andal, Mr. Parrish, Mr. Klehs, Mr. Chiang and Ms. Mandel voting yes, the Board ordered that the petition of Fidel Martinez Martinez, SR AB 99-421752-010; 89002246130, be redetermined as recommended by the Appeals Section.

Upon motion of Mr. Klehs, seconded by Mr. Chiang and unanimously carried, Mr. Andal, Mr. Parrish, Mr. Klehs, Mr. Chiang and Ms. Mandel voting yes, the Board ordered that the petition of Achievers Unlimited, Inc., SC OHC 99-620328-010, -020, SS OH 99-748619-010; 89002331450, 89002331470, 89002380730, be redetermined as recommended by the Appeals Section.

Mr. Parrish moved that the fraud penalty be reduced to a negligence penalty for the petitions of Gutierrez Restaurants, Inc., SR DH 99-501080-010, 020, 030; 32159, 33091, and Alice and Heliodoro Gutierrez, SR AC 13-834226; 89000086550, and Heliodoro Gutierrez, SR ARH 22-820125-010, SR AC 13-848556-010; 8900386850, 89000089730. The motion was seconded by Mr. Andal but failed to carry, Mr. Andal and Mr. Parrish voting yes, Mr. Klehs, Mr. Chiang and Ms. Mandel voting no.

Upon motion of Mr. Klehs and duly carried, Mr. Andal, Mr. Klehs and Ms. Mandel voting yes, Mr. Parrish and Mr. Chiang voting no, the Board ordered that the petitions be redetermined as recommended by the Appeals Section.

The Board recessed at 10:55 a.m. and reconvened at 1:45 p.m. with Mr. Andal, Mr. Parrish, Mr. Chiang and Ms. Mandel present.

BUSINESS TAXES HEARINGS

Heang Yu Heng Jewelry, Inc., SR AA 11-812052-010; 89000035060

2-1-92 to 6-30-96, $848,912.96

For Petitioner: Larry Rothman, Attorney
Long Ta
For Sales and Use Tax Department: Richard Goodrich, Hearing Representative

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

Issues: Whether the understatement of retail sales was established in accordance with the facts.

Whether the evidence shows that the overstatement of sales for resale is excessive.

Whether the evidence shows that the overstatement of sales in interstate commerce as audited is excessive.

Whether relief from the fraud penalty is warranted.

Action:Upon motion of Mr. Parrish, seconded by Mr. Andal and unanimously carried, Mr. Andal, Mr. Parrish, Mr. Chiang and Ms. Mandel voting yes, Mr. Klehs absent, the Board ordered that the measure of tax be reduced by $2,139,000.

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

Jorge Enrique Salguero, SR AB 12-721438-010; 89000051020

1-1-92 to 9-30-95, $66,890.92

For Petitioner: Arthur Close, Jr.
Jorge Enrique Salguero
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 the retail selling prices of vehicles used to establish audited taxable sales are excessive.

Whether the evidence shows that a reduction in the measure of tax is warranted to reflect alleged sales for resale.

Whether relief from the tax is warranted based on petitioner's allegation that he is unable to pay the liability.

Action:Upon motion of Mr. Parrish, seconded by Mr. Chiang and unanimously carried, Mr. Andal, Mr. Parrish, Mr. Chiang and Ms. Mandel voting yes, Mr. Klehs absent, the Board adopted a revised Appeals Section recommendation.

Upon motion of Mr. Parrish, seconded by Mr. Andal and duly carried, Mr. Andal and Mr. Parrish voting yes, Ms. Mandel voting no, Mr. Chiang abstaining, Mr. Klehs absent, the Board removed the amount of tax added after the reaudit and reconciled with the Appeals recommendation.

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

Edward C. Snow and Karen A. Snow, SR AB 99-753510-010, 020, 030; 89002382700, 89002382710, 89002382720

12-1-91 to 9-30-95, $12,511.05

Eddie's Convenience Stores, Inc., SY AB 99-828079-010; 89002408070

12-1-91 to 9-30-95, $12,511.05

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 taxable sales were established in accordance with the facts.

Whether relief from interest is warranted.

Action:Upon motion of Mr. Chiang, seconded by Mr. Parrish and unanimously carried, Mr. Andal, Mr. Parrish, Mr. Chiang and Ms. Mandel voting yes, Mr. Klehs absent, the Board adopted a revised Appeals Section recommendation.

ZMA, Inc., SX AC 99-767509-010; 89002387220

7-14-92 to 12-31-94, $63,809.73

For Petitioner: No Appearance
For Sales and Use Tax Department: Warren Astleford, Counsel

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

Action:The Board took no action.

The Board recessed at 2:25 p.m. and reconvened at 2:30 p.m. with Mr. Andal, Mr. Parrish and Ms. Mandel present.

BUSINESS TAXES HEARINGS

Moutaz Mamloik and Carlos Romo, Jr., SR AP 99-947064-010; 8900244420

1-1-96 to 3-31-96, $5,313.70

For Petitioner: Moutaz Mamlouk
Sophia Burns, Accountant
Peter Han, Landlord
For Sales and Use Tax Department: Warren Astleford, Counsel

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

Issue: Whether petitioner is responsible for successor liability.

During hearing of this petition, Mr. Chiang entered the Boardroom.

Action:Upon motion of Mr. Andal, seconded by Mr. Parrish and unanimously carried, Mr. Andal, Mr. Parrish, Mr. Chiang and Ms. Mandel voting yes, Mr. Klehs absent, the Board ordered that the petition be redetermined, deleting the failure to file penalty.

Norton S. Geller, SR AC 13-726965-010; 89000069820

4-1-94 to 3-31-97, $23,540.97

For Petitioner: No Appearance
For Sales and Use Tax Department: Janice Thurston, Counsel

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

Action:The Board took no action.

Philip Cohanim and Edward Cohanim, SX AC 13-870132-010; 89000095480

1-1-94 to 12-31-96, $36,420.54

For Petitioner: No Appearance
For Sales and Use Tax Department: Jeffrey Graybill, Counsel

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

Issue: Whether petitioners' purchase and use of certain catalogs is subject to use tax.

Action:Upon motion of Mr. Chiang, seconded by Ms. Mandel and unanimously carried, Mr. Andal, Mr. Parrish, Mr. Chiang and Ms. Mandel voting yes, Mr. Klehs absent, the Board adopted the revised Appeals Section recommendation to grant the petition.

Rosa M. Moreno, SR AP 17-767866-010; 89000212610

7-1-94 to 6-30-97, $6,125.11

For Petitioner: Moises Lissen, Bookkeeper
Rosa M. Moreno, Owner
For Sales and Use Tax Department: Mark Woolston, Hearing Representative

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

Issues: Whether audited taxable sales were computed in accordance with the facts.

Whether relief is warranted from the penalty for negligence.

Action:Upon motion of Mr. Parrish, seconded by Mr. Andal and unanimously carried, Mr. Andal, Mr. Parrish, Mr. Chiang and Ms. Mandel voting yes, Mr. Klehs absent, the Board accepted the revised recommendation of Sales and Use Tax Department.

Upon motion of Mr. Chiang, seconded by Mr. Parrish and unanimously carried, Mr. Andal, Mr. Parrish, Mr. Chiang and Ms. Mandel voting yes, Mr. Klehs absent, the Board removed the negligence penalty.

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

Woody's Bicycle World, Inc., SR AS 18-686601-010; 89000237030

1-1-93 to 9-30-96, $15,218.83

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 petitioner has provided evidence that the Board's determination of the measure of tax is erroneous.

Whether relief from the negligence penalty is warranted.

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

Mr. Klehs entered the Boardroom.

Rodolfo Torres, SR AA 12-672572-010; 89000044210

4-1-94 to 12-31-96, $8,493.86

Juana Torres, SR AP 99-006237-010; 89002101730

1-1-95 to 1-16-97, $5,917.86

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.

Issue: Whether the evidence shows that the audited weighted markup of 162.59% is excessive.

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

FINAL ACTIONS ON CASES HEARD JUNE 29, 2000

Upon motion of Mr. Andal, seconded by Mr. Chiang and unanimously carried, Mr. Andal, Mr. Parrish, Mr. Klehs, Mr. Chiang and Ms. Mandel voting yes, the Board ordered that the petition of Jorge Enrique Salguero, SR AB 12-721438-010; 89000051020, be redetermined as recommended by the Appeals Section, providing the taxpayer with a payment plan.

Mr. Parrish moved that the fraud penalty be reduced to a negligence penalty for the petition of Heang Yu Heng Jewelry, Inc., SR AA 11-812052-010; 89000035060. The motion was seconded by Mr. Chiang but failed to carry, Mr. Parrish voting yes, Mr. Andal, Mr. Klehs, Mr. Chiang and Ms. Mandel voting no.

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

Upon motion of Mr. Klehs, seconded by Mr. Andal and unanimously carried, Mr. Andal, Mr. Parrish, Mr. Klehs, Mr. Chiang and Ms. Mandel voting yes, the Board ordered that the petition of Woody's Bicycle World, Inc., SR AS 18-686601-010; 89000237030, be redetermined as recommended by the Appeals Section.

The Board adjourned at 2:50 p.m.

The foregoing minutes are adopted by the Board on September 14, 2000.