BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION 450 N Street, Room 121 Sacramento, California REPORTER'S TRANSCRIPT OCTOBER 6, 2009 ITEM J1 CHIEF COUNSEL MATTERS RULEMAKING 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 Jerome E. Horton 6 Vice-Chair 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 Board of Equalization Staff: Bradley Heller 16 Tax Counsel 17 ---oOo--- 18 19 20 21 22 23 24 25 26 27 28 2 1 2 Sacramento, California 3 October 6, 2009 4 ---oOO--- 5 MS. OLSON: Now we're on J1. 6 MS. YEE: Okay. 7 MS. OLSON: Adoption for Proposed Amendments to 8 Rules of Tax Appeals Regulation 5237, Board approval 9 required for refunds over $50,000 and Rules for Tax 10 Appeals Regulation 5266, Appeals Staff Recommendations, 11 Requests for Oral Hearings. 12 MS. YEE: Okay. Thank you very much. 13 Good morning -- good afternoon, Mr. Heller. 14 MR. HELLER: Good afternoon, Madam Chair, 15 Members of the Board. 16 I'm here to -- first of all to request the 17 Board's adoption of the proposed amendments to 18 Regulations 5237 and 5266 with the additions of the new 19 subdivisions "g" which were the substantially related -- 20 substantially related revisions that were referred to 21 the 15-day file during the August meeting. 22 And essentially those subdivision "g"s were 23 both added to incorporate the public record requirements 24 for refunds over $50,000. 25 In addition, to requesting the Board's adoption 26 of the proposed amendments today, staff's also prepared 27 a memorandum with more additional background information 28 on the public record requirements. And also prepared an 3 1 example of a -- example public record for Sales and Use 2 Tax refunds, credits and cancellations and has also just 3 recently distributed a flow chart showing the staff 4 approval process for these refunds and showing that the 5 Deputy Directors would have to approve any refunds in 6 excess of $50,000. 7 MS. YEE: Okay. Thank you very much, Mr. 8 Heller. And thank you for bringing this back. When we 9 had this discussion previously we actually had a very 10 robust discussion with respect to the issue of public 11 notice and public record. And I appreciate the staff 12 looking into differentiating between the two, certainly 13 as statute guides us. 14 And I guess my question is, is there a reason 15 why we couldn't add the amount to the format that you're 16 proposing? 17 MR. HELLER: Actually at this point there's no 18 reason we couldn't add the amount. The Legal Department 19 believes that the public record requirement is 20 essentially an exception to the various confidentiality 21 provisions that would apply to the amounts of the 22 credits, cancellations and refunds. 23 However, staff's just recommended maintaining 24 the status quo and including the same information that 25 we currently put in the public agenda notice. 26 But there's really no restriction and it's 27 really up to the Board's discretion and weighing the -- 28 weighing the interest of the taxpayers whose credits, 4 1 cancellations and refunds are at issue, rights to 2 confidentiality just versus the -- you know, the 3 information the public needs to make sure that there's a 4 public record of our proposed determinations. 5 MS. YEE: Okay. And I guess the reason I'm 6 pursuing this is that it seems to me the -- even though 7 the statute is not specific with regard to the 8 information that has to be included as a matter of 9 public record, I think certainly when those provisions 10 were enacted by the Legislature there have been some 11 understanding about the information that would be -- I 12 guess it be retained as a matter of public record by 13 this Board, by our organization, be similar to what 14 would be forwarded potentially to the Board of Control. 15 And so it seems to me amounts would probably 16 need to be forwarded to the Board of Control, so I was 17 looking for some symmetry there. But I certainly 18 understand also the need to balance all this with 19 taxpayer confidentiality. 20 And I guess I would have a different take if it 21 weren't credits, cancellations and refunds. It would -- 22 but I just feel like full disclosure is probably 23 appropriate here. 24 Other thoughts, Members? 25 MR. LEONARD: Madam Chair. 26 MS. YEE: Mr. Leonard. 27 MR. LEONARD: I understand your point. I would 28 hesitate to further violate taxpayer privacy than we 5 1 already do in the public agenda notice under the current 2 procedure by -- by publishing dollar numbers for 3 credits, cancellations, refunds, given the circumstances 4 of some of these claims of -- of embarrassment to the 5 taxpayer for accidental errors and other almost 6 irrelevant immaterial things, although the -- the claim 7 could be -- could be like quite large relative to the 8 taxpayer that's -- that's filing the claim. 9 I would -- I would hesitate to go any further 10 than we now do in making an effort to -- to delegate 11 some of this -- some of this more routine work for the 12 under $50,000. And -- or the over -- I guess the over 13 50 under 100, and want to continue to press that we work 14 with the Legislature on -- on the whole question of 15 what -- what is the public policy in advertising 16 publicly any refund to any taxpayer and -- and the taxes 17 and fees that are under us in our jurisdiction, which is 18 so unlike the Franchise Tax Board, which has a whole 19 different set of rules regarding refunds. 20 MS. YEE: Okay. Thank you, Mr. Leonard. 21 Other comments, Members? 22 Okay, is there a motion? 23 MS. MANDEL: Move adoption. 24 MR. LEONARD: Second. 25 MS. YEE: Okay. Motion by Ms. Mandel, second 26 by Mr. Leonard. 27 Without objection, that motion carries. 28 Thank you, Mr. Heller. 6 1 MR. LEONARD: Thank you, Mr. Heller. 2 ---oOo--- 3 REPORTER'S CERTIFICATE 4 5 State of California ) 6 ) ss 7 County of Sacramento ) 8 9 I, BEVERLY D. TOMS, Hearing Reporter for the 10 California State Board of Equalization certify that on 11 October 6, 2009 I recorded verbatim, in shorthand, to 12 the best of my ability, the proceedings in the 13 above-entitled hearing; that I transcribed the shorthand 14 writing into typewriting; and that the preceding 6 pages 15 constitute a complete and accurate transcription of the 16 shorthand writing. 17 18 Dated: October 14, 2009. 19 20 21 ____________________________ 22 BEVERLY D. TOMS 23 Hearing Reporter 24 25 26 27 28 7