BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION 5901 Green Valley Circle, Room 207 Culver City, California REPORTER'S TRANSCRIPT SEPTEMBER 22, 2009 ITEM B7 FRANCHISE AND PERSONAL INCOME TAX HEARING APPEAL OF JOE L. SANTOS (No. 445970) AGAINST PROPOSED ASSESSMENT OF ADDITIONAL TAX Reported by: Beverly D. Toms CSR No. 1662 1 1 2 P R E S E N T 3 For the Board Betty T. Yee of Equalization: Chairwoman 4 Bill Leonard 5 Member 6 Michelle Steel Member 7 Marcy Jo Mandel 8 Appearing for John Chiang State Controller (per 9 Government Code Section 7.9) 10 Diane Olson 11 Chief, Board Proceedings Division 12 13 For Board of Amy Kelly Equalization Staff: Tax Counsel 14 15 For Franchise Tax Bruce Langston 16 Board: Tax Counsel 17 Karen Smith Tax Counsel 18 For Appellant: Clarissa Conde 19 Representative 20 Joe L. Santos Taxpayer 21 ---oOo--- 22 23 24 25 26 27 28 2 1 Culver City, California 2 September 22, 2009 3 ---oOo--- 4 MS. YEE: We will reconvene the meeting of the 5 Board of Equalization. Ms. Olson, I believe we have a 6 case that we're going to move from the agenda. 7 MS. OLSON: That's correct. We are going to 8 start the afternoon with B7, Joe L. Santos. 9 MS. YEE: Okay. Would the parties please come 10 forward. 11 MS. OLSON: Board Proceedings has received 12 contribution disclosure forms for this afternoon's 13 hearings from the parties, agents and participants. All 14 forms were properly completed and signed. No 15 disqualifying contributions were disclosed. All 16 parties, agents and participants are on the Alpha 17 listing provided to your office. 18 Each person sitting at the table will be asked 19 to introduce themselves and if necessary their 20 affiliation with the taxpayer for the record. 21 Ten minutes is allocated for the taxpayer's 22 opening presentation followed by ten minutes for the 23 Franchise Tax Board presentation and five minutes is 24 allocated to the taxpayer for rebuttal. 25 Ms. Yee. 26 MS. YEE: Thank you very much. We are on item 27 B7, Joe L. Santos. Ms. Kelly. 28 MS. KELLY: Good afternoon, Madam Chairwoman, 3 1 Members of the Board, the issues in this appeal are 2 whether Appellant has shown error in the Franchise Tax 3 Board's proposed assessment, which is based on a Federal 4 adjustment, and whether the Franchise Tax Board abused 5 its discretion in denying abatement of interest on the 6 proposed assessment. 7 MS. YEE: Thank you very much. 8 Good afternoon. 9 MR. SANTOS: Good afternoon. 10 MS. YEE: If you'll introduce yourselves for 11 the record. You have ten minutes for your presentation. 12 MS. CONDE: Good afternoon, Members of the 13 Board. My name is Clarissa Conde, and I'm here 14 representing Joe L. Santos in his appeal. 15 MR. SANTOS: And my name is Joe L. Santos. 16 MS. YEE: Great. Thank you. 17 MS. CONDE: Mr. Santos filed a timely 2003 18 California resident income tax return. The IRS 19 performed an audit on Mr. Santos's 2003 return and 20 alleged that Mr. Santos had additional income during 21 2003. However, because of injuries from a car accident 22 and relocation of his home, Mr. Santos was not able to 23 find evidence to contest the audit within the time 24 allowed. 25 Mr. Santos submitted an offer in compromise to 26 the IRS in the amount of $2,100 for reasons of doubt as 27 to liability and doubt as to collectibility. 28 The Internal Revenue Code Section 7122 says 4 1 that the IRS is authorized to compromise a taxpayer's 2 Federal income tax liability. The grounds for such 3 compromise are doubt as to liability, doubt as to 4 collectibility and promotion of effective tax 5 administration. 6 The IRS in this case accepted Mr. Santos' offer 7 and confirmed that the offer in compromise was accepted 8 on both doubt as to liability and doubt as to 9 collectibility. 10 Mr. Santos then made payment and satisfied the 11 offer in compromise. However, applying the Federal 12 adjustments without taking into account the offer in 13 compromise the Franchise Tax Board proposed an 14 additional tax to Mr. Santos's California return of 15 1,914 plus interest. 16 The Franchise Tax Board says that even though 17 the IRS accepted Mr. Santos's offer in compromise for 18 reasons as to doubt as to liability, that information 19 alone does not establish revision or revocation of the 20 Federal actions upon which the FTB's proposed assessment 21 is based. 22 But we're arguing that the IRS entered into the 23 offer in compromise and made changes to the proposed tax 24 increase because the IRS determined that there was doubt 25 as to liability. Because if there was no doubt as to 26 liability, the IRS would have stated that the offer in 27 compromise was based on the doubt as to collectibility, 28 not both. 5 1 Therefore, the IRS believed that there was 2 enough doubt as to liability to forego their initial 3 audit and settle Mr. Santos's liability at a fraction of 4 what their initial audit determined it to be. And 5 without -- without an audit of its own, the Franchise 6 Tax Board should do the same. 7 According to Edison California Store, 8 Incorporated versus McClugan, the law is interpreted in 9 favor of the taxpayer. The same should be true in 10 ambiguous factual matters. Ambiguous factual matters 11 should be resolved in favor of the taxpayer when the 12 government agency allows the ambiguity. 13 In this case, the IRS accepted the offer in 14 compromise because there was doubt as to liability. 15 The Franchise Tax Board should be bound by 16 the -- by the IRS's offer in compromise because it is 17 relying on the IRS in this matter. 18 MR. Santos will be making an argument that the 19 interest should be abated also for extreme financial 20 hardship. We believe that the Legislature gave the 21 Board jurisdiction to abate interest in Revenue and 22 Taxation Code Section 19112. 23 Mr. Santos will now discuss the facts 24 surrounding his financial hardship. 25 MR. SANTOS: Yes. Thank you, Clarissa. 26 I am making an argument for abatement of 27 interest based on extreme financial hardship. We have 28 submitted documentation regarding the items that I will 6 1 be going over. 2 The first page was actual medical expenses 3 listing the medical treatment I have received thus far 4 from a rear-end collision on November 2007. And it 5 includes the hospital bill, which is above $9,000. The 6 hospital discharge sheet, which was found that I had a 7 back sprain, head injury, no -- and was asked to follow 8 up with my primary care physician. The ambulance bill, 9 which actually totaled $1139. 10 And the last page was actually my unemployment 11 has been depleted as of the first week of September 12 2009. This includes the extensions that I was afforded. 13 And a quick note regarding the first page listing the 14 medical expenses. I've actually paid off Bristol 15 Medical -- Bristol Park Medical and the pharmacy 16 prescription portions. I've been paying these off on a 17 monthly basis, so -- specific to the case I think the 18 core arguments that Clarissa has presented are valid and 19 factual. I would add to these the fact that my offer in 20 compromise with the IRS was very specific as to doubt as 21 to liability and doubt as to collectibility. The fact 22 that the State has based their assessment on this IRS 23 audit without performing their own audit to verify such 24 information is something that I guess -- I believe is -- 25 is in our favor. Because the Federal government 26 accepted my offer. 27 And so, it would follow that the assessment 28 would actually need to be the 2100 that the Federal 7 1 government accepted. 2 And so, with the information presented I hope 3 that the Board will reach a fair and just conclusion. 4 This has been a long trip for me with regard to the 5 number of appeals and correspondence. At this time I 6 want to take this opportunity to thank Mr. Craig Shaltes 7 and Clarissa and everyone involved with the tax 8 assistance program at the Loyola Marymount University. 9 Their help has been invaluable. Thank you. 10 MS. YEE: Thank you very much. We'll hear from 11 the Franchise Tax Board and give you five minutes on 12 rebuttal. 13 MS. CONDE: All right. Thank you. 14 MS. YEE: Franchise Tax Board. 15 MR. LANGSTON: Good afternoon, Madam Chair and 16 Board Members. I'm Bruce Langston, representing 17 Franchise Tax Board. To my right is Karen Smith, also 18 from the Franchise Tax Board. 19 This is a typical Federal action case that 20 we've -- we've heard many of these. What happened in 21 this, the IRS discovered some unreported income, made 22 an assessment based on a change to income, and then as 23 Appellant pointed out reached an offer in compromise. 24 The way the California and Federal statutes 25 interact is that it -- that California and Federal law 26 are the same with respect to items of income deduction 27 and credit in this area. And where Federal makes a 28 change to a specific item of income, allows a deduction, 8 1 allows a credit, California can -- can base its 2 determination on those determinati -- on those changes. 3 Normally in a Federal audit there will be a 4 specific item of income that is shown and then if it is 5 compromised or reduced -- if the IRS will issue a 6 revised report showing that. 7 That didn't happen in this case. Normally when 8 someone files for an offer in compromise they check a 9 box on the offer in compromise form as to how they want 10 it to be considered. If you check both boxes the 11 determination is going to come out with both boxes 12 showing that that's what they requested. But in this 13 case it's very clear, and as we pointed out in our 14 briefs, that the Federal government didn't change 15 specific items of income or deduction on his 2003 16 return. What they did is they took into account his 17 financial hardship and accepted his -- his changes 18 based -- his offer in compromise based on the financial 19 hardship. 20 Now, normally, when we see offer in compromises 21 done by the IRS based on doubt as to liability, there 22 will be some indication of what specific item there was 23 doubt as to liability. 24 Here there wasn't. Nevertheless, let's go 25 through a little -- little time line. In this 26 situation, as he pointed out, they had a Federal offer 27 in compromise in 2006. In December of 2006 Franchise 28 Tax Board issued a proposed assessment based on the 9 1 original RAR. That is based on the original adjustments 2 to income. 3 In February of 2007 appellant filed a protest 4 with a copy of his offer in compromise documentation. 5 As shown in the brief, that all relates to basically 6 inability to pay, not to substantiation of why the 7 substance of the IRS action was incorrect. 8 Then just as our protest Hearing Officer was 9 ready to mail the letter we had massive fires break out 10 in Southern California. As you may remember, in October 11 of 2007 both Franchise Tax Board and Board of 12 Equalization announced that all of our collection action 13 and billing would be suspended for areas that were 14 within the fire area for three months. Actually, the 15 Franchise Tax Board news release said October 21, 2007 16 through January 31, 2008. 17 We complied with that, basically held the 18 protest letter -- or the -- the action on the protest, 19 we were asking for more information. Sent it out 20 January 8, 2008 so the deadline would be after they 21 announced that we deadline -- that -- of the 22 announcement of when we were going to have the deadline. 23 So, we asked for copies of any -- anything he 24 had to show the substance of the IRS adjustment, that 25 they actually made an adjustment to an item of income 26 deduction or credit, which would allow us to reduce his 27 proposed liability. 28 He came back; asked for additional time to 10 1 respond. February 27, 2008 the protest was supplemented 2 with hardship medical expenses, but nothing -- nothing 3 relating to the items of income in 2003 that we needed 4 to be able to reduce the assessment. 5 Therefore, on March 2008 we told him that, 6 issued a Notice of Action explaining that he hadn't 7 substantiated any actual changes to income or 8 deductions. 9 April 7, 2008 he filed his appeal letter. We 10 got -- he got an acknowledgement from your Board June 11 13th. And in September 2008, in our opening brief we 12 explained again that in order to get the -- remember 13 this is a proposed assessment, it's not a final 14 assessment yet. In order to get the proposed assessment 15 reduced he needed to provide some evidence or 16 documentation that either the IRS had considered the 17 actual line items or, in the alternative he could 18 provide information about the IRS adjustments to us 19 and -- and we would go ahead and -- and make the 20 adjustments. 21 In his appeal brief he basically asserted that 22 the offer in compromise was to doubt as to liability but 23 again no documentation, nothing that we could work on. 24 We can't even compute exactly what -- what he's asking 25 for, exactly what changes to income are being 26 considered. 27 Again, we explained in -- in March we filed 28 another reply brief, again explaining why all the IRS 11 1 documentation showed it was doubt as to collectibility 2 based on hardship, not doubt as to liability. 3 Finally in August we e-mailed -- before this 4 hearing we e-mailed the representative asking for 5 anything that they could provide showing the actual 6 changes, and if there's any documentation that -- that 7 we could use to reduce the assessment. And at this 8 point we still -- there still isn't any -- any response, 9 nothing that we can use to change that. 10 The -- the argument about interest suspension 11 just -- interest abatement, very -- very briefly, I have 12 to say that what Appellant is asking for is interest 13 abatement under Section 19112, which is a section which 14 allows Franchise Tax Board to -- to abate interest on a 15 final liability due to hardship. This liability is not 16 final yet. 17 What your Board has jurisdiction over is 18 interest abatement under Section 19104, ministerial and 19 managerial acts. The only possible one that we can see 20 here would be the delay in the protest because of the 21 fires, and that did delay during -- for three months for 22 a small amount of interest. But, again, we believe that 23 wasn't a managerial act because we had to comply with 24 our own announcement that we were going to delay 25 correspondence into the affected fire areas. 26 So, the -- in sum, we don't believe taxpayer 27 has shown that the Franchise Tax Board's computation of 28 the proposed assessment is incorrect. The financial -- 12 1 you know, the financial disability situation is 2 something that would be considered later after this 3 is -- is over. And I would also point out that I think 4 what the taxpayer's really asking us to do is do an 5 offer in compromise the same -- on the same basis as the 6 IRS did. Which, again, we can only do after this case 7 is dismissed. At that point he can fill out the offer 8 in compromise form and we can do the same thing that the 9 IRS did. 10 Thank you. 11 MS. YEE: Thank you very much, Mr. Langston. 12 You have five minutes on rebuttal. 13 MS. CONDE: Okay. From what I understand FTB 14 is saying that their assessment is based on the IRS's 15 audit. And then they said that -- that the offer in 16 compromise is based on doubt as to collectibility based 17 on his financial hardship. 18 But I'd like to reiterate that the IRS said 19 that the offer in compromise was accepted on both 20 grounds, doubt as to liability and doubt as to 21 collectibility. And if -- if it was only based on doubt 22 as to collectibility then they would have said it. 23 In regards to Section 19112, if the Board has 24 no jurisdiction to abate the interest, then FTB can do 25 that. 26 MR. SANTOS: I would like to follow up with -- 27 on that. Franchise Tax Board has indicated in their 28 presentation that the IRS accepted the offer in 13 1 compromise based on my information of economic hardship. 2 I believe this to be incorrect, as my offer in 3 compromise again was based on doubt as to liability and 4 doubt as to collectibility. The fact that the 5 assessment was based on 2003, I received notice in 2007. 6 I had moved since then. I did not have any paperwork to 7 be able to prove my position. And so, I presented in 8 the documentation with the offer in compromise to the 9 IRS these points along with additional information. 10 But the fact that they accepted was as to doubt 11 as to liability and doubt as to collectibility. 12 Furthermore, the Franchise Tax Board indicated 13 that they had sent an e-mail requesting documentation 14 and -- and that no response was given. An e-mail 15 response was sent by Clarissa, I was copied on it, 16 indicating that there was no additional documentations 17 that we could supply to them that -- at that time. 18 MR. LANGSTON: Yes, I agree, that's correct. 19 MR. SANTOS: And -- and furthermore, I -- I 20 have to go back to the fact that their basis -- one of 21 their position is that I have not shown the fact that 22 the IRS computation was correct. Based on the 23 information on the offer in compromise I don't believe I 24 had a duty to show whether they were correct or not. If 25 I could present a reasonable doubt, the fact that there 26 would be doubt as to collectibility and doubt as to 27 liability, I believe that the IRS was able to reach a 28 decision to accept the offer because there -- there was 14 1 reasonable information presented that they -- it would 2 be to their benefit and to mine to just reach a 3 consensus and -- and accept the offer. 4 Here I reiterate the fact that Franchise Tax 5 Board did not perform their own audit even though they 6 had plenty of time to do so. They could requested -- 7 have requested documentation that they needed by 8 subpoena or any other form. And just the fact that 9 they're basing their findings on an IRS audit that was 10 not followed up on, I believe that the fact that the IRS 11 accepted my offer in compromise for 2100 -- I would 12 concede I -- I believe that I would owe 2100 in -- in 13 assessments if -- if the State would use the 2100 rather 14 than a 12 plus thousand that they have assessed. 15 But they have been unwavering in their 16 position, and so I find myself here with Clarissa and 17 their assistance program so that we could present our 18 case and hopefully you would reach a -- a just and fair 19 decision. 20 MS. YEE: Okay. Thank you very much, 21 Mr. Santos. 22 Questions or comments? Yes, Ms. -- Ms. Steel. 23 Then Ms. Mandel. 24 MS. STEEL: Taxpayer just said that offers in 25 compromise that -- you know, is it anything in writing 26 from IRS that they are forgiving for two -- both 27 reasons? 28 MR. SANTOS: I don't recall all the 15 1 documentation that was submitted for the appeals to the 2 tax board. The acceptance offer was received, and you 3 do have a copy of the acceptance offer. I don't recall 4 whether they reference both doubt as to liability or 5 doubt as to collectibility. 6 They do indicate that they accepted the offer 7 as is based on my offer in compromise. Again, I believe 8 this is a very important point. 9 MS. STEEL: I just want to know yes or no. 10 MR. SANTOS: I don't recall if the offer 11 reflects that. 12 MS. STEEL: Yeah. Can I ask -- 13 MR. LANGSTON: I think, yes, it does. 14 MS. STEEL: It does just for one? 15 MR. LANGSTON: Because -- because it's going 16 to -- because it always reflects what they checked on 17 the original form. 18 MS. KELLY: Ms. Steel. 19 MS. STEEL: Yeah. 20 MS. KELLY: Ms. Steel, I'm looking at a copy of 21 the letter from the IRS, and you may be referencing 22 something else. Mr. Langston -- 23 MR. LANGSTON: Oh, I'm sorry. 24 MS. KELLY: -- but the acceptance letter says, 25 "Dear Mr. Santos: We have accepted your offer in 26 compromise signed and dated by you on July 5, 2006. The 27 date of acceptance is the date of this letter, and our 28 acceptance is subject to the terms and conditions on the 16 1 enclosed form 656, Offer in Compromise." 2 So, the letter, itself, doesn't specify on what 3 basis it's being accepted, but it does refer to the 4 enclosed form 656. And on that Mr. Santos checked both 5 boxes. 6 MR. LANGSTON: Yes, that's -- that's a clearer 7 way of putting it. 8 MS. STEEL: I have a question to FTB that so 9 October of 2007 there were a fire. 10 MR. LANGSTON: Yes. 11 MS. STEEL: So, FTB said that you should not -- 12 I mean, you should hold all the letters going out to 13 taxpayers. It's really odd that holding all the letters 14 going out to taxpayers try to help taxpayers. But 15 somebody who didn't have any damage by the fire seems 16 like they are not getting any advantage of that because 17 they don't get the letter first, and second they have to 18 pay for the interest on the top of it because they 19 didn't get the letter, that exactly how much they owe, 20 what they supposed to get. 21 So, is that the normal procedure from FTB, 22 that -- 23 MR. LANGSTON: It is. 24 MS. STEEL: -- when you have fire -- 25 MR. LANGSTON: And you -- you know, you raise a 26 good point because the -- the postponement that we 27 announced had to do with -- there was a disaster area 28 declaration for certain counties. And so the way our 17 1 system works is we have those zip codes that are in 2 those counties. And of course most people in the County 3 are not actually in the fire. But to avoid sending 4 something to -- you know, the only way that we can stop 5 things is by zip code. And so, if your zip code or in 6 this case your county was one that was affected, we are 7 going to put a hold on those. 8 And -- and in this particular case, this is the 9 letter that said, "Reply to us within 30 days with 10 documentation." You don't want to be sending someone a 11 notice with a 30-day deadline if they are in -- somehow 12 in the fire area or -- or incapacitated. I mean, the -- 13 the orders that our Board gave us was, you know, stop 14 this kind of either billing or things with deadlines, 15 basically. 16 Like, for example, an appeal deadline. If 17 someone was supposed to respond within 30 days but they 18 were within one of these counties, your Board did 19 exactly the same thing, you gave them extra period of 20 time. Even though you're right, in the long run if they 21 lose it would have increased the interest. 22 MS. STEEL: The funny thing is that a petition 23 was filed on February of 2007. 24 MR. LANGSTON: Yes. 25 MS. STEEL: And fire happened on October of 26 2007. So, it's been eight months period there. 27 MR. LANGSTON: It was -- that -- that is 28 correct. The protest, we -- we worked -- it took -- it 18 1 took that time, that's the amount of time. 2 MS. STEEL: It always takes more than eight 3 months to -- 4 MR. LANGSTON: It -- it often does, especially 5 in Federal action protests because they're just -- the 6 reality of life is there are a lot of them. And Federal 7 action cases come in in large groups and they get worked 8 in order. 9 But, yes, seven months is not an unreasonable 10 amount of time. 11 MS. STEEL: Larger groups means that how many 12 cases you talking about? By how many people? 13 MR. LANGSTON: Oh, there's a wall bigger than 14 this room with just case, case, case, case. So I don't 15 know. I mean -- 16 MS. SMITH: It's -- it's several thousand -- 17 MR. LANGSTON: Yeah. 18 MS. SMITH: -- Federal action cases. And -- 19 and the Hearing Officer -- 20 MS. STEEL: It's not computerized at all, you 21 have to looking at physically page by page? 22 MS. SMITH: Yes. 23 MR. LANGSTON: You -- 24 MS. SMITH: A person -- 25 MR. LANGSTON: As the letters come in, yes. 26 And -- and the point is, and this is probably 27 more than you want to know, but these often come in in 28 waves because we get Federal data and Federal 19 1 information in big groups. And then our notices go out 2 in big groups. And so, then the people protest them in 3 big groups. 4 So, we suddenly get lots of -- lots of things 5 in at once, and then they are worked in the order we 6 receive them. 7 MS. STEEL: So, how many -- how -- how often 8 you get these bulks of these cases? 9 MR. LANGSTON: Oh, you know, I -- that -- 10 that's something I would have to get back to you on 11 because I don't actually work in the Fed/State audit 12 unit. 13 MS. STEEL: What I want to say is, it's just 14 been delayed and you said, yes, there's so many cases. 15 It delayed for eight months at that point and then 16 waiting for the fire, yes, we have to hold another few 17 months. 18 MR. LANGSTON: Yes. 19 MS. STEEL: Now that interest has been keep 20 growing for this taxpayer that -- you know, they are not 21 getting any responses. They don't know why they are not 22 getting anything. 23 MR. LANGSTON: Well, that's -- that's correct. 24 But I mean the issue is how long is too long. And 25 that's the whole -- every case -- 26 MS. STEEL: Everything is too long. 27 MR. LANGSTON: Everything -- 28 MS. STEEL: I mean, eight months is way too 20 1 long. And then after February till January, 11 months 2 is really long. I mean, as a taxpayer that they know 3 that they have to pay penalty and interest, that is 4 really long. I just want to see that -- you know, I see 5 cases -- case after cases coming in here, that it just 6 took forever. I'm hearing exactly same thing. We have 7 case loads and now that we are having layoffs and, you 8 know, furloughs, I don't know how much is going to be 9 delayed. 10 You say, yeah, it's going to be eight months to 11 11 months. Then for cases coming in from now, it's 12 going -- they have to wait what, two or three years to, 13 you know, come -- getting one letter from FTB? 14 I mean, this is getting just a little too much. 15 MR. LANGSTON: I -- I don't disagree that -- 16 that it would be much better if we could answer them 17 quicker. 18 MS. STEEL: I have just one more question that 19 it's been delayed. Is it -- is it legally okay -- I 20 mean, it's 11 months to respond to taxpayer's protest 21 letter. That is it possible that we can waive some of 22 the interest, you know, from that part -- the letter. 23 MR. LANGSTON: That is a decision for your 24 Board to make. 25 MS. STEEL: So, we -- we're going to make. 26 Okay. Thanks. 27 MS. YEE: Okay. 28 MR. SANTOS: Can I follow up quickly, just -- 21 1 MS. YEE: Yes, Mr. Santos. 2 MR. SANTOS: I find it interesting that just 3 now in your question and answer response with the FTB 4 they have conceded the fact that it wasn't due to a fire 5 that I did not get notice, it's actually they're 6 overworked, is what the case is. 7 MR. LANGSTON: That's -- that -- the fire was 8 raised in the hearing summary. 9 MR. SANTOS: Right. 10 MR. LANGSTON: Which is why I asked. 11 MR. SANTOS: And as Ms. Steel has eloquently 12 presented, the fact that there was a gap of eight months 13 between my February 2007 letter and the response -- an 14 attempted response from the FTB that took place in 15 October -- the fires were in October so the -- the fact 16 that I did not get a notice was because you're 17 indicating it was too much work? 18 MR. LANGSTON: It would have gone out in 19 October. It was all ready and prepared, but it took 20 three more months -- 21 MR. SANTOS: I find that -- 22 MR. LANGSTON: -- because of the fire. So 23 that's -- that's correct. 24 MR. SANTOS: I find that interesting. 25 MS. YEE: Okay. Ms. Mandel, please. 26 MS. MANDEL: Just going back to what the 27 Federal adjustments were, I have it as increasing income 28 for $4 of interest, a small pension or annuity of 224, 22 1 unemployment income, which California did not pick up 2 because we don't -- 3 MR. LANGSTON: Correct. 4 MS. MANDEL: -- California doesn't tax that. 5 But securities income of $32,941. Was that -- do you 6 know if that figure was off a 1099 gross proceeds 7 number? 8 MR. LANGSTON: We -- we don't know. We know 9 that was the figure by which the IRS increased income, 10 and that's why we kept asking him was there -- was this 11 the gross sales price? Was -- was their basis things 12 like that. 13 Normally if it was a 1099 we get 1099B 14 information about stock sales, then we could -- if we 15 knew when they were purchased we could back into the 16 basis. 17 But here we don't even have the information to 18 know whether that was a net amount after IRS had already 19 given a basis or not. That's -- that's the -- that's 20 the whole problem, is we don't have documentation. 21 MS. MANDEL: Is -- is that documentation 22 available from IRS? I mean, you know, my natural 23 suspicion was that it was a gross amount off a 1099. 24 But, you know, I don't know if -- if it was or not. 25 MR. LANGSTON: Again, the IRS -- because the 26 IRS didn't go -- dig more deeply into it because they 27 accepted his offer in compromise. 28 MS. MANDEL: No, I'm talking about his offer in 23 1 compromise. I'm talking about the initial adjustment 2 that the IRS made. 3 MR. LANGSTON: Now, what -- 4 MS. MANDEL: Do we get information about the 5 particular -- 6 MR. LANGSTON: We did get some, but I'd have to 7 go through it and look and see exactly what it was. 8 MS. MANDEL: Because I just have a vague 9 recollection that sometimes -- 10 MR. LANGSTON: Yes. 11 MS. MANDEL: -- there's a notation that it's -- 12 you know, it's 1099s. 13 MR. LANGSTON: And that's correct. And to the 14 extent that he could show -- he could -- he could show 15 us where those figures came from, certainly we'd make an 16 adjustment. 17 MS. MANDEL: Okay. That -- that's the one 18 piece of the income that I'm curious about of the 19 underlying adjustment. And I don't know what they would 20 show in the IRS original report if it would still be 21 available from IRS. If there would be something where 22 IRS makes -- I remember a long time ago an instance 23 where FTB said, well, IRS made the adjustment for 1099 24 but they couldn't tell what kind of 1099s. We didn't 25 know what kind of income it was. 26 But here we're getting told it's securities 27 income, and I'm just wondering if -- if there's a 28 possibility of getting that information from -- did you 24 1 have a securities account? 2 MR. SANTOS: Real briefly. In -- in about 3 2000 -- in late 2002 to about early 2004, I had 4 settled -- I had actually deposited money from a 5 settlement of a rear-end collision in 2000. And I used 6 that to try and make some money on the stock market. 7 I did have transactions -- postings. I bought 8 shares, sold shares. 9 As I mentioned to the IRS, they actually based 10 their findings on incorrect figures. And the -- the -- 11 some shares were sold at the -- before the December 31, 12 2003 period. And some -- the rest following into 2004. 13 When everything was sold, there was actual loss. 14 And so, in the offer in compromise -- and I 15 think there was a phone call with an IRS agent, as well, 16 I -- I don't know whether the IRS file that they have on 17 the offer in compromise reflects their further 18 investigation. But they had found that those earnings 19 were not realistic in that a few months later those 20 stocks were actually sold at a loss. 21 So, I actually -- on paper it seemed that I 22 might have income, but I did not because those were 23 actual losses. 24 MS. MANDEL: Did -- did you -- did you work 25 with -- where were you doing the trading? Did you have 26 an on-line account or did you have an account at a 27 brokerage house? 28 MR. SANTOS: On-line. TD Waterhouse at the 25 1 time. 2 MS. MANDEL: 2003. What are we in? 2009. 3 Have you checked with TD Waterhouse to see if they still 4 have records for your account? 5 MR. SANTOS: I have not. 6 MS. MANDEL: Would you be able to -- 7 MR. SANTOS: I could -- 8 MS. MANDEL: -- do that? 9 MR. SANTOS: -- contact them and see if they 10 could provide information, certainly. 11 MS. MANDEL: Because it's -- that's the big 12 ticket of the income that has been included. 13 MR. SANTOS: Uh-huh. 14 MS. MANDEL: And so far you've not -- you know, 15 because you don't have your own documents any more, 16 it's -- it's possible that TD Waterhouse would still 17 have -- I don't know. You know, some -- some places 18 keep things six -- seven years maybe. They might have 19 records of your account where you could see the stuff 20 going in and out. And that -- that might be useful 21 toward resolving some of what the issue is on the 22 underlying substance. 23 And if you -- if you -- and I don't know what 24 you did on your 2004 because the way you explained it it 25 sounds a little bit like you were doing trading in 2003 26 and 2004 and that ultimately whatever -- that ultimately 27 you overall lost money. And it's not absolutely 28 inconceivable to me that the IRS might have looked at, 26 1 oh, well, he had income in '03 but he had loss in '04 -- 2 I don't know if you took losses on your '04 return or 3 not. And if they were looking at it as also a hardship 4 case. 5 It's not -- you know, I could see maybe where 6 they'd go, well, you know, overall I didn't really make 7 money on the security stuff so, you know, we're going to 8 let it go by the boards as part of the offer in 9 compromise. 10 Again, I don't know what you did on your 2000 11 return, whether you reported losses from those stock 12 sales or not. But I think if you could get the 13 information from TD Waterhouse it might show something. 14 And I don't know if IRS -- if -- if FTB or if you would 15 be able to -- Clarissa or whoever would be able to go to 16 IRS and find out what the initial adjustment -- 17 particularly that -- you know, particularly the 18 securities income just because I think that's -- I mean, 19 just from looking at this it looks like -- to me my 20 guess would be that they were -- I mean, $4 of interest 21 is too little for a 1099, but you never know. Maybe 22 somebody did do a 1099 for $4 of interest. 23 The pension annuity would be some kind of -- it 24 looks like 1099 reporting that they picked up. That's 25 my guess. And there -- and there might be something in 26 the IRS records when they make the initial adjustments 27 that -- that show that. And then maybe the securities 28 information. 27 1 I know it's often hard, you know, when you 2 didn't work in the tax world to think about what 3 documents would help my case and where can I get them 4 because all you can think about is "I don't have them." 5 But I think that those kinds of things if they're out 6 there might be -- could be useful. 7 MR. LANGSTON: And I would point out, we would 8 consider that as part of our own -- FTB's offer in 9 compromise process, as well. Because, I mean, honestly 10 from the figures he's given us today, it just seems like 11 the offer in compromise procedure is the way to go after 12 this appeal is dismissed because -- 13 MS. YEE: So, in other words, then that's kind 14 of my followup question, in terms of the relief that 15 could be provided to Mr. Santos, he could certainly 16 pursue the offer in compromise once we -- 17 MR. LANGSTON: Absolutely. 18 MS. YEE: -- determine this is final. 19 MR. LANGSTON: Yes. 20 MS. YEE: And in that process you would still 21 consider substantiation from -- 22 MR. LANGSTON: We also -- yes, we will also 23 look -- even -- you know, even when something goes final 24 if a taxpayer has not paid it, but they come up with the 25 documentation that they didn't have before, they can 26 submit it to us. Our Taxpayer Advocate office does that 27 all the time. 28 If they have already paid it, then it becomes a 28 1 refund claim and you know about those. 2 MR. SANTOS: May I follow up on Ms. Mandel's 3 suggestion? 4 MS. YEE: Yes. 5 MR. SANTOS: I will contact TD Waterhouse. I 6 know that that name has changed. I was unsuccessful in 7 getting any information from them in 2000 -- late 2007. 8 So, but I will try again. 9 Now, if it does help FTB, I would not mind 10 signing a waiver so that they can get records for that 11 tax year from the IRS or anyone else. But, now again, I 12 feel strongly with regard to the FTB's position. And if 13 they're at this point conceding that we will consider an 14 offer in compromise, why hasn't it been considered when 15 I presented it in 2007? 16 MR. LANGSTON: The offer in compromise can only 17 compromise a final liability. And when you pro -- when 18 we have a proposed assessment and you protest that and 19 appeal it, it's not a final liability yet. So, that's 20 why -- you first have to figure out how much tax a 21 person owes, then -- before you can figure out how much 22 of that amount they should pay. So, that's sort of a 23 simplified version of why we can't do an offer in 24 compromise while something is still on appeal. 25 MR. SANTOS: Okay. 26 MS. YEE: Right. 27 MR. SANTOS: So, the Board will decide whether 28 I owe any tax. If any tax is owed, you are open to an 29 1 offer in compromise? 2 MR. LANGSTON: Yes. 3 MS. YEE: And -- and in that process, open to 4 any other documentation to substantiate the underlying 5 liability -- or -- or the dispute on that underlying. 6 MR. SANTOS: Yeah. Because I think -- I am 7 looking for work. And the way things happen, I was -- 8 in 2002, as I mentioned, I was rear-ended at a stop 9 light. I was living in Irvine and and I was at a stop 10 light and, guess what, someone rear-ended me in November 11 2007. 12 And I had some issues with it, but it was the 13 right time -- I guess the Lord knows why, my father had 14 some health issues. So I've spent some time with him 15 that I -- I would not have had. 16 But I -- I feel because I'm living between two 17 houses from relatives, that the Franchise Tax Board 18 would have better luck getting documentation. I would 19 be more than happy to sign an authorization form for 20 you, but me trying to get that, it's a little bit 21 difficult because I -- I'm not too familiar as to 22 statutes regarding -- 23 MS. YEE: Sure. 24 MR. SANTOS: -- documentation. How long does 25 the brokerage firm hold records or -- and what not. 26 So -- 27 MS. YEE: Okay. Certainly the Franchise Tax 28 Board can provide whatever assistance in that regard, 30 1 with your cooperation. 2 MR. SANTOS: Okay. 3 MS. YEE: Okay. Thank you. Other questions, 4 Members? 5 Mr. Leonard. 6 MR. LEONARD: Back to interest. 7 MS. YEE: Yeah. 8 MR. LANGSTON: Yes. 9 MR. LEONARD: Madam Chair, I -- I support some 10 interest abatement here, but I'd like to make a broader 11 request that we ask Franchise Tax Board and our own 12 Department to help us set a standard of a -- of a 13 reasonable workload time. And that if because of 14 workload issues, which obviously are there -- I mean, 15 IRS dumps on you guys, I know that -- that that 16 doesn't -- that pain doesn't get shared with the 17 taxpayer in terms of extra interest because our State 18 agencies are so overwhelmed in getting out timely 19 responses to protests or -- or petitions. 20 That we should have fair standards. I mean, I 21 remember bragging about the -- I think I picked your 22 press release and the BOE release, that billings are 23 suspended in fire zones. I didn't know that interest 24 continued. 25 I've got a mea culpa to lots of people and -- 26 and I think we ought -- we owe it in our press releases 27 on that to say -- now, some cases where the taxpayer 28 knows it, it's -- it's sort of a -- it's a billing on a 31 1 final assessment, they're -- they already know they owe 2 something. In other cases -- in this one where it was 3 merely a protest, at that point there's just a 4 disagreement, he said, she said, and there's no final 5 assessment and that interest added to that -- not 6 through your fault necessarily at the Franchise Tax 7 Board, or Board of Equalization on their cases, because 8 of the workload and not through your fault because of a 9 fire, but the consequences of both is to increase the 10 interest due should -- should it turn out that the -- 11 the tax billing is accurate and becomes final, the 12 taxpayer has to pay and when -- when our theory is -- is 13 that the taxpayer is holding the government's money and 14 that they should pay interest on that. It's -- it's a 15 loan. 16 But if the taxpayer doesn't know they're 17 holding the government's money, hasn't been fully 18 informed of that, it -- it appears to be an interest 19 charge that's -- that's not justified. 20 And I think we should -- I don't know what the 21 right amount of time is if a February protest letter 22 letter arrives to get a response back to them. But I 23 think we should do some work and what that is, let 24 taxpayers know that -- in the letter that goes out to 25 them, you may protest this letter, we will work on it, 26 get back quickly, but we want to let you know interest 27 is accruing and starting in 60 days, whatever, after -- 28 after this letter, if -- if we don't hear from you. 32 1 Just to give some kind of balance to this because -- the 2 bad part of it, I don't -- it's -- I don't think it's 3 anybody's clear purpose here, but the bad part of this 4 consequence is government profits by their own delays. 5 Whether they're ministerial, managerable -- managerial 6 or just happens, they profit by their own delays to the 7 extent that they prosecute these tax cases this way. 8 And I -- that just doesn't set well with the 9 public. It makes tax agencies even have a worse 10 reputation. And I think we should set some reasonable 11 standards for the -- with the Franchise Tax Board and, 12 Madam Chair, for our own Department 13 MS. YEE: Okay. Yeah, certainly to be 14 exacerbated by our ongoing constrained resources. But I 15 would say at the very least certainly any information we 16 put out publicly we ought to be sure that the -- the 17 taxpayers are aware that interest continues to accrue. 18 MS. MANDEL: Madam Chair. 19 MS. YEE: Yes. Ms. Mandel. 20 MS. MANDEL: I -- I -- I did -- I did have a 21 question which I guess has been answered, which also I 22 guess wasn't something I was aware of, that -- because 23 my question had been when -- when the tax agencies 24 exercise their authority to say we're going to postpone 25 things because of -- which happens -- unfortunately we 26 have a lot of fires, that -- that -- my question had 27 been whether those same -- whatever provisions give us 28 the authority to do that, whether those same provisions 33 1 give authority to suspend the interest. 2 Because I think on the BOE side, there's all 3 that stuff about, well, we're not going to -- no late 4 payment penalties and all of that. And I know that -- 5 that interest -- you know, the interest is really -- 6 interest is just the time value of money and interest is 7 just -- you know, the taxpayer has the money in hand, 8 interest goes both ways, depending who has the money in 9 hand, and it's just a question of -- of compensation for 10 the use of the money during the time that the person is 11 supposed to have it doesn't have it. 12 But -- so, the -- the provisions that -- that 13 allow the sort of postponements and the extensions of 14 time and all that don't provide for authority for 15 interest suspension, the legislative provision. 16 MR. LANGSTON: Not -- not a broad blanket one 17 like you are suggesting. We do have -- as we talked 18 earlier about 19112, where there truly is a -- a 19 disaster financial hardship, but I don't think we've 20 ever extended that to everyone in the County where 21 there's a fire -- 22 MS. MANDEL: Okay. 23 MR. LANGSTON: -- you know, would get that. You 24 know, that -- that would be a good legislative change, I 25 mean, to make it clear, because that is a -- that is a 26 consequence of a delay, is that people who have unpaid 27 amounts will owe interest 28 MS. MANDEL: And then as -- as to sort of -- my 34 1 understanding of the way the interest abatement statutes 2 are written, is that when they talk about unreasonable 3 error or delay from ministerial or managerial act, that 4 managerial act is not -- and I think you alluded to it 5 in your presentation, Mr. Langston, that managerial act 6 is a specific managerial act on a specific case as 7 opposed to a general -- 8 MR. LANGSTON: Yes. 9 MS. MANDEL: -- managerial thing. 10 MR. LANGSTON: That's correct, as opposed to 11 a -- just general workload constraints have def -- have 12 generally not been held to be ministerial or managerial 13 act. There has to be something like a lost file, some 14 -- something specific to that case. Not just it's one 15 of a thousand that came in in a big lump and it took a 16 while to get to them. 17 MS. YEE: Okay. Mr. Leonard. 18 MR. LEONARD: Mr. Langston, your comment 19 just -- it brings -- if the Legislature continues to 20 punish our two agencies with -- with budget cuts without 21 acknowledging the revenue losses and the slowdown in 22 collections it's going to get to a point where we don't 23 process anything, and they still expect all this money 24 to roll in. 25 At some point that kind of management decision 26 is a managerial error. 27 MR. SANTOS: Yes. 28 MR. LEONARD: It may be broad based, but it -- 35 1 there's some culpability. 2 My question, now to get to the point of 3 Mr. Santos. He sent the letter in in February. He 4 doesn't hear by April. Is there anything that he could 5 have or should have done in April of '07 that would have 6 brought him an answer? 7 MR. LANGSTON: I mean, I suppose he could have 8 followed up with a phone call saying, "I filed this 9 protest. I never got an answer." Someone would have 10 gone over to the stack and pulled it out and looked at 11 it and either said, "Yes, someone's looked at it already 12 and they're writing a letter," or -- 13 MR. LEONARD: Well, we know that didn't happen. 14 It wasn't till October they wrote the letter. 15 MR. LANGSTON: Right. Because -- because it -- 16 it was worked in order. Just as far as we can tell 17 nothing -- nothing extraordinary about it. 18 MR. LEONARD: Right. 19 MR. LANGSTON: As with all the other protests 20 that came in, it -- it just -- you know, because -- what 21 you're asking kind of -- 22 MR. LEONARD: He would have been told, "We're 23 working on it. We got it" -- 24 MR. LANGSTON: Yes. 25 MR. LEONARD: -- "we're working on it." 26 MR. LANGSTON: Yes. And -- and we would -- 27 MR. LEONARD: So we only found out one thing, 28 that Franchise Tax Board got the letter. 36 1 MR. LANGSTON: Yes. And -- and we would have 2 probably, you know, taken a look at it right there while 3 we had it in our hands. I mean, we wouldn't have just 4 dumped it back in the stack. 5 But -- you know -- 6 MR. LEONARD: Would he have gotten an answer? 7 MR. LANGSTON: He -- he -- someone probably 8 would have looked at it. I mean, normally -- 9 MR. LEONARD: I understand looking at it, but 10 would he have gotten the answer that -- that ultimately 11 came out? Would he -- 12 MR. LANGSTON: See, I don't -- I don't know. 13 Probably not. Probably it still would have to be 14 assigned to someone. 15 MR. LEONARD: Assigned. 16 MR. LANGSTON: Might have been able to bump it 17 a little higher in the -- in the -- in the line. 18 MR. LEONARD: So there's really not much 19 taxpayers could do other than to call regularly and 20 frequently? 21 MR. LANGSTON: That's right. I mean, but, you 22 know, your -- most taxpayers don't really want their 23 protests handled quickly. Most -- a lot of them it's 24 just the opposite, is they would just as soon have us 25 wait and, you know, stretch the payment out into the 26 future. But -- 27 MR. LEONARD: But it doesn't stretch the 28 payment out. It grows the amount. 37 1 MR. LANGSTON: Well, it -- but -- but it 2 stretches the time -- 3 MR. LEONARD: It stretches the time in which 4 they have to pay. 5 MR. LANGSTON: -- that it becomes final. 6 And so -- so -- 7 MR. LEONARD: By the time they get to that 8 point it may -- they may be -- it may be unaffordable. 9 MR. LANGSTON: Correct. And of course 10 everyone's situation is different. And for some people 11 are going to want it but -- 12 MR. LEONARD: I know there's some taxpayers 13 have stalled us -- 14 MR. LANGSTON: Yes. 15 MR. LEONARD: -- and stalled the Franchise Tax 16 Board. I got that. 17 MR. LANGSTON: Yes. 18 MR. LEONARD: I'm just asking -- I'm just 19 trying to think through and trying to set a reasonable 20 standard for response. What to set it at and what would 21 I advise -- if a taxpayer asked me, "I put a letter in 22 and what do I do," I'd volunteer to make a call for him, 23 but I'm not sure what I'd tell him to do on their own. 24 MS. SMITH: I believe that, Mr. Leonard, if -- 25 if a taxpayer called and started asking questions that 26 it probably would have been bumped up -- 27 MR. LEONARD: Been bumped up. 28 MS. SMITH: -- higher in the line. The problem 38 1 is if everybody called -- 2 MR. LEONARD: You got the same position? 3 MS. SMITH: -- you got -- you're in the same 4 situation because you can't move everybody up. 5 MR. LEONARD: So I should tell all my 6 newsletter readers to call you? 7 MS. SMITH: They should call the unit that sent 8 them the -- the last letter and -- and here I understand 9 that an acknowledgement went out and said we will work 10 your protest in -- 11 MR. LEONARD: Okay. 12 MS. SMITH: -- due course or something like 13 that. 14 MR. LEONARD: We already knew that. So 15 there's -- 16 MS. SMITH: Yeah, I mean -- 17 MR. LEONARD: But I -- we need some -- we need 18 some workload standards to be made -- to be at least 19 linked to our interest. 20 MS. MANDEL: Yeah, I don't -- I don't know -- I 21 don't know that there's statutory authority to -- to 22 abate interest on those grounds. It's not specific to 23 the case. 24 MR. LEONARD: It's very specific to a case. 25 MR. SANTOS: Actually, if I may speak to that. 26 MS. YEE: Mr. Santos. 27 MR. SANTOS: Actually, I believe the 28 interest -- I would feel very specific to my case. 39 1 Now -- 2 MS. MANDEL: I understand -- 3 MR. SANTOS: Now -- 4 MS. MANDEL: I understand what you're saying. 5 MR. SANTOS: Now, the fact that Mr. Leonard 6 presented an option regarding a phone call, I would say 7 I did give Franchise Tax Board a phone call, either 8 before or after the 2007 appeal, and I was told that it 9 had not been assigned to anyone and that once it was 10 assigned I would be hearing from them. But I do agree 11 with your position that there is a reasonable 12 expectation as a taxpayer after having presented more 13 than one appeal they have had a -- a timely response. 14 Not only in tax law, but in any legal proceeding there 15 are statutes that require certain guidelines in time -- 16 time constraints to respond to a petition or to present 17 information. 18 I believe, as Ms. Steel has indicated, eight 19 months is a little too long to have had a response. 20 MS. YEE: Mr. Leonard, let me suggest that -- I 21 would agree with Ms. Mandel, we -- we don't have much 22 latitude at this point without a statutory change and I 23 think certainly just foreseeing what the near term holds 24 for both of our agencies, it probably would make sense 25 to examine what reasonable standard might be -- this is 26 not going away. I think we're just going to have the 27 situation exacerbated given our -- our constrained 28 fiscal resources. 40 1 MR. LEONARD: Well, first I'd ask how much 2 latitude we do have. I agree the statute seems all 3 encompassing, but we actually have some latitude in the 4 sense we -- we choose when to -- when to start the 5 interest accruing because of when we send the letter 6 out, the original letters. 7 MR. LANGSTON: No, interest accrues from the 8 original due date of the return. 9 MS. YEE: Due date of the -- right. 10 MR. LANGSTON: So it doesn't make any 11 difference when we send out the letter. 12 MR. LEONARD: Okay, I understand. Because 13 you're right on the due date. 14 MR. LANGSTON: I mean, but it does in a sense 15 that they're going to -- 16 MR. LEONARD: Yeah. 17 MR. LANGSTON: -- get it more quickly and do 18 that. 19 MS. KELLY: Mr. Leonard, I think you're 20 thinking about the first notification. That's the 21 beginning of the interest abatement period, where 22 interest can abated. It's from first notification of 23 the liability. 24 MR. LEONARD: That's correct. 25 MS. KELLY: Usually the NPA. 26 MR. LEONARD: That's -- I was, yeah. Thank 27 you. 28 MS. KELLY: That's what you were thinking of. 41 1 MR. LEONARD: Thank you much. 2 MS. YEE: Other questions, Members? 3 MR. LEONARD: Thank you. 4 MS. YEE: Discussion? 5 Hearing none, is there a motion? 6 MS. MANDEL: Take it under submission. 7 MS. YEE: Motion by Ms. Mandel to take this 8 matter under submission. 9 Is there a second? 10 MR. LEONARD: Second. 11 MS. YEE: Second by Ms. Steel. 12 Without objection that motion carries. 13 Thank you very much, Mr. Santos, Ms. Conde. We 14 will discuss your matter later today and send you 15 written notice of our decision. 16 MR. SANTOS: Thank you, Mr. Leonard and Ms. 17 Steel, Ms. Yee and Ms. Mandel. 18 MS. YEE: Thank you. 19 MS. CONDE: Thank you, guys. 20 ---oOo--- 21 22 23 24 25 26 27 28 42 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 September 22, 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 42 13 pages constitute a complete and accurate transcription 14 of the shorthand writing. 15 16 Dated: October 8, 2009. 17 18 19 ____________________________ 20 BEVERLY D. TOMS 21 Hearing Reporter 22 23 24 25 26 27 28 43