BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION 5901 Green Valley Circle, Room 207 Culver City, California REPORTER'S TRANSCRIPT FEBRUARY 24, 2010 ITEM C2 SALES AND USE TAX APPEALS HEARINGS PETITION FOR REDETERMINATION filed by MEDICAL EQUIPMENT DISCOUNT CENTER (Case No. 400764 EH ) Reported by: Beverly D. Toms CSR No. 1662 1 1 2 P R E S E N T 3 4 For the Board Betty T. 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 Chiang 11 State Controller (per Government Code 12 Section 7.9) 13 Diane Olson Chief, Board Proceedings 14 Division 15 For Board of David Levine 16 Equalization Staff: Tax Counsel IV 17 Robert Tucker 18 Legal Department 19 Kevin Hanks Sales and Use Tax Department 20 21 For Petitioner: Mohtasham Shalikar Representative 22 23 ---OOO--- 24 25 26 27 28 2 1 Culver City, California 2 February 24, 2010 3 ---oOo--- 4 MS. OLSON: Our next item is C2, Medical 5 Equipment Discount Center. Please come forward. 6 MS. YEE: Okay, we are on item C2, Medical 7 Equipment Discount Center. Mr. Levine. 8 MR. LEVINE: The issue in this petition is 9 whether adjustments are warranted to the disallowed 10 claimed exempt sales of medical equipment. 11 MS. YEE: Thank you very much. Good morning. 12 MR. SHALIKAR: Good morning. 13 MS. YEE: If you'll introduce yourself for the 14 record, you have ten minutes for your presentation. 15 MR. SHALIKAR: My name is Mohtasham Shalikar. 16 I'm the company President. 17 MS. YEE: Okay. 18 MR. SHALIKAR: I hope the nice lady gave you 19 one pages this morning. I gave her ten copies of it, to 20 each member. 21 MS. YEE: Yes. 22 MR. LEONARD: Coming. 23 MS. YEE: It's coming. 24 MR. SHALIKAR: Okay. Which would be very 25 helpful. 26 MS. YEE: Okay. Okay, please proceed. 27 MR. SHALIKAR: It is my sincere hope that the 28 distinguished member have read my exhibit, particular 3 1 Exhibit A., which is a real eye-opener. It shows how 2 badly and poorly the Riverside office of the Board of 3 Equalization is managed and run. 4 As an old saying goes, half knowledge is 5 dangerous. The auditor and her supervisor were assigned 6 to me not only did not know anything about my type of 7 business, they did not know the Board of Equalization 8 rules and regulations, either. 9 Consequently, I became a victim. An audit that 10 should have not taken more than two or three weeks at 11 the most has been dragged on for almost four years, 12 which has resulted in tremendous financial damages to my 13 business and has caused my family a lot of emotional 14 suffering. As another old saying goes, justice delayed, 15 justice -- is just -- justice denied. 16 So I have summarized my suggestion here in four 17 parts. But before I do that four parts I would like to, 18 as I said, I hope you have read that Exhibit A that I 19 wrote in response to the Board of Equalization of 20 Riverside. 21 And -- but just to give a -- a brief summary, 22 the auditor showed to my office to audit my business for 23 sales tax. And I provided her with all the information 24 right away. I instructed all my employee that in my 25 absence, which I had some health problem, give her all 26 the access to the files, to the computer, and anything 27 she asked for her -- ask for should be printed and given 28 to her. 4 1 She went through all the sales purchases that 2 we made. She went through all the vendors' file. She 3 went through all my tax return for many, many years. 4 She went through everything that she asked and 5 anything she asked in a matter of second or a matter of 6 minute or matter of perhaps most an hour we provided her 7 and provided the -- the Board. 8 However, when she came out -- when she found 9 nothing really wrong with -- we were very organized and 10 very well bookkeeping method of our business, she came 11 with idea that all the oral prescription that has been 12 ordered by the doctors' offices is -- is not accurate 13 and it should have been followed by written 14 prescription. 15 She also said that why I have not charged the 16 Veteran Administration sales tax. Why I did not charge 17 for Section -- all those item which falls under Section 18 1591.3, which is -- even does not require taxes, like 19 vehicle lift. You can read those one for yourself. Why 20 I have not charged. 21 So, she came with a rough figure of a hundred 22 and something thousand dollar that I owe to the -- to 23 the Board. 24 I told her that, Mrs. Cabeza, I am not 25 comfortable with you, can I see your supervisor? 26 So, the supervisor came here the following day 27 with her, Mr. Macias. Unfortunately or regretfully I 28 found her less knowledgeable than Ms. -- Mrs. Cabeza. 5 1 Or Lorena Cabeza. And this is the time that -- she was 2 educating her supervisor that, no, sir, like Mr. 3 Shalikar says, V. A. is not taxable. It's United States 4 Government. 5 And these six -- these certain item that he has 6 sold is not even require a prescription. But, no, he -- 7 the Mr. Macias says no, no, no, no, no, you have to get 8 me -- from every oral prescription that you are claiming 9 you have to have a letter from the doctor now 10 prescription. And in that prescription must say exactly 11 what I want. 12 I said, "What do you want?" He said, "Exactly 13 like what a doctor write -- prescribe an antibiotic." 14 I said, "Mr. Macias, for heaven sake, 15 wheelchair and a walker and a cane, crutches, these are 16 not antibiotic. These are entirely different things. 17 These are medical devices and it does not require to 18 tell the customer how to use it, how many times you use 19 it, which you use it antibiotics." 20 "No, no, no, I want exactly what is required 21 for an antibiotic." 22 I showed her an -- an abstract of the legal 23 advice that I asked from the Board that they e-mailed me 24 and I said, "Look and see what they say. They say that 25 a oral prescription is valid as long as you have got 26 enough documentation. And you have not tell me that, 27 and the Board does not tell me, the manual does not tell 28 me. What kind of documentation I have? You have left 6 1 it for me." 2 To the best of my knowledge, I took everyone's 3 doctor phone number, their name, the person who called 4 in and also we got all their UPIN number with Unique 5 Physician Identification Number or National Provider 6 number. And we recorded that one. 7 And on the top of that even for those in -- 8 item which are not -- do not require prescription, like 9 this -- these patient vehicle lift, I also has asked 10 every customer to sign some kind of a paper that they 11 did not pay me any sales taxes so in the future they 12 will not claim that, yes, I paid him taxes but he didn't 13 pay it to the Board. 14 He said, "No, I don't want this one. I want 15 exactly what I asked for." 16 I said, "Mr. Macias, then I'm not comfortable 17 you, too. Your booklet here says that as a -- as a 18 taxpayer right that I do have the right to ask for your 19 superior. "Can I see your superior or can I talk to 20 him?" 21 He said, "We will discuss it among themself -- 22 ourself." They denied this right of mine, which was 23 very clearly against your own rules, the Board's rules, 24 that I had the right to talk to the superior of Mr. 25 Macias that I found him extremely, extremely 26 incompetent -- to talk to him. He denied this right to 27 me from Day One. From that day it became personal. 28 It -- it was not a professional relationship between me 7 1 as a taxpayer and a Government organization. It became 2 like two enemies. 3 So, they start absolute lies. The lies was not 4 smaller lies. Big, big lies. That's why I wrote a very 5 nice letter to -- to the head of the Department. I say, 6 for heaven sakes, these are lies. 7 So, when I finally ask for a review, Mr. Paul 8 Steinberg, very nice gentleman, came from Sacramento, I 9 guess, and he saw -- heard me and heard them and he 10 said, "No, no, no, this is not correct." So what 11 he -- when he went back he wrote them a very, very 12 detailed letter. First of all, they educated them that 13 -- where they have gone wrong. 14 Number two, he educated them that there's a lot 15 of ambiguity in this -- in this regulations about taxes 16 and non-taxes, especially about medical equipment. 17 So, therefore, suddenly from 68,000 it cames to 18 $53,000, and from $53,000 my taxes due based on Mr. 19 Steinberg's recommendation to $19,000. 20 Now, you can imagine a taxes which was over 21 $100,000 due now it become 19,000. So somebody did not 22 know their job, what they were doing. 23 So when Mr. Steinberg send his recommendation I 24 did not agree with one part. And one part of it, and I 25 will explain from the back of -- the rest of it from 26 this summary page that I have written. 27 There are taxes that we are really -- really 28 legitimate and there are dues. And then how that 8 1 happen, I have written here that we unintentionally 2 failed to collect. Why unintentional? Because we are 3 using Quick Book. Perhaps most of you are familiar with 4 Quick Book. At the bottom of the customer page when 5 you're making a sale, there is a choice which gave you 6 customer taxable or non-taxable. 7 So, this custom -- for example, some customer 8 came in the past, bought a wheelchair, had a 9 prescription and my employee made it non-taxable. 10 Now, next time, a month or two month later, the 11 same customer came here and the -- the employee failed 12 to change that portion, so even though they bought a 13 shower chair, which was taxable, it still it was not 14 charged taxes. 15 But I'm not having -- asking for any excuses 16 here. The total taxes on those -- or amount for the 17 entire period is $735, which is -- comes in $56.95 in 18 the part one of my -- in my summary. And if you 19 multiply it by 12 quarter of three years it come to 20 $683.40, and I don't have any -- anything, and I would 21 be glad to pay for it. 22 I have all -- always told that I will pay this 23 amount. 24 Now, the next one is line 1, 4 and 9 of the -- 25 the -- the summary that they have prepared for me. They 26 rejected that I did not have the pin number for the 27 doctor or the National Provider Identification number. 28 One of my employee who -- an ex-employee of mine, many, 9 1 many months ago came to my store and -- and I greeted 2 her and I asked her that how in the world -- do you know 3 what happened aside from papers and the -- the 4 information that we write here and there, and he says, 5 "Well, your Honor, when you" -- you told me, sir, at 6 that time the -- some have asked when writing the 7 United -- the U. N. -- the -- wait a minute -- the UPIN 8 number and NPI number not on the paper but we are 9 writing it on the Quick Book notepad of each customer. 10 So I went there and found out that all these 11 three of them, each one had a UPIN number and one of 12 them had -- which is that -- item number 4 had an NPI 13 number and I put it in parenthesis. 14 So, therefore, this is legitimately based on 15 what the -- the Appeal Department have said it, they 16 should reduce this amount for the total amount of $4,400 17 and set -- 47.76. This should be adjusted from the 18 19,198 that they're asking me to pay. 19 Now, the third part that I'm -- I'm -- I've got 20 an issue with Mr. Steinberg finding, he says that a 21 stair lift or a lift chair is not an integral part of a 22 wheelchair. There's a lot of stuff that the -- the -- 23 the State of California is not charging sales taxes. 24 They don't have to be part of a wheelchair in order to 25 be non-taxable. 26 For example, oxygen, or a stair -- or -- or a 27 vehicle lift. Or a walker. Walker is not part of -- 28 integral part of a wheelchair. So he specifically 10 1 emphasizes if it's wheelchair it's a non-taxable. If 2 it's not a wheelchair then it's non-taxable -- it is 3 taxable, which is not accurate. So -- 4 MS. OLSON: Time has expired. 5 MS. YEE: Mr. Shalikar, let me ask you to 6 briefly just complete your thought on your remaining 7 issues on this page. But -- but please be brief. And 8 we'll give you time on rebuttal. 9 MR. SHALIKAR: Can I continue? 10 MS. YEE: Yes. 11 MR. SHALIKAR: Yeah. 12 MS. YEE: I'm only going to give you another 13 minute to essentially finish your summary. 14 MR. SHALIKAR: Thank you so much. So, what I'm 15 suggesting here that it is -- it's not the authority of 16 the Board which describe what is a medical device and -- 17 or not. It is the -- it is the FDA authority, the 18 Federal authority which says that what is and what is 19 not a medical device. They are not lift furniture as 20 the Board suggested. 21 And number 4 is about the interest. For heaven 22 sakes, this -- this -- this should have not taken, as I 23 said, more than two weeks, at the most a month. We are 24 entering our four years. And as I maintain here, it's 25 not only gross injustice to ask me to pay interest for 26 this, and apologies for the -- the use of the word, I 27 contend it's totally ridiculous, too. 28 Thank you, ma'am. 11 1 MS. YEE: Thank you very much. We'll give you 2 time on rebuttal. 3 Department. 4 MR. TUCKER: Good morning, Madam Chairwoman, 5 Members of the Board. My name is Bob Tucker. I'm with 6 the Board's Legal Department. And with me is Kevin 7 Hanks. And he represents the Sales and Use Tax 8 Department. 9 We concur with the recommendation of the 10 Appeals Division and we believe no further adjustments 11 are warranted to the disallowed claimed exempt sales of 12 medical equipment. At issue are claimed exempt sales 13 where Petitioner has not demonstrated that the sales of 14 wheelchairs, crutches, canes and walkers were directed 15 by the purchasers' doctors, and sales of medical devices 16 whose sales were not exempt by the statute. 17 As Petitioner explained, the audit was issued 18 and as a result of the Decision and Recommendation it 19 appears that a number of the transactions were 20 ultimately accepted by staff. Initially I believe there 21 were 42 disallowed transactions. At issue now are 5. 22 Three of those are because there is claimed to be 23 insufficient documentation and two in which there were 24 simply -- pardon me, simply no intake forms. 25 Petitioner provided three numbers. If these 26 numbers are valid and they relate to those three claimed 27 intake forms in which they didn't have the numbers, then 28 perhaps a 30-30 would be warranted so we could have the 12 1 appropriate time to verify and confirm that information. 2 As relates to the additional sales of tangible 3 personal property, those simply are not the -- for 4 example, in particular the nebulizers, there simply is 5 no exemption for those sales. Had the nebulizers been 6 sold with a medicine -- or prescription medicine, pardon 7 me, then they would have qualified. But simply the sale 8 of the nebulizer by itself is not covered under the 9 exemptions as established by the Sales and Use Tax law. 10 Accordingly, for those reasons, since we don't 11 have a sufficient basis, we request that the petition 12 for redetermination be determined in accordance with the 13 Appeals recommendation. 14 Thank you. 15 MS. YEE: Thank you, Mr. Tucker. 16 Mr. Shalikar, you have five minutes on 17 rebuttal. 18 MR. SHALIKAR: I don't have any objection about 19 that nebulizer. I will pay taxes for it. But the 20 three -- that he said there was no three intake sheet 21 there. Here is -- here is -- these are the one that the 22 Board has send me. So there are intake sheet except 23 that you -- UPIN number was missing on them and the UPIN 24 number, as I said, was written in the Quick Book 25 notepad, not on the intake sheet. 26 So, therefore I'm asking that that should be 27 adjusted for $4,747.76. 28 MS. YEE: Okay. Let -- let me clarify. 13 1 Mr. Tucker, you said that there are three -- 2 MS. STEEL: Intake. 3 MS. YEE: -- intake forms that are -- 4 MS. STEEL: You know, actually I -- you know 5 what -- 6 MR. TUCKER: On -- on the exhibit this -- 7 MS. STEEL: -- actually I called the -- those 8 numbers that were listed here and they were working -- 9 those are medical doctors working for V. A. and then you 10 can get that number right away. So -- 11 MS. MANDEL: Well, they -- 12 MS. STEEL: -- I actually called three days 13 ago. So, -- 14 MS. MANDEL: Do you have the names -- there's 15 a -- I mean, is that all you're trying to do is double 16 check the I. D. number that he's giving against the name 17 on the sheet? 18 MR. TUCKER: As it appears in the audit work 19 papers, yes. 20 MS. MANDEL: Okay. Because do you have a 21 Dr. -- is Dr. Thomas -- Dr. Lynn K. Thomas, orthopedic 22 surgery, is there any -- is there any like zip code 23 information? Because I thought UPIN -- there is, I have 24 discovered, because you guys said in your writeup or 25 someone said that the doctors' UPIN numbers were 26 verified on the internet. So, magically I found under 27 "Physician UPIN" lookup that there -- there -- you can 28 look up a UPIN by -- if you have the number. 14 1 So I put in the number he has here for Dr. Lynn 2 Thomas and it came up with a Lynn K. Thomas, M. D. in 3 California, with a zip code and orthopedic surgery. 4 There's a -- I also did -- and you can do this, 5 you know, later yourself -- I did Armand -- I did the 6 Lop -- Dr. Franco, an Armando Lopez Franco. But I'm not 7 fast enough to do the NPI number. But you're able to 8 verify those pretty readily, I think, if that's what 9 you're looking to do on them. 10 MR. HANKS: Right. Right. That's what -- 11 MR. TUCKER: Apparently we didn't -- 12 MR. HANKS: -- Mr. Tucker was suggesting. 13 MR. TUCKER: -- we didn't have that information 14 before, but staff will absolutely look into it. 15 MS. STEEL: I think we should adjust that 16 because I called one number and then you know what, we 17 found that number. It's there and those doctors were 18 working. 19 At the same time why normal people, healthy 20 people, wants to have a wheelchair, anyway? 21 MR. SHALIKAR: Exactly. 22 MS. STEEL: Maybe somebody wants to have some 23 free ride that somebody is going to push you around, 24 but -- 25 MS. MANDEL: And doc -- and I -- and the number 26 for Dr. Alma Gonzoga is showing up with the Loma 27 Linda -- Dr. Alma Mario Gonzonga in Loma Linda. There's 28 an address. It's nice what you learn in these hearings. 15 1 MR. TUCKER: Absolutely. 2 MS. YEE: Okay. 3 MR. SHALIKAR: And I wish I knew that -- that 4 this one it's available on the internet. 5 MS. YEE: Okay. Now you know. 6 MR. SHALIKAR: It might have been easier. 7 MS. YEE: Okay. And -- 8 MR. LEONARD: Question, Madam Chair. 9 MS. YEE: Ms. Mandel then Mr. Leonard. 10 MS. MANDEL: And this was -- was this an actual 11 basis or test basis? 12 MR. TUCKER: Test basis. 13 MS. MANDEL: Test basis. So if you knock those 14 out you would expand? 15 MR. TUCKER: Yes. 16 MR. HANKS: It's multiplied. It would affect 17 the projection. 18 MS. MANDEL: For the projection. 19 MR. HANKS: That's correct. 20 MR. LEVINE: He's already done the projection. 21 MS. MANDEL: No, I just wanted to -- 22 MR. LEVINE: It's 4,000. 23 MS. MANDEL: Yeah. Okay. 24 MS. YEE: Mr. Leonard. 25 MR. LEONARD: To the Department, how much time 26 do you want to check out these three? 27 Nine minutes? Before noon? Or 30 days. 28 MR. TUCKER: 30 days would be helpful, 16 1 Mr. Leonard. 2 MR. LEONARD: I'd so move, Madam Chair. 3 MR. HORTON: Second. 4 MS. YEE: Very well. Motion by Mr. Leonard to 5 grant a 30-30-30. Second by Mr. Horton. 6 Without objection, that motion carries. 7 Mr. Shalikar. 8 MR. LEONARD: Madam Chair. 9 MS. YEE: Yes. 10 MR. LEONARD: When you're done I have a 11 question. 12 MS. YEE: Okay. Mr. Shalikar, the -- let me 13 have the Department confer with you and just let you 14 know what we are expecting to happen in the next 30 15 days. It will give us time to verify the information 16 that's been provided. 17 MR. SHALIKAR: What -- what -- can I have one 18 question, ma'am. Would the -- the panel, would it 19 recommend anything about, because this got dragged on 20 for four years because of lack of knowledge of the 21 auditors on the Board of Riverside. And the interest 22 that they are charging me for their lack of knowledge 23 and your bureaucracy, I apologize for the use of that. 24 I mean four years, for heaven sake, that's a 25 lot of time. I -- it's a human cost involved. My wife 26 is -- is suffering from cancer, and I am a sick person 27 myself. Can you imagine with the last four years what 28 we have gone through? 17 1 MS. MANDEL: Can -- can I just ask -- I just 2 want to clarify some things because -- I guess it's 3 unfortunate that I've learned some of these other 4 things. 5 There were lift chairs and recliner chairs and 6 stair lifts. And, you know, I understand that the 7 statute specifically says wheelchairs. My understanding 8 of all of these devices is they are in fact mobility 9 devices. That a stair lift isn't necessarily one that 10 transports someone in a wheelchair. It may. You know, 11 people might have walkers or canes at both ends, or 12 wheelchairs at both ends, depending and -- and may, 13 themselves get into the stair lift and use the stair 14 lift to trans -- be transported up -- up the -- you 15 know, up or down the stairs. 16 And the chair lifts -- the recliner chairs and 17 the -- what are the other things called -- lift 18 chairs -- you know, lift chairs -- again, you know, it's 19 a mobility device. It may not be specifically listed in 20 the statute, which is a problem for the -- the 21 deduction, but there are -- the reason he talks about 22 FDA and medical device is that there are parts of them 23 that may be reimbursable by Medicare, for example. And 24 the recliner chairs, from reading the D & R it sounded 25 like someone thought the recliner chairs were just like 26 what you might have in your -- you know, den or 27 something. 28 But because of the nature of the business my 18 1 assumption on the recliner chairs was there are some 2 chairs manufactured by the same people who make the lift 3 chairs; the lift chairs are the ones that get you to 4 stand upright -- they sort of dump you up -- is that 5 there are ones that will go all the way back like a bed. 6 Much more even than -- you know, than a Lazy-Boy that 7 you might buy. And it was my impression that it's that 8 type of recliner chair that was probably at issue, again 9 something that at some level lift mechanisms or 10 reclining mechanisms if it was for medical purposes that 11 they had that chair might be reimbursable by Medicare. 12 But, again, it's not something that's 13 specifically listed in the statute. 14 So I just -- you know, it's -- it's -- it's the 15 type of products that people may not have familiarity 16 with until they have to have familiarity with it. But I 17 did not think that the description of recliner 18 chairs -- and you can confirm whether I'm right or not, 19 was -- was a basic, you know, lean back to watch T. V., 20 that it was really the other type of chairs made by 21 PRIDE that, you know, can go all the way down. Is 22 that -- 23 MR. SHALIKAR: I think you are very kind, 24 ma'am. You explained it very well. The problem is that 25 every lift chair is a recliner, too. Every one, no 26 matter who makes it. 27 MS. MANDEL: Okay. 28 MR. SHALIKAR: Number one. And there is a $330 19 1 something of Medicare allowable for the lifting 2 mechanism. 3 MS. MANDEL: Right. 4 MR. SHALIKAR: They don't allow for the whole 5 chair -- 6 MS. MANDEL: Right. 7 MR. SHALIKAR: -- for the decor, they say, of 8 furniture. But the lifting mechanism is -- is a 9 mobility. 10 MS. MANDEL: I just -- I just wanted to get 11 that on the record. Because when I read the D & R it 12 sounded -- you know, just -- and with the gentleman's 13 frustration that staff didn't -- 14 MR. HANKS: Right. 15 MS. MANDEL: -- necessarily understand some of 16 what he was talking about and what he sold. I just 17 wanted it on the record. Thanks. 18 MS. YEE: Thank you, Ms. Mandel. 19 MR. HORTON: If -- 20 MS. YEE: Mr. Leonard. 21 MR. LEONARD: Thank you, Madam Chair. We do 22 determine whether medical devices are taxable. And it's 23 always bothered me because my medical expertise is even 24 worse than my tax expertise. 25 I -- question to the Department, and an idea 26 for maybe legislation is, is it time to revisit the 27 issue of a statutory definition of a -- of a tax exempt 28 medical device by reviewing whether the FDA or -- or the 20 1 Medicare reimbursement schedule is a more definitive 2 list that we could simply inform retailers -- we could 3 rely on, it's either on it or on it, and this idea that 4 it -- it has to be not only a defined device but a 5 prescribed device under certain circumstances. It just 6 strikes me we've -- we've made our own audit trail much 7 more difficult by the statutory definition, and -- and I 8 assume it was adopted in a day when it was -- when there 9 weren't as many standard lists for medical 10 reimbursements like there are now. And it may well be 11 that FDA or -- or Medicare just has a really clear list 12 and everybody knows it but us. 13 MR. SHALIKAR: Can I have one more minute, 14 Madam Chair? 15 MS. YEE: Let me have the Department respond to 16 that first, Mr. Shalikar. We'll give you time. 17 MR. TUCKER: Mr. Leonard, as you're aware right 18 now, much of our definitions are provided by statute. 19 MR. LEONARD: Right. Oh, yes. 20 MR. TUCKER: And so -- and it would require -- 21 I think we would have to go back and probably look at 22 legislation to make at least some of the changes. 23 MR. LEONARD: No, I'm suggesting legislation, 24 but I would like the Department to recommend what might 25 the legislative solution be and if it's cost effective 26 for us and for retailers. 27 If there's not a good database out there that's 28 constantly updated and all run by a respected source, 21 1 FDA or -- or Medicare or something, then it's probably 2 not going to work. 3 But if there is, we might be able to go through 4 our Legislative Committee and sponsor legislation to try 5 to -- to clarify it for all parties. 6 That's -- so I agree. 7 MR. TUCKER: Okay. 8 MR. LEONARD: I'm talking legislation -- 9 MS. YEE: Yeah. 10 MR. LEONARD: -- but I don't know if -- I don't 11 know if it's a good idea yet. It may be that what's out 12 there is just as confusing as what we have today. 13 MS. YEE: And perhaps the first step is really 14 to take a look at, you know, what the FDA -- 15 MR. TUCKER: Right. Right. 16 MS. YEE: -- does recognize and -- and -- 17 MR. LEONARD: And these -- we come up with 18 these things all the time on -- on non-controlled 19 substances, either medicines, foods or -- or devices for 20 which there's less restriction on a doctor's part that 21 he doesn't write on a prescription pad, but he 22 nevertheless tells the patient, "You really ought to go 23 do this." They go do it, they assume it's doctor's 24 orders. They don't expect to pay sales tax. They argue 25 with the retailer who knows how that works out, and then 26 we come along and audit later based on our statute, 27 which is unclear to both the physician -- probably the 28 retailer knows a little bit more, but clearly the 22 1 physician doesn't have an understanding that their -- by 2 their inaction or action they've made the product 3 taxable. 4 MS. YEE: Mr. Horton? Okay. 5 MR. SHALIKAR: Can I have my one minute? 6 MS. YEE: Actually, you've had your one minute 7 but -- 8 MR. SHALIKAR: Oh. 9 MS. YEE: -- let me just entertain all the 10 questions and then I'm going to have you make -- 11 MR. LEONARD: Thank you, Madam Chair. 12 MS. YEE: -- a concluding remark. 13 Thank you. Mr. Horton. 14 MR. HORTON: Yes. I just want to share with 15 the Members that we -- we saw this and was a little bit 16 concerned about it, as you are, Mr. Leonard, and so we 17 reached out to the Assembly and the Senate Appropriate 18 Committees, and particularly in the Assembly the 19 Committee on Aging and -- and Senior Citizens to ask 20 them to take a look at the legislation to see if there 21 is a -- 22 MR. LEONARD: Oh. 23 MR. HORTON: -- potential. We've also reached 24 out to AARP. There -- the inherent problem with the 25 legislation is, is that it delineates specific items 26 that in and of themselves over a period of time can 27 change. And so it didn't -- then it -- and in doing so 28 it doesn't provide the regulatory or administrative 23 1 agency the ability to -- to regulate or to further 2 define and bring clarity when things change. 3 And so hopefully they will take this matter up. 4 We will continue to monitor and report back to the body. 5 MS. YEE: Okay. Thank you, Mr. Horton. Good 6 suggestion. 7 Mr. Shalikar, concluding remark. 8 MR. SHALIKAR: Yeah. I came as a refugee here 9 and I owe this country a lot. 10 When the Board of Equalization every week sends 11 me nine of these, of exactly same date, same amount, 12 same paper, it breaks my heart because of waste of 13 taxpayer money. Can you ask them please send me one a 14 month. I don't need every week nine because on -- on 15 the average I get 40 of them month. Number one. 16 And number two -- 17 MR. LEONARD: What -- what are those? 18 MS. YEE: What -- what are they? 19 MR. LEONARD: What is it? What are you 20 getting? 21 MR. SHALIKAR: They're telling me that how much 22 money I owe. Every month. 23 MR. LEONARD: It's a bill? 24 MR. SHALIKAR: Yeah, the bill. Every month 40 25 of them. 26 MR. HORTON: Same amount? 27 MR. SHALIKAR: Same amount. 28 MS. YEE: Okay. 24 1 MR. SHALIKAR: Honestly, this is one of them, 2 and you -- you can look at it. 3 MS. YEE: Department -- well, we'll -- 4 MR. LEONARD: I'd love to. 5 MR. HANKS: We'd be happy to look at it. 6 MR. SHALIKAR: The same day -- 7 MS. YEE: Mr. Shalikar -- 8 MR. SHALIKAR: Same postmark. 9 MS. YEE: -- we will -- we will take a look at 10 that. 11 MR. LEONARD: Point well made. 12 MS. YEE: We -- 13 MR. SHALIKAR: Same postmark. 14 MS. YEE: -- concur with your concern on that. 15 MR. LEONARD: Just balanced the State budget. 16 MS. YEE: Thank you. 17 MR. SHALIKAR: And for the California which is 18 bothering from tax -- 19 MS. YEE: Yes. 20 MR. SHALIKAR: -- internet is the biggest 21 competition. No internet is charging sales tax or 22 anything that they send us to. 23 MS. YEE: We've got a bill for you to work on. 24 Okay. 25 MR. SHALIKAR: I appreciate very much your time 26 and thank you. 27 MS. YEE: Thank you very much. The Department 28 will confer with you in terms of what will happen in the 25 1 next 30 days and beyond. Thank you. 2 ---oOo--- 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 26 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 February 24, 2010 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 26 13 pages constitute a complete and accurate transcription 14 of the shorthand writing. 15 16 Dated: March 16, 2010. 17 18 19 20 ____________________________ 21 BEVERLY D. TOMS 22 Hearing Reporter 23 24 25 26 27 28 27