1 BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION 2 5901 GREEN VALLEY CIRCLE 3 CULVER CITY, CALIFORNIA 4 5 6 7 8 REPORTER'S TRANSCRIPT 9 SEPTEMBER 23, 2009 10 11 12 13 14 15 FINAL ACTIONS 16 17 18 19 20 21 22 23 REPORTED BY: JULI PRICE JACKSON 24 CSR NO. 5214 25 26 27 28 1 1 P R E S E N T 2 3 4 For The Board Betty Yee 5 of Equalization: Chairwoman 6 7 Bill Leonard 8 Member 9 10 Michelle Steel 11 Member 12 13 Marcy Jo Mandel 14 Appearing for John 15 Chiang State 16 Controller (per 17 Government Code 18 Section 7.9) 19 20 Diane G. Olson 21 Chief, Board 22 Proceedings Division 23 24 ---OOO--- 25 26 27 28 2 1 5901 GREEN VALLEY CIRCLE 2 CULVER CITY, CALIFORNIA 3 SEPTEMBER 23, 2009 4 ---o0o--- 5 MS. OLSON: We have final actions, cases that 6 were submitted or waived appearance. 7 MS. YEE: Okay. Why don't we start then with 8 the matters taken under submission. I believe we are 9 beginning with Item C1. 10 ---o0o--- 11 C1 GI JOYN YOO AND KYUNG AE YOO 12 NO. 390865 (AS) 13 ---o0o--- 14 MS. OLSON: That's correct. 15 Q. MS. YEE: Gi Joyn Yoo and Kyung Ae Yoo. And 16 this is a waived appearance matter. 17 Is there a motion? 18 MS. STEEL: Can I just ask one question to the 19 Department about this C1? 20 MS. YEE: For item C1? 21 MS. STEEL: What is our usual markup for this 22 kind of store? 23 MR. HANKS: Ms. Steel, this business operates 24 as a liquor store. 25 MS. STEEL: Right. 26 MR. HANK: So, typically the overall markup is 27 going to be in the range of 30 percent to, say, 40 28 percent that's typical for a liquor store. 3 1 MS STEEL: How much markup did we put on? 2 MR. LAMBERT: 31 percent. 3 MS. STEEL: Okay, thank you. 4 MS. YEE: Okay, thank you. 5 Is there a motion on this? 6 MS. MANDEL: Move to redetermine. 7 MS. YEE: Okay. Motion by Ms. Mandel to 8 redetermine. Is there a second? 9 I will second that motion. 10 Without objection, that motion carries. 11 ---o0o--- 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 4 1 . 2 C2 SELECT OFFICE SOLUTIONS, INC. 3 NO. 184760, 345451 (AP) 4 ---o0o--- 5 MS. OLSON: The next item is C2, Select Office 6 Solutions, Inc. 7 MS. YEE: Okay, we have item C2, Select Office 8 Solutions, Incorporated is there a motion? 9 MS. MANDEL: Move to redetermine. 10 MS. YEE: Motion by Ms. Mandel to redetermine. 11 Is there a second? 12 MS. YEE: I will second that motion. 13 MS. STEEL: Any discussion? 14 MR. LEONARD: Madam Chair? 15 MS. YEE: Discussion? 16 MR. LEONARD: Would you be interested in a 17 substitute motion to redetermine and remove the interest? 18 And if I have to blame somebody under the law, blame 19 Appeals? 20 MS. YEE: Ms. Mandel? 21 MR. LEONARD: The idea of excess reimbursement 22 being a loss of money available to the State, when it's 23 really a forfeit of money that this person took from the 24 customer, who -- and for whatever reason is unable to 25 refund to the customer, it -- it just seems that the 26 State's profiting twice instead of just profiting once on 27 a tax they would have never -- an amount of money they 28 would have never gotten. It's even wrong to call it 5 1 a tax. 2 That would be my argument, Ms. Mandel. 3 MS. MANDEL: Well, it's creative, but I 4 don't -- I don't see the room for -- 5 MR. LEONARD: Let me try another one. 6 It appears that the taxpayer went around with 7 the Department in trying to find ways to identify and 8 refund the true customer. Because there is the finance 9 company/leasing company and then the ultimate user of the 10 product. They -- it ultimately didn't happen, I don't 11 know why. I am not blaming the Department on this one, 12 but a huge amount of time passed while that effort took 13 place -- all of which, by our rules, interest was 14 accruing. 15 There appears some diligence that was done in 16 trying to refund the excess tax reimbursement. And, 17 again, I don't think that should count against this 18 company during that period. 19 So, a substantial portion of the interest 20 should be eliminated. 21 MS. YEE: Was this the same matter where the 22 Petitioner had actually entered into settlement at some 23 point during the course, or am I confusing this? 24 MR. LEONARD: I don't remember settlement 25 being -- 26 MR. HUXSOLL: Yes. 27 MS. YEE: And do you know what period of time 28 -- not to talk about the settlement itself, but -- 6 1 MR. LEONARD: That's a good question. 2 MR. HUXSOLL: I believe it -- the reference -- 3 it got put back -- it came out of settlement in about 4 2005 for the first audit period, in the middle of 2005. 5 Obviously, I don't know anything that went on 6 in the settlement, there was just a reference to it 7 coming out of that. 8 MS. YEE: All right, okay. 9 MS. MANDEL: And the company -- should the 10 whole thing be redetermined, the company's probably offer 11 in compromise -- is not precluded from offers in 12 compromise is it, do you know? 13 MR. LEVINE: I believe the law changed. I 14 don't know if that was a temporary thing that they don't 15 have to be out of business. 16 MS. MANDEL: Right. 17 MS. YEE: For a limited period of time. 18 MR. LEVINE: I'm not fully up on that, but -- 19 MR. LEONARD: How retroactive is that law? 20 MS. MANDEL: No, it's for -- 21 MR. LEONARD: It's current liabilities. 22 MS. MANDEL: For any current liability. 23 Yeah, I don't -- I don't see it on that 24 interest issue. 25 MS. YEE: Okay. Well, we have a motion by 26 Ms. Mandel, second by Yee to redetermine. 27 Please call the roll. 28 MS. OLSON: Madam Chair? 7 1 MS. YEE: Aye. 2 MS. OLSON: Mr. Leonard? 3 MR. LEONARD: No. 4 MS. OLSON: Ms. Steel? 5 MS. STEEL: No. 6 MS. OLSON: Ms. Mandel? 7 MS. MANDEL: Aye. 8 MS. OLSON: Motion fails. 9 MS. YEE: Okay, all right. 10 We can try a motion of redetermining but direct 11 staff to work with Petitioner to explore the offers in 12 compromise program? 13 I think there was some reference made to some 14 potential financial hardship should the liability -- 15 MR. LEVINE: Petitioner had requested a payment 16 plan -- 17 MS. YEE: -- payment plan -- 18 MR. LEVINE: -- at the minimum. 19 MS. YEE: Right. 20 MR. LEVINE: -- and the Department has 21 indicated it would work with -- 22 MS. YEE: Sure. 23 MR. LEVINE: -- them. The normal payment plan 24 is a year. And the Department advises me that the 25 longest they voluntarily agree to is three years. 26 MS. YEE: Okay. So, I would move to 27 redetermine but direct staff to work with the Petitioner 28 on whatever is more favorable to assist the taxpayer, 8 1 either the extended payment plan or the offers in 2 compromise program. 3 Is there a second? 4 MS. MANDEL: Sure. 5 MS. YEE: Second by Ms. Mandel. 6 MR. LEONARD: Question. 7 MS. YEE: Mr. Leonard? 8 MR. LEONARD: Can we direct the Department to 9 enter into an offers in compromise? 10 MR. LEVINE: I can't answer that. I suspect 11 not, but I don't know. 12 MS. MANDEL: Yeah, I -- my suspicion is we -- 13 we can refer it -- 14 MS. YEE: I think we can. 15 MS. MANDEL: -- to offers in compromise, but 16 that we can't say what an offer in compromise should be 17 or whether they should accept one or not. 18 MS. YEE: Yeah. And the motion would be to 19 direct staff to work with the Petitioner to explore the 20 offer in compromise program or an extended payment plan, 21 whichever. 22 Okay, any other discussion on this? We have a 23 motion by Yee, second by Mandel, please call the roll. 24 MS. OLSON: Madam Chair? 25 MS. YEE: Aye. 26 MS. OLSON: Mr. Leonard? 27 MR. LEONARD: No. 28 MS. OLSON: Ms. Steel? 9 1 MS. STEEL: No. 2 MS. OLSON: Ms. Mandel? 3 MS. MANDEL: Aye. 4 MS. OLSON: Motion fails. 5 MS. YEE: Okay, we'll put this one over to 6 another time. 7 ---o0o--- 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 10 1 C3 JAMES WILLIAMS 2 NO. 376621 (UT) 3 ---o0o--- 4 MS. YEE: Next item is C3, James Williams. And 5 I think Department or Appeals, do we have an update? 6 MR. LEVINE: Mr. Williams did fax in a form and 7 the Department has decided that it can accept that and 8 would conceded that this should be refunded. It's a 9 claim for refund. 10 MS. YEE: Okay. 11 MR. LEVINE: So, the Department concedes it 12 should be granted. 13 MS. YEE: All right, very well, thank you. 14 MS. MANDEL: So moved. 15 MR. LEONARD: Is an action required on our 16 part? 17 MR. LEVINE: Yes. 18 MR. LEONARD: So moved. 19 MS. MANDEL: So moved. 20 MS. YEE: Okay. Motion by Mr. Leonard to allow 21 the claim for refund, second by Ms. Steel. 22 Without objection, such will be the order. 23 Thank you. 24 ---o0o--- 25 26 27 28 11 1 C4 TOM DWORKIN ASSOCIATES 2 NO. 341727 (AC) 3 ---o0o--- 4 MS. YEE: Next item, James Stephen Mustard, 5 item C5. 6 MS. OLSON: There's C4. 7 MS. YEE: Oh, I'm sorry, C4, let me back up. 8 Item C4, Tom Dworkin Associates. Is there a 9 motion? 10 MS. MANDEL: Move to -- 11 MS. STEEL: What -- 12 MS. MANDEL: -- I was. 13 MS. STEEL: I was going to make one too. 14 MS. MANDEL: I was going to say move to 15 redetermine. 16 MS. YEE: Okay, we have a motion by Ms. Mandel 17 to redetermine. I will second that motion. 18 Discussion? 19 Okay, hearing none, objection? 20 MS. STEEL: Objection. 21 MS. YEE: Okay, please call the roll. 22 MS. OLSON: Madam Chair? 23 MS. YEE: Aye. 24 MS. OLSON: Mr. Leonard? 25 MR. LEONARD: Aye. 26 MS. OLSON: Ms. Steel? 27 MS. STEEL: No. 28 MS. OLSON: Ms. Mandel? 12 1 MS. MANDEL: Aye. 2 MS. OLSON: Motion carries. 3 MS. YEE: Okay, thank you. 4 ---o0o--- 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 13 1 C5 JAMES STEPHEN MUSTARD 2 NO. 336696 (AS) 3 ---o0o--- 4 MS. YEE: Next item is C5, James Stephen 5 Mustard. This was a matter in which appearance was 6 waived. 7 Is there a motion? 8 MS. MANDEL: Move to redetermine. 9 MS. YEE: Motion by Ms. Mandel to redetermine. 10 Is there a second? 11 MR. LEONARD: Second. 12 MS. YEE: Second by Mr. Leonard. 13 Discussion? 14 Without objection, that motion carries. 15 ---o0o--- 16 17 18 19 20 21 22 23 24 25 26 27 28 14 1 C6 CHAD KIMO KUKAHIKO. 2 NO. 334779 (AS) 3 ---o0o--- 4 MS. YEE: Next item is C6, Chad Kimo Kukahiko. 5 Is there a motion? 6 MS. STEEL: Move to grant. 7 MR. LEONARD: Second the motion to grant the 8 petition. 9 MS. YEE: Okay. Motion by Ms. Steel to grant 10 the appeal; second by Mr. Leonard. 11 Any discussion? 12 Please call the roll. 13 MS. OLSON: Madam Chair? 14 MS. YEE: Aye. 15 MS. OLSON: Mr. Leonard? 16 MR. LEONARD: Aye. 17 MS. STEEL: Aye. 18 MS. MANDEL: Aye. 19 MS. OLSON: Motion carries. 20 ---o0o--- 21 22 23 24 25 26 27 28 15 1 C8 LIBERTY SUPPLIES COMPANY, INC. 2 NO. 405242 (AA) 3 ---o0o--- 4 MS. YEE: Next item, item C8, Liberty Supplies 5 Company, Incorporated. 6 Is there a motion? 7 MS. MANDEL: With the exclusion that staff 8 conceded on, I think it was N & N Enterprises and how 9 that then gets projected out to otherwise redetermine. 10 MS. YEE: Okay. Motion by Ms. Mandel to 11 redetermine, recognizing the adjustment that had been 12 raised during the hearing. 13 Is there a second? 14 MS. STEEL: Second. 15 MS. YEE: Second by Ms. Steel. 16 Without objection, that motion carries. 17 ---o0o--- 18 19 20 21 22 23 24 25 26 27 28 16 1 C9 ELUFA CORPORATION 2 NO. 350440 (AA) 3 ---o0o--- 4 MS. YEE: Next item, item C9, Elufa 5 Corporation. Is there a motion? 6 MS. STEEL: Move to grant. 7 MS. YEE: Motion by Ms. Steel to grant for 8 Petitioner. Is there a second? 9 Okay, that motion fails for lack of a second. 10 May I have another motion? 11 MS. MANDEL: Move to redetermine. 12 MS. YEE: Okay. Motion by Ms. Mandel to 13 redetermine. 14 I will second that motion. 15 Please call the roll. 16 MS. OLSON: Madam Chair? 17 MS. YEE: Aye. 18 MS. OLSON: Mr. Leonard? 19 MR. LEONARD: Pass for the moment. 20 MS. OLSON: Ms. Steel? 21 MS. STEEL: No. 22 MS. OLSON: Ms. Mandel? 23 MS. MANDEL: Aye. 24 MS. OLSON: Mr. Leonard? 25 MR. LEONARD: Leonard, no. 26 MS. OLSON: Motion fails. 27 MS. YEE: Okay. 28 ---o0o--- 17 1 MS. YEE: Then our final matter, I am sorry, 2 C10 has been postponed. 3 Any other pending matters, Ms. Olson? 4 MS. OLSON: That's it. 5 MS. YEE: Okay. Thank you very much, everyone. 6 We are adjourned. 7 ---o0o--- 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 18 1 REPORTER'S CERTIFICATE 2 3 State of California ) 4 ) ss 5 County of Sacramento ) 6 7 I, JULI PRICE JACKSON Hearing Reporter for the 8 California State Board of Equalization certify that on 9 SEPTEMBER 23, 2009 I recorded verbatim, in shorthand, to the 10 best of my ability, the proceedings in the above-entitled 11 hearing; that I transcribed the shorthand writing into 12 typewriting; and that the preceding pages 1 through 18 13 constitute a complete and accurate transcription of the 14 shorthand writing. 15 16 Dated: OCTOBER 15, 2009 17 18 19 ____________________________ 20 JULI PRICE JACKSON 21 Hearing Reporter 22 23 24 25 26 27 28 19