Approved 2000 Minutes - Thursday August 10, 2000

The Board met at its offices at 450 N Street, Sacramento, at 9:30 a.m. with Chairman Andal, Mr. Parrish, Mr. Klehs, Mr. Chiang present, and Ms. Mandel present on behalf of Dr. Connell in accordance with Government Code Section 7.9.

ANNOUNCEMENT OF CLOSED SESSION

The Board went immediately into closed session with Mr. Andal,

Mr. Chiang, and Ms. Mandel present.

CLOSED SESSION

The Board met to discuss personnel matters and Revenue and Taxation Code 7093.5 and 50156.11 settlements and pending litigation.

The Board recessed at 9:30 a.m. and reconvened at 9:31 in open session with Mr. Andal, Mr. Parrish, Mr. Klehs, Mr. Chiang and Ms. Mandel present.

EMERGENCY TELEPHONE USERS SURCHARGE RATE

Upon motion of Mr. Andal, seconded by Mr. Parrish, and duly carried, Mr. Andal, Mr. Parrish, Mr. Klehs, and Ms. Mandel voting yes and Mr. Chiang not participating, the Board fixed the Emergency Telephone Users Surcharge Rate at .72 percent and ordered that the rate be published in its minutes.

BUSINESS TAXES COMMITTEE REPORT

Ramon J. Hirsig, Deputy Director, Sales and Use Tax Department, recommended adoption of the Business Taxes Committee Report.

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 approved the committee report. (Exhibit 8.1).

PROPERTY TAX COMMITTEE REPORT

Richard Johnson, Deputy Director, Property Taxes Department, recommended adoption of the Property Tax Committee Report.

Upon motion of Ms. Mandel, seconded by Mr. Chiang and unanimously carried, Mr. Andal, Mr. Parrish, Mr. Klehs, Mr. Chiang and Ms. Mandel voting yes, the Board approved the committee report. (Exhibit 8.2).

LEGAL APPEALS MATTERS

John Chris Mogannam, SR KH 99-108404-010; 89002106580

1-1-93 to 12-31-95, $29,543.81

Considered by the Board:November 18, 1999

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. Andal, Mr. Parrish, and Ms. Mandel voting yes, Mr. Klehs, Mr. Chiang voting no, the Board adopted the Memorandum Opinion.

Sam Arman, TK MT 44-038726-010; 89000950260

1-1-91 to 6-30-97, $25,549.89

Considered by the Board:May 3, 2000

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. Andal, Mr. Parrish, Mr. Klehs, Mr. Chiang and Ms. Mandel voting yes, the Board ordered that the petition be redetermined in accordance with the reaudit report dated July 3, 2000.

John Romero, SY JH 27-773579-010; 89000718810

1-1-94 to 12-31-96, $20,379.39

Considered by the Board:June 14, 2000

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. Andal, Mr. Parrish, Mr. Klehs, Mr. Chiang and Ms. Mandel voting yes, the Board ordered that the petition be redetermined as recommended by Appeals and the penalty be deleted.

Robert Lusk Davis and Samuel David Glick, SR AS 99-109329-010; 89002106920

10-1-92 through 9-30-95, $41,296.59

Considered by the Board: June 14, 2000

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. Andal, Mr. Parrish, Mr. Klehs, Mr. Chiang and Ms. Mandel voting yes, the Board ordered that the petition be redetermined as recommended by Appeals.

FRANCHISE AND INCOME TAX MATTERS

Arthur H. & Suzanne G. Stolnitz, 98R-0078; 89002465890

1992, $10,505.00

Considered by the Board: May 3, 2000

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

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

Upon motion of Mr. Andal, seconded by Ms. Mandel and duly carried, Mr. Andal, Mr. Chiang and Ms. Mandel voting yes, Mr. Parrish and Mr. Klehs voting no, the Board ordered that the petition for rehearing be granted allowing the parties to brief on the application of the Uncodified Act not previously raised.

LEGAL APPEALS MATTERS

With respect to the Legal Appeals Matters Consent Agenda, upon a single

motion of Mr. Andal, seconded by Mr. Parrish and unanimously carried, Mr. Andal, Mr. Parrish, Mr. Klehs, Mr. Chiang and Ms. Mandel voting yes, the Board made the following orders:

Bay Area Home Health Care, SR GH 26-735750-010; 89222658470

4-1-94 to 12-31-96, $15,380.65

Considered by the Board:Hearing Notice Sent – No Response

Action: Redetermined as recommended by the Appeals Section.

Boris Podtetenieff, SR JH 53-000550-010; 89000970810

6-1-95 to 12-31-95, $4,070.00

Considered by the Board:Hearing Notice Sent – No Response

Action: Redetermined as recommended by the Appeals Section.

Arden Bohanec, SR JH 99-255540-010; 89002169570

7-1-94 to 3-31-97, $3,098.29

Considered by the Board:Hearing Notice Sent – No Response

Action: Redetermined in accordance with the reaudit report dated June 2, 1998, and the negligence penalty is deleted.

Michael William Hamilton, SR JHE 99-896955-010; 89002430780

1-1-92 to 9-30-95, $7,817.88

Considered by the Board:Hearing Notice Sent – No Response

Action: Redetermined as recommended by the Appeals Section.

Saddleback Recreational Vehicles, Inc., SR EA 24-915739-010; 89000490280

1-1-92 to 12-31-94, $4,064.80

Considered by the Board:Hearing Notice Sent – Appearance Waived

Action: Granted and ordered the tax redetermined in accordance with the second reaudit report dated June 20, 2000.

Oz Technologies, Inc., SR CH 21-831838-010; 89000340810

4-1-95 to 6-30-97, $8,699.64

Considered by the Board:Hearing Notice Sent – Hearing Request Withdrawn

Action: Redetermined in accordance with the reaudit report dated March 19, 1999.

Fuad Hassan Dahan Ali, SR CH 99-240166-010; 89002162770

1-1-94 to 3-31-97, $57,677.56

Considered by the Board:Hearing Notice Sent – Hearing Request Withdrawn

Action: Redetermined in accordance with the reaudit report dated April 22, 1999.

Scaffold Supply Company, Inc. SR AB 14-763439-010; 89000127430

7-1-91 to 6-30-94, $ 74,410.80

Considered by the Board:Hearing Request Withdrawn

Action: Redetermined in accordance with the second reaudit report dated December 5, 1996.

LDI, Inc., SR AS 98-967567-010; 89002449970

4-1-95 to 6-30-97, $23,267.56

Considered by the Board:Hearing Request Withdrawn

Action: Granted the petition and the tax redetermined to zero.

Hamid & Hossein Asemanfar, SR AC 13-883621-010; 89000099100

2-1-92 to 12-31-95, $168,381.40

Considered by the Board:Petition for Rehearing

Action: Denied the petition for rehearing and the tax redetermined in accordance with the reaudit dated May 5, 2000.

FRANCHISE AND INCOME TAX MATTERS

With respect to the Franchise and Income Tax Matters Consent Agenda,

upon a single 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 made the following orders:

James W. & Linda G. Bartels, 47607

1995, $1,962.00

Action: Sustained the action of the Franchise Tax Board.

Nikita R. Battle, 51506

1998, $454.00

Action: Sustained the action of the Franchise Tax Board.

Don E. Briggs, 36473

1997, $722.00

Action: Sustained the action of the Franchise Tax Board.

Joseph Brom, 18711

1997, $270.00

Action: Sustained the action of the Franchise Tax Board.

Donald D. Brown, 99A-0394; 15711

1993, $1.00 or more

1996, $1.00 or more

Action: Sustained the action of the Franchise Tax Board.

Robert E. Brown, Jr., 34401

1997, $1,158.00

Action: Sustained the action of the Franchise Tax Board.

Arcie W. & Nyla J. Christopher, 27771

1994, $1.00 or more

1995, $1.00 or more

Action: Sustained the action of the Franchise Tax Board.

Robert E. Davis, 18715

1993, $202.20

Action: Sustained the action of the Franchise Tax Board.

James D. Doss, 18721

1997, $1,159.00

Action: Sustained the action of the Franchise Tax Board.

Dale A. Erickson, 99A-0254; 89002468620

1984, $6,461.63

Action: Sustained the action of the Franchise Tax Board.

Brenda Estrada, 34327

1997, $254.86

Action: Deferred consideration of this matter.

Emanuel M. & Sandra E. Estrada, 99A-0074; 89002462200

1992, $10,561.00

Action: Sustained the action of the Franchise Tax Board.

Kenneth M. Fleming, 41104

1991, $6,829.11

Action: Sustained the action of the Franchise Tax Board.

Thomas F. Fleming, 29235

1996, $418.42

Action: Sustained the action of the Franchise Tax Board.

Ernie Garcia, 27580

1997, $116.00

Action: Sustained the action of the Franchise Tax Board.

Samuel J. Gomez, 27583

1997, $568.00

Action: Sustained the action of the Franchise Tax Board.

Jason Gross, 27976

1995, $709.00

Action: Sustained the action of the Franchise Tax Board.

Leo Guerrero, 99R-0079; 89002462750

1996, $609.50

Action: Sustained the action of the Franchise Tax Board.

Anthony P. Hart, 27977

1997, $2,542.00

Action: Sustained the action of the Franchise Tax Board with an inclusion of a $750.00 frivolous appeal penalty.

Diane Homer, 27590

1997, $1.00 or more

Action: Sustained the action of the Franchise Tax Board.

Robert S. & Linda Kambe, 28482

1995, $1,082.00

Action: Sustained the action of the Franchise Tax Board.

Harold & Debra Kenneybrew, 27993

1990, $1.00 or more

1991, $1.00 or more

Action: Sustained the action of the Franchise Tax Board.

Key Industries, Inc., 99A-0456; 18050

12/31/94, $66,989.00

Action: Sustained the action of the Franchise Tax Board.

Richard J. Klunk, 99R-0043; 89002463620

1997, $878.92

Action: Sustained the action of the Franchise Tax Board.

Loraine M. Langdon, 47547

1997, $1,054.50

Action: Sustained the action of the Franchise Tax Board with an inclusion of a $750.00 frivolous appeal penalty.

Kye O. Lee, 29501

1997, $1,974.00

Action: Sustained the action of the Franchise Tax Board.

Carl E., Jr., & Cynthia R. Lehman, 47200

1993, $701.00

Action: Sustained the action of the Franchise Tax Board.

Mansueto & Cheri Lenci, 29503

1990, $5,113.00

Action: Sustained the action of the Franchise Tax Board.

Patrique O.W. Lindahl, 29504

1997, $1,037.05

Action: Sustained the action of the Franchise Tax Board.

John E., III & Sally Ann McInerney, 99A-0406, 27701

1992, $10,205.00, 1993, $4,574.00

Action: Sustained the action of the Franchise Tax Board.

Michael Lynn Miller, 33778

1997, $1,158.00

Action: Sustained the action of the Franchise Tax Board.

Benjamin E. & Glenda Millerbis, 98A-0039; 19790

1990, $12,673.00

Action: Sustained the action of the Franchise Tax Board.

Taylor R. Moulton, 99A-0462; 17734

1995, $1,095.00

Action: Sustained the action of the Franchise Tax Board.

James Mulla, 31903

1993, $1,415.00

Action: Sustained the action of the Franchise Tax Board.

Duy T. Nguyen, 28629

1997, $643.00

Action: Sustained the action of the Franchise Tax Board.

Harold A. Oliver, 99A-0400; 19816

1997, $1,157.00

Action: Sustained the action of the Franchise Tax Board.

Victor Pacheco, 28631

1997, $715.00

Action: Sustained the action of the Franchise Tax Board.

Leon R. & Barbara K. Peikin, 33783

1989, $1,453.62

Action: Deferred consideration of this matter.

Joseph E. Pollock, 99A-0458; 17762

1997, $587.00

Action: Sustained the action of the Franchise Tax Board.

David J. Pugh, 99A-0404; 27565

1997, $1,155.00

Action: Sustained the action of the Franchise Tax Board.

Marek Reavis, 30980

1997, $755.00

Action: Sustained the action of the Franchise Tax Board.

Rosemary Rosales, 99A-0392; 27702

1997, $855.00

Action: Reversed the action of the Franchise Tax Board.

Richard Rule, 47999

1995, $843.00

Action: Sustained the action of the Franchise Tax Board.

Hernando Sandoval, 99A-0429; 17472

1997, $317.00

Action: Sustained the action of the Franchise Tax Board.

Margaret A. Simon, 99A-0477; 17578

1997, $796.00

Action: Sustained the action of the Franchise Tax Board.

Richard B. Small, 99A-0468; 17562

1997, $775.00

Action: Sustained the action of the Franchise Tax Board.

Michiko Soffer, 37438

1993, $1.00 or more

1994, $1.00 or more

Action: Sustained the action of the Franchise Tax Board.

Jose M. Suchite, 99A-0467; 17579

1997, $425.00

Action: Sustained the action of the Franchise Tax Board.

Alejandro Vargas-Picazo, 99A-0479; 18703

1997, $415.00

Action: Sustained the action of the Franchise Tax Board.

Parson Vazan, 99A-0434; 18679

1997, $928.00

Action: Sustained the action of the Franchise Tax Board.

Christopher Walsh, 42989

1995, $319.00

Action: Reversed the action of the Franchise Tax Board.

Bettie Williams, 99A-0425, 17192

1997, $918.00

Action: Sustained the action of the Franchise Tax Board.

Abbyneh A. Zeleke, 99A-0426; 17193

1997, $1,160.00

Action: Sustained the action of the Franchise Tax Board.

John A. Wadsworth, 99A-0106; 89002465080

1989, $505.00

1990, $102.50

1992, $35.00

Action: Denied the petition for rehearing.

BUSINESS TAXES MATTERS

With respect to the Sales and Use Taxes Matters Consent Agenda, upon a

single motion of Mr. Parrish, seconded by Ms. Mandel and unanimously carried, Mr. Andal, Mr. Parrish, Mr. Klehs, Mr. Chiang and Ms. Mandel voting yes, with Mr.Chiang not participating in Jong Won Rhee, SR AA 099-430724; 89002250890, the Board made the following orders:

Discount Auto Mart, Inc., SR EA 024-957902, 31690

4-1-96 to 3-31-99, $151,711.98

Action: Revised redetermination as recommended by staff.

Medical Design Concepts, Inc., SR EH 099-191745; 89002139990

1-1-93 to 12-31-95, $174,406.00

Action: Revised redetermination as recommended by staff.

Millenium Petrochemicals, Inc., SZ OHA 098-004327; 15906

10-1-94 to 11-30-97, $605,182.93

Action: Revised redetermination as recommended by staff.

Phoenixcor Inc., SR OHB 030-641596; 36597

10-1-94 to 9-30-97, $109,136.13

Action: Revised redetermination as recommended by staff.

Windmoeller & Hoelscher Corp., SS OHB 030-661120, 27495

2nd Quarter 1998, $136,124.00

Action: Cancelled the liability as recommended by staff.

Electric Mobility Corporation, SR OHB 030-672870; 89000849970

1995 – 1997, $174,462.89

Action: Revised redetermination as recommended by staff.

Sandvik Process, Inc., SC OHB 097-312893; 34326

1998, $271,808.53

Action: Revised redetermination as recommended by staff.

Reliance Steel & Aluminum Company, SY AA 098-039890; 49285

10-1-95 to 12-31-98, $175,696.03

Action: Deferred consideration of this matter.

Jong Won Rhee, SR AA 099-430724; 89002250890

1-1-94 to 12-31-96, $67,236.65

Action: Denied claim for refund as recommended by staff. Mr. Chiang not participating.

Westland Graphics, Inc., SR AP 099-696542; 51927

7-1-96 to 9-30-96, $59,787.27

Action: Deferred consideration of this matter.

Carlsbad Technology, Inc., SR FHB 099-256116; 18201

4-1-96 to 6-30-99, $58,502.00

Action: Denied claim for refund as recommended by staff.

Wesco Distribution, Inc., SZ OHB 099-479773; 89002274750

1-1-96 to 9-30-96, $566,928.84

Action: Denied claim for refund as recommended by staff.

Kars-Yes, Inc., SS OHC 024-931718; 18203

1-1-97 to 9-30-98, $114,506.60

Action: Denied claim for refund as recommended by staff.

BUSINESS TAXES MATTERS

With respect to Sales and Use Taxes Credits, Cancellations and Refunds

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

Superior Industries International, Inc., SR AC 013-646463; 59761

10-1-99 to 12-31-99, $62,327.52

Action: Granted the credit.

University of California Irvine, SR EAA 024-141560; 89000438790

4-1-92 to 12-31-97, $74,173.05

Action: Granted the claim for refund.

Big Creek Lumber Company, SY GHD 026-098270; 76450

1-1-2000 to 3-31-2000, $104,389.28

Action: Granted the claim for refund.

US Bancorp Leasing & Financial, SS OH 030-629392; 27718

10-1-94 to 12-31-97, $159,224.60

Action: Granted the claim for refund.

McKesson General Medical Corporation, SZ OHB 030-644105; 27781

4-1-96 to 9-30-99, $63,362.81

Action: Granted the claim for refund.

Complas, Inc., SY EH 021-854851; 78552

January 2000 and 4th quarter 1999, $157,597.22

Action: Granted request for relief from penalty.

PROPERTY TAX MATTERS

With respect to Property Taxes Matters Consent Agenda, upon a single

motion of Mr. Andal, seconded by Mr. Parrish and unanimously carried, Mr. Andal, Mr. Parrish, Mr. Klehs, voting yes, Mr. Chiang and Ms. Mandel not participating, the Board made the following orders:

L.D.C. Consultants, Inc., (2410) SAU 00-022; 75863

2000, $47,600.00

Action: Granted the petition for abatement of penalties.

Hendrix Radio Communications, Inc., (3359) SAU 00-007; 67014

2000, $138,000.00

Action: Granted the petition for abatement of penalties.

Access Paging Company, Inc., (3427) SAU 00-002; 66398

2000, $84,800.00

Action: Granted the petition for abatement of penalties.

Covad Communications Company (7706) SAU 00-005; 67006

2000, $83,800,000.00

Action: Granted the petition for abatement of penalties.

I-Link, Inc., (7714) SAU 00-025; 76073

2000, $550,000.00

Action: Granted the petition for abatement of penalties.

SaveCom International, USA, Inc., (7737) SAU 00-073; 76480

2000, $410,000.00

Action: Granted the petition for abatement of penalties.

TGEC Communications, (7747) SAU 00-006; 67009

2000, $235,000.00

Action: Granted the petition for abatement of penalties.

International ThinkLink Corporation, (7767) SAU 00-036; 76143

2000, $7,340,000.00

Action: Granted the petition for abatement of penalties.

KerTel Communications, Inc., (7824) SAU 00-012; 67036

2000, $176,000.00

Action: Granted the petition for abatement of penalties.

Seren Innovations, Inc, (7832) SAU 00-076; 76910

2000, $56,400,000.00

Action: Granted the petition for abatement of penalties.

FRANCHISE AND INCOME TAXES HEARINGS

Norman F. & Suzanne M. Wood, 49626

1996, $356

For Appellant: Norman F. & Suzanne M. Wood
For Franchise Tax Board: Cynthia Kent, Tax Counsel

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

Issue:Whether appellants have established that respondent’s assessment, which was a recalculation of appellants’ tax for 1996 should be revised.

Whether appellants have established that a portion of their interest income for 1996 was exempt from California income taxes.

Appellant’s Exhibit: 1996 540 Return (Exhibit 8.3)

Respondent’s Exhibit: 1996 W-2’s, 540 Return (Exhibit 8. 4)

Action: 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 action of the Franchise Tax Board be modified.

Eden Solbes, 37439

1997, $947

For Appellant: Waived Appearance
For Franchise Tax Board: George M. Damon, Counsel

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

Issue:Whether appellant’s boyfriend met the requirements to be appellant’s qualifying individual so that she was entitled to use head of household filing status for 1997.

Action: 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 action of the Franchise Tax Board be sustained.

The Board recessed at 9:50 a.m. and reconvened at 10:00 a.m. with

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

Jose & Elena Sosa, 37440

1989, $12,900.00

1990, $6,103.60

For Appellant: Aurelio A. Piedra, CPA
Jose Sosa
For Franchise Tax Board: Richard Gould, Counsel

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

Issue:Whether appellants were residents of California in 1989 or 1990.

(Respondent has conceded that appellants were not residents of California for either year.)

Whether respondent was in error when it calculated California-source income for either 1989 or 1990.

Whether either or both of respondent’s proposed assessments were time barred.

Appellant’s Exhibit: Misc. Schedules, Affidavit, and tax returns (Exhibit 8. 5)

Action: Upon motion of Mr. Andal, seconded by Mr. Parish and unanimously carried, Mr. Andal, Mr. Parrish, Mr. Klehs, Mr. Chiang and Ms. Mandel voting yes, the Board ordered the appeal be submitted for decision, and granting the petitioner 30 days to submit additional documentation and the Appeals Section 30 days thereafter to bring the matter back to the Board with a recommendation.

The Board adjourned at 10:25 a.m.

The foregoing minutes are adopted by the Board on November 2, 2000.