Approved Minutes Februray 23, 2000

The Board met at its offices at 450 N Street, Sacramento, at 9:30 a.m. with Chairman Andal, 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

Ron L. Mathis & Jennifer Mathis, SA UT 82-673244-010, 89001155960

2-28-97, $1,461.61

For Petitioner: Ron L. Mathis
For Sales and Use Tax Department: Jeffrey Graybill, Counsel

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

Issue: Whether the measure of tax was established in accordance with the facts.

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 that the petition be submitted for decision.

Melanie Mages, SR KH 28-721933-010, 89000751100

7-1-93 to 3-31-96, $21,998.88

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

Contribution: Disclosures pursuant to Government Code Section 15626: No disclosure forms were filed.

Issue: Whether the facts prove that petitioner was an employee of Triaac Enterprises dba Great Expectations rather than an independent contractor.

Alternatively, whether petitioner’s labor sales are subject to sales tax.

Whether the finder’s fee paid to Great Expectations is a part of taxable gross receipts.

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 granted.

Gerald S. Mescher, dba Mescher Door Co., SZ KHD 28-752776-020, 89000755260

10-1-93 to 9-30-96, $14,345.08

For Petitioner: Appearance Waived
For Sales and Use Tax Department: Kevin Hanks, Hearing Representative

Contribution: Disclosures pursuant to Government Code Section 15626: No disclosure forms were filed.

Issue: Whether markups used in the cost accountability test were excessive.

Whether petitioner’s claim that the Department has not proven that ex-tax purchases of materials consumed on lump sum construction contracts were purchased under a resale certificate warrants relief from the tax.

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 petition be redetermined as recommended by the Appeals Section.

Filco Of Folsom Inc., dba Filco Discount Center, SR KH 28-824628-010,89000767500

10-1-93 to 9-30-96, $7,934.08

For Petitioner: George Saca, General Manager
For Sales and Use Tax Department: Warren Astleford, Counsel

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

Issue: Whether petitioner’s alleged unawareness of the Board’s new administrative policy regarding the application of sales tax to retail sales of bundled cellular phones warrants relief from the sales tax.

Whether petitioner has met its burden of proving that the Board’s determination of the measure of tax is erroneous by providing evidence from which a more accurate determination may be made.

Action: Upon motion of Mr. Parrish, 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 submitted for decision.

Bashir A. Ahmadi, dba Bayside Motors, SR BHA 19-771932-010, 89000289920

7-1-91 to 3-11-94, $18,115.14

For Petitioner: Bashir A. Ahmadi
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 measure of tax for unreported taxable sales was established in accordance with the facts.

Whether the evidence provided is sufficient to support further adjustments for claimed nontaxable and exempt sales.

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 that the petition be submitted for decision.

Steve Vu & Loi Huu Pham, dba Furniture Outlet, SR CHA 21-870356-010 89000352490

7-1-93 to 6-30-96, $47,835.58

For Petitioner: Steve Vu
For Sales and Use Tax Department: Kevin Hanks, Hearing Representative

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

Issue: Whether additional taxable sales based on bank deposits, were established in accordance with the facts.

Whether petitioner’s delivery charges are nontaxable.

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, deleting the negligence penalty. The Board directed the Sales and Use Tax Department to offer a payment plan.

Amdahl Corporation, SZ GH 26-653755-003, 005, 890002645210, 89000645230

1-1-91 to 12-31-93, $7,956,074.00

For Claimant: Vern Oswald, Tax Manager
Janet S. Bianchi, Tax Counsel
For Sales and Use Tax Department: Kevin Hanks, Hearing Representative

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

Issue: Whether credit interest should be allowed on the periods in which overpayments occurred.

Action: 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 ordered that the claims be submitted for decision.

Kurt Krumes, SY EA 24-785958-010, 89000461050

7-1-90 to 6-30-93, $74,284.27

For Petitioner: Kai Mickey, Consultant
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 audit allowance for shrinkage or waste should be increased to 9.3%.

Whether the material accountability test should be expanded to include the first six months of 1993.

Whether relief from the negligence penalty is warranted.

Action: Mr. Parrish moved that the shrinkage amount be reduced. The motion was seconded by Mr. Andal but failed to carry, Mr. Andal and Mr. Parrish yes, 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 submitted for decision.

The Board recessed at 10:43 and reconvened at 10:47 with Mr. Andal,

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

Thomas Dean Costello, dba Tom’s Trailer Repair-Outlet, SR JHH 97-119628-010, 89002060480

1-1-95 to 3-31-97, $4,236.75

For Petitioner: Lavera Costello, Partner
Tom Costello, Partner Don Costello, Partner
Tams Costello, Bookkeeper
For Sales and Use Tax Department: Janice Thurston, Counsel

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

Issue: Whether the trailer in issue was delivered by petitioner to the purchaser out of state.

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

Marriott Corporation, SY OHB 30-628394-010, 89000817120

9-7-85 to 12-30-88, $514,914.61

For Petitioner: Joseph A. Vinatieri, Attorney
For Sales and Use Tax Department: Warren Astleford, Counsel

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

Issue: Whether the FFE purchased for the Hotel were purchased for resale and in fact resold prior to any intervening use by petitioner.

Whether petitioner is entitled to a tax credit for use tax self-assessed on purchases of tangible personal property made for the Hotel from California vendors where the Board cannot substantiate that petitioner issued a resale certificate.

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 petition be submitted for decision.

FINAL ACTION ON PETITIONS HEARD FEBRUARY 23, 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 Ron L. Mathis & Jennifer Mathis, SA UT 82-673244-010, 89001155960, be redetermined, deleting the penalty.

Upon motion of Mr. Klehs, seconded by Ms. Mandel and unanimously carried, Mr. Andal, Mr. Parrish, Mr. Klehs, Mr. Chiang and Ms. Mandel voting yes, the Board ordered that the petition of Filco Of Folsom, Inc. dba Filco Discount Center,

SR KH 28-824628-010, 89000767500, be redetermined as recommended by the Appeals Section.

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 of Bashir A. Ahmadi dba Bayside Motors, SR BHA 19-771932-010, 89000289920, be redetermined as recommended by the Appeals Section.

Upon motion of Mr. Klehs, seconded by Mr. Andal and duly carried,

Mr. Andal, Mr. Parrish, Mr. Klehs yes, Mr. Chiang and Ms. Mandel voting no, the Board ordered that the claims of Amdahl Corporation, SZ GH 26-653755-003, 005, 890002645210, 89000645230, be granted.

Upon motion of Mr. Klehs, seconded by Mr. Andal and unanimously carried, Mr. Andal, Mr. Parrish, Mr. Klehs, Mr. Chiang voting yes, Ms. Mandel abstaining, the Board ordered that the shrinkage allowance be increased to 7.62% in the petition of Kurt Krumes, SY EA 24-785958-010, 89000461050.

Mr. Andal moved that the material accountability test be expanded. The motion was seconded by Mr. Parrish but failed to carry, Mr. Andal and Mr. Parrish voting yes, Mr. Klehs and Mr. Chiang voting no, Ms. Mandel not participating.

Mr. Andal moved to delete the negligence penalty. The motion was seconded by Mr. Parrish but failed to carry, Mr. Andal and Mr. Parrish voting yes, Mr. Klehs and 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. Parrish and Mr. Andal voting no, the Board ordered to redetermine the remainder of the petition as recommended by the Appeals Section.

Upon motion of Mr. Klehs, seconded by Mr. Andal and duly carried,

Mr. Andal, Mr. Parrish, Mr. Klehs and Ms. Mandel voting yes, Mr. Chiang voting no, the Board directed the Sales and Use Tax Department to offer a two-year payment plan.

Upon motion of Mr. Klehs, seconded by Mr. Andal and duly carried, carried, Mr. Andal, Mr. Klehs, Mr. Chiang and Ms. Mandel voting yes, Mr. Parrish voting no, the Board ordered that the petition of Marriott Corporation, SY OHB 30-628394-010, 89000817120, be redetermined as recommended by the Appeals Section.

The Board recessed at 11:40 and reconvened at 1:30 p.m. with Mr. Andal, Mr. Parrish, Mr. Chiang and Ms. Mandel present.

PUBLIC HEARINGS

PROPERTY TAXES-STATE ASSESSEE PRESENTATIONS ON CAPITALIZATION RATES & OTHER FACTORS AFFECTING VALUE

Speakers: Peter Michaels, Cooper, White & Cooper

Representing Various State Assessees

Mr. Klehs entered the Boardroom.

Speakers: Barbara Lager, Director of Property Tax

Representing AT&T Communications

Terry F. Palmer, Sempra Energy

Representing Southern California Gas Company and

San Diego Gas & Electric Company

VALUATION OF MICROPORCESSOR-CONTROLLED TELEPHONE SWITCH SOFTWARE

Speakers: Frederick A. Richman, O’Melveny & Myers

David Colker, Gary, Cary, Ware & Freidenrich

Representing Cellular Carriers Association

Bruce Dear, Placer County Assessor

Representing California Assessors’ Association

Lenny Goldberg

California Tax Reform Association

David Jones

League of California Cities

Steve Keil

California State Association of Counties

Action: Upon motion of Mr. Andal, seconded by Mr. Parrish and duly carried,

Mr. Andal, Mr. Parrish, Mr. Chiang and Ms. Mandel voting yes, Mr. Klehs voting no, the Board found that Revenue and Taxation Code Sections 995 and 995.2 and Rule 152 do not distinguish between general purpose computers and special purpose computers. In computing value indicators for state-assessed property, the Board directed the staff to continue to make a deduction or allowance for the value of processing programs, service programs, data management systems, and application programs, as defined in Revenue and Taxation Code Section 995.2 and Rule 152, with respect to telephone switches, and directed the staff to withdraw the letter dated January 7, 2000, issued to state assessees.

PROPOSED AMENDMENTS TO PROPERTY TAX RULE 10, TRADE LEVEL FOR TANGIBLE PERSONAL PROPERTY

Lawrence A. Augusta, Assistant Chief Counsel, Property Taxes, reported that the Board proposes to amend Rule 10 to delete provisions that provide guidance on the valuation of business inventory for property tax assessment purposes to reflect a change in existing law. In 1980, the Legislature repealed former section 219 of the Revenue and Taxation Code, which provided a partial exemption from taxation for business inventory from 1970 through 1980, and enacted the current section 219 to provide a full exemption for business inventory. (Stats. 1980, Ch. 411, in effect July 11, 1980).

The proposed amendments to Rule 10 clarify and make specific Revenue and Taxation Code Sections 110 and 401, and Article XIII, section 1(a) of the California Constitution. Rule 10 specifies that tangible personal property shall be valued at the proper level of trade, based on its location and use on the lien date. The trade level concept is consistent with Constitutional and statutory mandates that property shall be valued at fair market value. The Constitution requires that all taxable property must be assessed at fair market value. (Cal. Const. Art. XIII, § 1(a).) Section 110, subd. (a) of the Revenue and Taxation Code defines fair market value or full cash value as the amount of cash or its equivalent which property would bring if exposed for sale in the open market under conditions which neither buyer or seller could take advantage of the exigencies of the other. The fair market value mandate of Section 110 requires assessment uniformity.

The trade level concept is that property normally increases in value as it progresses through production and distribution channels to the consumer, whether or not the cost or value added is booked in accounting records. The trade level concept is applicable when book cost does not provide adequate information for making a fair market appraisal and is most frequently applied to leased equipment and self-constructed equipment. Trade level adjustments ensure assessment uniformity for similar property that may be acquired through different means including self constructed, leased, or purchased by a consumer. The proposed amendment of Rule 10 provides guidance on the valuation of property to ensure assessment uniformity and valuation of personal property at fair market value.

Speakers: Bruce Dear, California Assessors’ Association

Mr. Dear testified that the Assessors’ Association requests that 1) a sentence be added to subdivision (a) to state that trade level applies to personal property affixed to real estate; and 2) the last sentence of subdivision (b) be struck.

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 adopted the amendments to Rule 10 as published. A copy of the rule as amended is incorporated in these minutes by reference (Exhibit 2.19).

PROPOSED PROPERTY TAX RULE 153, LIQUEFIED PETROLEUM GAS TANKS

Mr. Augusta reported that Rule 153 is proposed to be added to provide guidance on the valuation of propane tanks pursuant to the authority given the Board under Government Code section 15606, subdivision (c), to prescribe rules and regulations to govern local boards of equalization when equalizing and assessors when assessing. The proposed rule clarifies issues related to this type of property which are not specifically addressed in statutes or rules, and provides for uniformity in the assessment of liquefied petroleum gas tanks.

Liquefied petroleum gas tanks, similar to most other types of property, must be valued at the price to the consumer of the property, in most instances. (An exception set forth in Property Tax Rule 10 regarding property leased for a period of six months or less is carried forward in proposed Rule 153.) It is often difficult to determine whether the consumer of the tank is the consumer of the propane gas, or the supplier of the gas. Proposed Rule 153 identifies the ultimate consumer of the tank for assessment purposes by providing specific criteria to be applied to the factual determination in each situation. The proposed rule also defines the term "liquefied petroleum gas tank" to include related equipment, apparatus, gauges and meters attached to or installed on the tank.

Speakers: Bruce Dear, California Assessors’ Association

Mr. Dear testified that the Assessors have three concerns with the proposed rule – 1) that the rule is an unnecessary proliferation; 2) the equity issue – this rule creates a situation that the same property put to the same use will be valued differently; and 3) that this rule contradicts past advice without change in statute.

Action: Upon motion of Mr. Andal, seconded by Mr. Parrish and duly carried,

Mr. Andal, Mr. Parrish, Mr. Chiang and Ms. Mandel voting yes, Mr. Klehs voting no, the Board adopted rule 153 as published. A copy of the rule as adopted is incorporated in these minutes by reference (Exhibit 2.20).

PROPOSED AMENDMENTS TO SALES AND USE TAX REGULATION 1525.2, MANUFACTURING EQUIPMENT

David H. Levine, Acting Assistant Chief Counsel, Sales and Use Taxes, reported that Regulation 1525.2 is proposed to be amended to interpret, implement and make specific Revenue and Taxation Code section 6377. Amendments are proposed to permit claims for refund where the partial exemption was not originally claimed in a timely manner and is in lieu of the statutorily authorized provisions of Revenue and Taxation Code Section 6902.

Mr. Levine reported that the staff recommends that further changes be made to the regulation for clarification.

Speakers: Speakers were invited to address the Board but there were none.

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 approved further changes to the published version of Regulation 1525.2 and ordered that the changed version be placed in the rulemaking file for 15 days. A copy of the changed version is incorporated in these minutes by reference (Exhibit 2.21).

PROPOSED AMENDMENTS TO SALES AND USE TAX REGULATION 1587, ANIMAL LIFE, FEED, DRUGS AND MEDICINES

Mr. Levine reported that Regulation 1587 is proposed to be amended to interpret, implement and make specific Revenue and Taxation Code section 6358. Amendments are proposed to conform the regulation to recent legislation and to incorporate into the definition of "food animals" certain Food and Agricultural Code provisions.

Speakers: Speakers were invited to address the Board but there were none.

Action: Upon motion of Mr. Klehs, seconded by Mr. Andal and duly carried,

Mr. Andal, Mr. Parrish, Mr. Klehs and Mr. Chiang voting yes, Ms. Mandel voting no, the Board adopted the amendments to Regulation 1587 as published. A copy of the regulation as amended is incorporated in these minutes by reference (Exhibit 2.22).

PROPOSED AMENDMENTS TO SALES AND USE TAX REGULATION 1660, LEASES OF TANGIBLE PERSONAL PROPERTY – IN GENERAL

Mr. Levine reported that Regulation 1660 is proposed to be amended to interpret, implement and make specific Revenue and Taxation Code section 6011. Amendments are proposed to provide that real and personal property taxes are not included in the taxable measure of rental payments when the lessor is a bank or financial corporation.

Speakers: Speakers were invited to address the Board but there were none.

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 adopted the amendments to Regulation 1660 as published. A copy of the regulation as amended is incorporated in these minutes by reference (Exhibit 2.23).

PROPOSED AMENDMENTS TO SALES AND USE TAX REGULATION 1661, LEASES OF MOBILE TRANSPORTATION EQUIPMENT

Mr. Levine reported that Regulation 1661 is proposed to be amended to interpret, implement and make specific Revenue and Taxation Code section 6011. Amendments are proposed to provide that real and personal property taxes are not included in the fair rental value of mobile transportation equipment leased under defined conditions when the lessor is a bank or financial corporation.

Speakers: Speakers were invited to address the Board but there were none.

Action: Upon motion of Mr. Parrish, seconded by Ms. Mandel and duly carried, Mr. Andal, Mr. Parrish, Mr. Klehs and Ms. Mandel voting yes, Mr. Chiang voting no, the Board adopted the amendments to Regulation 1661 as published. A copy of the regulation as amended is incorporated by reference (Exhibit 2.24).

PROPOSED AMENDMENTS TO SALES AND USE TAX REGULATION 1669, DEMONSTRATION, DISPLAY, AND >USE OF PROPERTY HELD FOR RESALE

Mr. Levine reported that Regulation 1669 is proposed to be amended to interpret, implement and make specific Revenue and Taxation Code section 6011. Amendments are proposed to provide that real and personal property taxes are not included in the fair rental value of property used while also being held for resale when the lessor is a bank or financial corporation.

Speakers: Speakers were invited to address the Board but there were none.

Action: Upon motion of Mr. Parrish, seconded by Mr. Klehs and unanimously carried, Mr. Andal, Mr. Parrish, Mr. Klehs, Mr. Chiang and Ms. Mandel voting yes, the Board adopted the amendments to Regulation 1669 as published. A copy of the regulation as amended is incorporated in these minutes by reference (Exhibit 2.25).

BUSINESS TAX HEARINGS

Ms. Mandel announced that she would not participate in the following hearing in accordance with Government Section 7.9. She left the Boardroom.

Liberty Life Assurance Company Of Boston, IT ET 34-001792-010, 020, 89000900290, 89000900300

1985, $60,212.44

1986, $69,048.43

1987, $75,355.17

1988, $80,674.75

1989, $99,471.67

For Petitioner: Philip D. Murphy, Attorney
Amy Silverstein, Attorney
For Sales and Use Tax Department: David Levine, Counsel
David K. Okumura, Sr. Insurance Examiner Dept. of Insurance

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

Issue: Whether premiums paid to petitioner by petitioner’s parent company for insurance provided to employees of petitioner’s parent company are properly included in petitioner’s measure of tax.

Action: Mr. Parrish moved that the petitions be granted. The motion was seconded by Mr. Andal but failed to carry, Mr. Andal and Mr. Parrish voting yes,

Mr. Klehs and Mr. Chiang voting no, Ms. Mandel absent and not participating in accordance with Government Code Section 7.9.

Upon motion of Mr. Klehs, seconded by Mr. Chiang and unanimously carried, Mr. Andal, Mr. Parrish, Mr. Klehs and Mr. Chiang voting yes, Ms. Mandel absent and not participating in accordance with Government Code Section 7.9, the Board ordered that the petitions be submitted for decision.

The Board recessed at 2:30 p.m. and reconvened at 2:40 p.m. with

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

Bechtel Petroleum Operations, Inc.,

Elk Hills Naval Petroleum Reserve No. 1,

HG HQ 36-043257-001, 89000917590; HF HQ 38-001990-010, 89000929210;

HF HQ 38-001990-001, 89000929230

7-1-87 to 6-30-88, $1, 126,020.00

For Petitioner: Jose R. Allen, Attorney
For Sales and Use Tax Department: Janet Vining, Counsel
Dennis Mahoney, Counsel, DTSC

Contribution: Disclosures pursuant to Government Code Section 15626: A disqualifying contribution to Mr. Klehs was disclosed. No other contributions were disclosed.

Issue: Whether petitioner/claimant (hereafter "petitioner") was an operator of a hazardous waste facility such that petitioner remains liable for the facility fees for the years in question.

Whether the facility fees imposed by Health and Safety Code section 25205.2 are unconstitutional as a tax on a federal entity and therefore are barred by the doctrine of sovereign immunity.

Mr. Klehs entered the Boardroom.

Action: Upon motion of Ms. Mandel, seconded by Mr. Andal and unanimously carried, Mr. Andal, Mr. Parrish, Mr. Chiang and Ms. Mandel voting yes, Mr. Klehs not participating in accordance with Government Code Section 15626, the Board ordered that the petition be submitted for decision and directed that it be scheduled for decision on March 16, 2000, in Sacramento and instructed the Appeals Section to provide the Board with a recommendation on whether the Board should adopt a Memorandum Opinion that adopts the Best Foods case as the definition of an operator.

Krupakart T. Reddy, Vanitha Buddam & Reddy J. Buddham, SR GH 97-111129-010, 020, 89002058680, 16241

Bushan Reddy Baddam, Krupakar T. Reddy & Reddy J. Buddham, SR GH 97-111149-010, 020, 89002058690, 89002058700

Krippakar T. Reddy & Reddy J. Buddham, SR CH 99-207408-010, 020, 89002147880, 89002147890

7/1/93 to 6/30/97, $68,418.13

ACTION ON PETITIONS HEARD FEBRUARY 23, 2000

Mr. Klehs moved that the petition of Liberty Life Assurance Company Of Boston, IT ET 34-001792-010, 020, 89000900290, 89000900300, be redetermined as recommended. The motion was seconded by Mr. Chiang but failed to carry, Mr. Klehs and Mr. Chiang voting yes, Mr. Andal and Mr. Parrish voting no, Ms. Mandel not participating in accordance with Government Code Section 7.9. The Board directed that it be scheduled for decision on March 15, 2000, following the Property Tax Committee meeting.

The Board adjourned at 3:30 p.m.

The foregoing minutes are adopted by the Board on April 6, 2000.

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