Approved Minutes - Wednesday July 25, 200

The Board met at its offices at 450 N Street, Sacramento, at 11:00 a.m. with Chairman Andal, Vice Chairman Parrish, Mr. Klehs and Mr. Chiang present.

BUSINESS TAXES HEARINGS

Rhonda Sarnicola & Robert Rustigian, SR AC 13-877526-010; 89000097510

7-1-91 through 6-30-94, $218,385.91

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 evidence establishes that the measure of tax was established in accordance with the facts.

Whether relief from the 25 percent penalty for fraud or intent to evade the tax is warranted. Ms. Mandel entered during the discussion of this appeal on behalf of

Dr. Connell in accordance with Government Code Section 7.9.

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 fraud penalty be reduced to a negligence penalty.

Upon motion of Mr. Parrish, seconded by Mr. Andal and duly carried, Mr. Andal, Mr. Parrish, Mr. Klehs voting yes, Mr. Chiang and Ms. Mandel voting no, the Board ordered that the disputed measure of pilferage be reduced by 1%.

Upon motion of Mr. Klehs, seconded by Mr. Parrish and duly carried, Mr. Andal, Mr. Parrish, Mr. Klehs voting yes, Mr. Chiang voting no and Ms. Mandel abstaining, the Board ordered that the petition be redetermined as recommended by the Appeals Section with the above adjustments, directing the staff to implement a 3 year payment plan.

Avante Apparel & Accessories, Inc., SR AA 11-802145-010; 89000032680

1-1-93 through 12-31-95, $13,521.06

For Petitioner: Appearance Waived
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 taxable sales are excessive.

Action: Upon motion of Mr. Klehs, seconded by Mr. Parrish and duly carried, Mr. Andal, Mr. Parrish, Mr. Klehs, Ms. Mandel voting yes and Mr. Chiang not participating, the Board ordered that the petition be redetermined in accordance with the revised Appeals Section recommendation.

Chevron U.S.A., Inc., SR BH 18-602500-070, -080, -090, -0A0; 89000227860, 89000227870, 89000227880, 89000227450

7-1-85 through 12-31-90, $220,279.56

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

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

Issue: Whether petitioner is entitled to exemption for sales of jet fuel under Revenue and Taxation Code section 6385 (as it read prior to the June 30, 1991 amendment).

Action: Upon motion of Mr. Klehs, seconded by Mr. Andal and unanimously carried, Mr. Andal, Mr. Parrish, Mr. Klehs, Mr. Chiang voting yes and Ms. Mandel not participating, the Board ordered that the petition be redetermined as recommended by the Appeals Section. Minute Man Vending, Inc., SZ JH 19-680569-010; 89000266060

10-1-90 through 3-31-93, $14,311.42

Axel Hillebrandt, SZ JH 99-411475-010; 89002240520

4-1-93 through 6-30-93, $2,460.70, $273.18

For Petitioner: Axel Hillebrandt, President/Owner
George Lamaison, Accountant
For Sales and Use Tax Department: Kevin Hanks, Hearing Representative

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

Issue: Whether audited taxable sales were established in accordance with the facts.

Whether relief from the negligence penalty is warranted.

Whether the corporation is entitled to a refund or the sole proprietor is entitled to an offset.

Whether the refund or overpayment is warranted based on erroneous advice from the Board.

Action: Upon motion of Mr. Parrish, 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 negligence penalty be deleted.

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 adjustments and supported the appellant's filing of a Board of Control claim. Ms. Mandel did not participate in the Board of Control claim.

Clayton Howard Au (Deceased), SR BHA 19-713597-010; 89000272030

1-1-95 through 3-31-98, $47,120.75

For Petitioner: Terry Au, Petitioner's Wife
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 some of the taxable sales included in the measure of tax were in fact reported as taxable on petitioner's sales and use tax returns.

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 disputed measure be reduced by 50% based on staff's recommendation.

Richard Brian Powers, SR CH 21-763169-020; 89000327470

1-1-97 through 12-31-97, $1,592.00

For Petitioner: Richard B. Powers, Owner
Charles D. Crawford, Witness
Sandra Sandell, Witness
For Sales and Use Tax Department: Jeffrey Graybill, Counsel

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

Issue: Whether Business and Professions Code section 16102 (Section 16102) exempts the otherwise taxable retail sales of petitioner, an honorably discharged United States Marine Corps veteran, from sales tax.

Whether the applicable statutes of the Sales and Use Tax Law, as applied to petitioner, are unconstitutional under the First and Fourteenth Amendments to the United States Constitution.

Action: Mr. Parrish moved to grant the petition, seconded by Mr. Andal but failed to carry, Mr. Andal and Mr. Parrish voting yes, Mr. Chiang and Ms. Mandel voting no, Mr. Klehs not voting.

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.

The Board recessed at 12:05 p.m. and reconvened at 2:10 p.m. with Mr. Andal, Mr. Parrish, Mr. Chiang, and Ms. Mandel present.

BUSINESS TAXES HEARINGS

John H. Kimo, Inc., SN BH 52-006159-010; 89000965800

7-1-94 through 10-31-95, $10,615.97

Kimo J. Cochran, SR BH 97-196208-010; 89002074000

11-1-95 through 6-30-97, $7,736.28

For Petitioner: Kimo J. Cochran, Owner/President
Joseph B. Zaarour, Accountant
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 supports reductions in the audited costs of goods sold.

Whether the evidence supports reductions of the markups to reflect discounted selling prices during "Happy Hour". Mr. Klehs entered the Boardroom during discussion of this petition.

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 ordered that the disputed measure of tax be reduced by 35%.

Ray's Is The Place, SR KH 97-121701-010; 89002060790

4-1-95 through 12-31-96, $12,929.29

For Petitioner: Zouhair Younam, President
For Sales and Use Tax Department: Kevin Hanks, Hearing Representative

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

Issue: Whether petitioner's contention that all sales were properly reported from petitioner's electronic scanner system warrants relief from the tax.

Whether the evidence shows that the taxable markup of 31.37 percent is excessive.

Action: Upon motion of Mr. Andal, seconded by Ms. Mandel and duly carried, Mr. Andal, Mr. Parrish, Mr. Chiang and Ms. Mandel voting yes, Mr. Klehs voting no, the Board ordered that the disputed measure be reduced by 50% and increase the self-consumption allowance to 1%.

Charles N. Giguere, SR GH 97-046799-010; 89002044410

1-1-89 through 12-31-96, $88,899.80, $41,709.79

For Petitioner: Joseph F. Micallef, Consultant
Kai Mickey, Consultant
For Sales and Use Tax Department: Warren Astleford, 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.

Whether relief from the 25 percent penalty for fraud or intent to evade the tax is warranted. Mr. Andal left Boardroom and then returned during the discussion of this petition.

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 taken under submission.

The Board recessed at 3:15 p.m. and reconvened at 3:20 p.m. with Mr. Andal, Mr. Parrish, Mr. Klehs, Mr. Chiang and Ms. Mandel present.

FINAL ACTION ON PETITIONS HEARD JULY 25, 2000

Mr. Klehs moved to redetermine the petition of Richard Brian Powers, SR CH 21-763169-020; 89000327470. The motion failed for lack of a second. Mr. Andal moved to grant the petition, seconded by Mr. Parrish but failed to carry, Mr. Andal, Mr. Parrish voting yes, Mr. Klehs, Mr. Chiang and Ms. Mandel voting no.

The Board deferred consideration of this petition to the next day.

Upon motion of Ms. Mandel, seconded by Mr. Parrish and duly carried, Mr. Parrish, Mr. Klehs, Ms. Mandel voting yes, Mr. Andal and Mr. Chiang voting no the Board ordered that the petition of Charles N. Giguere, SR GH 97-046799-010, 89002044410, be reduced with respect to tax paid to Pennsylvania. Mr. Parrish moved to delete the fraud penalty, seconded by Mr. Andal but failed to carry, Mr. Parrish voting yes, Mr. Andal, Mr. Klehs, Mr. Chiang and Ms. Mandel voting no.

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

The Board adjourned at 3:30 p.m.

The foregoing minutes are adopted by the Board on October 3, 2000.