BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION 450 N Street, Room 121 Sacramento, California REPORTER'S TRANSCRIPT AUGUST 31, 2009 FINAL ACTIONS PART I Reported by: Beverly D. Toms No. CSR 1662 1 1 2 P R E S E N T 3 4 For the Board Betty Yee of Equalization: Chair 5 Steve Shea 6 Acting Member 7 Bill Leonard Member 8 Michelle Steel 9 Member 10 Marcy Jo Mandel Appearing for John 11 Chiang, State Controller (per Government Code 12 Section 7.9) 13 Diane Olson Chief, Board 14 Proceedings Division 15 16 ---oOo--- 17 18 19 20 21 22 23 24 25 26 27 28 2 1 Sacramento, California 2 August 31, 2009 3 ---oOO--- 4 MS. YEE: Ms. Olson, what's our next item? 5 MS. OLSON: We have two nonappearance items 6 under submission; H1-5, Arco. Ms. Mandel has made 7 arrangements for Mr. Chivaro to appear tomorrow. 8 MS. YEE: Okay. 9 MS. OLSON: Without -- 10 MS. YEE: Let's put that one over until 11 tomorrow. 12 (H2-2 transcribed separately.) 13 ---oOo--- 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 3 1 ITEMB2 2 MS. OLSON: Our next item is B2, Thomas Haas. 3 MS. YEE: Okay. Item B2, Thomas G. Haas, is 4 there a motion? 5 MR. SHEA: I'll -- motion to sustain the 6 Franchise Tax Board and abate the interest of $173.93 7 for the period August 16, 2006 through January 8, 2008. 8 MS. MANDEL: Second. 9 MS. YEE: Okay. Motion by Mr. Shea to sustain 10 the Franchise Tax Board with the specified abatement. 11 Second by Ms. Mandel. 12 Discussion? 13 MS. MANDEL: That's the abatement that they -- 14 MS. KELLY: That they've conceded, yes. 15 MS. MANDEL: Yes. 16 MR. LEONARD: Conceded. 17 MS. YEE: Okay. 18 MS. STEEL: Objection. 19 MS. YEE: Yes. Any discussion? Ms. Steel. 20 MS. STEEL: Well, FTB delayed for 17 months and 21 I think if they moved fast enough that this taxpayer 22 could have met 240 days rule. And they lost the file 23 and they didn't put enough money there and, you know, 24 just to show so much sloppy job. And that small 25 interest -- abate small interest payment is not going to 26 be enough for this taxpayer. 27 MS. YEE: Okay. Very well. Please call the 28 roll. 4 1 MS. OLSON: Madam Chair. 2 MS. YEE: Aye. 3 MS. OLSON: Mr. Leonard 4 MR. LEONARD: No. 5 MS. OLSON: Ms. Steel. 6 MS. STEEL: No. 7 MS. OLSON: Mr. Shea. 8 MR. SHEA: Aye. 9 MS. OLSON: Ms. Mandel. 10 MS. MANDEL: Aye. 11 MS. OLSON: Motion carries. 12 MS. YEE: Okay. 13 ---oOo--- 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 5 1 ITEM B3. 2 MS. OLSON: Our next item is B3, Paul 3 Katchadourian. 4 MS. YEE: Okay. Item B3, Paul Katchadourian. 5 Is there a motion? 6 MR. SHEA: I move to sustain the Franchise Tax 7 Board. 8 MS. YEE: Okay. Motion by Mr. Shea to sustain 9 the Franchise Tax Board. 10 Is there a second? 11 MS. MANDEL: Second. 12 MS. YEE: Second by Ms. Mandel. 13 With -- discussion? 14 MS. STEEL: This -- you know what, this is 15 another unfair job for FTB to the taxpayer that they 16 could not just make one phone call before they assess 17 for three years, and those industry average was just 18 didn't make any sense at all; 1999 for $46,000; 2000 for 19 15 average; and 2002 83. And it seems like they just 20 picked the numbers and going after the taxpayer. And I 21 really cannot go for FTB. 22 MS. YEE: Okay. Thank you. Other comments? 23 Hearing none, please call the roll. 24 MS. OLSON: Madam Chair. 25 MS. YEE: Aye. 26 MS. OLSON: Mr. Leonard. 27 MR. LEONARD: Aye. 28 MS. OLSON: Ms. Steel. 6 1 MS. STEEL: No. 2 MS. OLSON: Mr. Shea. 3 MR. SHEA: Aye. 4 MS. OLSON: Ms. Mandel. 5 MS. MANDEL: Aye. 6 MS. OLSON: Motion carries. 7 MS. YEE: Okay. 8 ---oOo--- 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 7 1 ITEM C1. 2 MS. OLSON: Our next item is C1, City of Union 3 City. 4 MS. YEE: Okay. We have Item C1, City of Union 5 City. Is there a motion? 6 MR. SHEA: I'll move the staff recommendation. 7 And just to clarify, because the case is confusing, of 8 what my understanding of the staff recommendation, is to 9 deny the petition finding that Union City did not 10 require a sales tax permit and the participation of 11 Southern California was more significant in those 12 transactions, in those sales, that both jurisdictions 13 participated in Southern California locations than Union 14 City, but to approve the allocation on the sales that 15 did not have a participation from the Southern 16 California facilities but were from the out-of-state to 17 Union City, but to allocate that to the County-wide pool 18 in Alameda because Union City did not require a permit 19 which would result in Union City receiving a small 20 amount, about $6200, from those sales. 21 So, that's my understanding of the staff 22 recommendation, and I'll move that. 23 MS. YEE: Okay. I have a motion by Mr. Shea. 24 Is there a second? 25 Let me second it for purposes of discussion. I 26 guess first off I have a question to Appeals. The -- 27 the allocation to the County-wide pool versus directly 28 to petitioner, would the fact that there is now -- or I 8 1 guess allegedly there's a seller's permit that's been 2 obtained make any difference with respect to that? 3 MS. NIENOW: I don't think so, no. 4 MS. YEE: Okay. 5 MS. NIENOW: And I'm -- and I'm not sure 6 whether one has been obtained. 7 MS. YEE: Right. Right. I think that is still 8 a question. 9 Okay. Other discussion here? 10 MS. STEEL: I still think that the last sales 11 was done in Union City and I think they deserve their 12 money. That's why they sales side $1.6 million and it 13 went to Alameda County. Not -- not only that, that now 14 they got permit. So that shows that they deserve that 15 money. 16 MS. YEE: Okay. Other comments, Members? 17 Okay, please call the roll. 18 MS. OLSON: Madam Chair. 19 MS. YEE: Oh, I'm sorry, Ms. Mandel. 20 MS. MANDEL: No, I -- I'm still a little 21 confused about the 1699 distribution center issue, which 22 affects only the -- affects the ones that came from 23 Georgia. But I don't have all the background 24 necessarily on the reg. adoption for that. 25 MS. YEE: Okay. 26 MS. MANDEL: I'm getting tired. 27 MS. YEE: It's okay. Is there -- yes, Mr. 28 Leonard. 9 1 MR. LEONARD: Just to clarify, I thought part 2 of the staff recommendation to partially allocate was 3 because of those types of distribution transactions. Am 4 I -- am I characterizing those transactions wrong? 5 MS. NIENOW: Yes, I believe you are. The 6 partial -- 7 MR. LEONARD: What's the Department -- what's 8 the Appeals recommending that we approve in favor of 9 Union City? What -- it's a small amount, I know, but -- 10 MS. NIENOW: It's a small amount. It has to 11 do -- 12 MR. LEONARD: It's related to what types of 13 transactions? 14 MS. NIENOW: The types of transactions it's 15 related to are where the goods were shipped from out of 16 state from the Georgia warehouse to the Union City 17 location where -- 18 MR. LEONARD: That's what I just said. 19 MS. MANDEL: Right, but -- but that's via the 20 County-wide pool, not direct allocation to Union City. 21 MS. NIENOW: Correct. 22 MS. MANDEL: So it's Union City's share of the 23 County-wide pool. 24 MR. LEONARD: Okay. Gotcha. Thank you. 25 MS. YEE: Okay. That is the motion. 26 MS. MANDEL: Which is the whole thing that I 27 got all confused on -- 28 MR. LEONARD: Which -- 10 1 MS. MANDEL: -- before. 2 MR. LEONARD: Me, too. 3 MS. YEE: Okay. We have a motion to adopt the 4 staff recommendation and a second. Please call the 5 roll. 6 MS. OLSON: Madam Chair. 7 MS. YEE: Aye. 8 MS. OLSON: Mr. Leonard. 9 MR. LEONARD: Aye. 10 MS. OLSON: Ms. Steel. 11 MS. STEEL: No. 12 MS. OLSON: Mr. Shea. 13 MR. SHEA: Aye. 14 MS. OLSON: Ms. Mandel. 15 MS. MANDEL: It doesn't matter. Aye. 16 MS. OLSON: Motion carries. 17 ---oOo--- 18 19 20 21 22 23 24 25 26 27 28 11 1 ITEM C2. 2 MS. OLSON: Our next item is C2, City of Pomona 3 and Town of Los Gatos. 4 MR. LEVINE: Mr. Hanks caught me on the way in 5 and said they are talking. I don't know what they're 6 talking about. Just to pass that on. 7 MS. YEE: Okay. 8 MS. MANDEL: So they should talk. 9 MS. YEE: Let's see if there's any further -- 10 MR. LEONARD: Put it over to tomorrow? 11 MS. YEE: We could. 12 MS. OLSON: We -- we can do that. 13 MS. YEE: Yeah, let's see what kind of 14 progress they make. 15 MR. LEONARD: Talking's good. 16 MS. YEE: Yeah. Let's -- we'll put this over 17 till tomorrow and see if we can get an update. 18 MS. OLSON: Okay. 19 MS. YEE: Okay. 20 MS. OLSON: That concludes our meeting for this 21 afternoon. 22 MS. YEE: Okay. Very well. Thank you very 23 much, everyone. We will -- we are recessed until 9:30 24 tomorrow. 25 ---oOo--- 26 27 28 12 1 REPORTER'S CERTIFICATE. 2 3 State of California ) 4 ) ss 5 County of Sacramento ) 6 7 I, BEVERLY D. TOMS, Hearing Reporter for the 8 California State Board of Equalization certify that on 9 August 31, 2009 I recorded verbatim, in shorthand, to 10 the best of my ability, the proceedings in the 11 above-entitled hearing; that I transcribed the shorthand 12 writing into typewriting; and that the preceding 12 13 pages constitute a complete and accurate transcription 14 of the shorthand writing. 15 16 Dated: September 14, 2009. 17 18 19 ____________________________ 20 BEVERLY D. TOMS 21 Hearing Reporter 22 23 24 25 26 27 28 13