BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION 5901 Green Valley Circle, Room 207 Culver City, California REPORTER'S TRANSCRIPT JUNE 16, 2010 ITEM B20 FRANCHISE AND PERSONAL INCOME TAX HEARING APPEAL OF RICK BURNINGHAM, et al. (No. 469765) 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: Chair 4 Jerome E. Horton 5 Vice-Chair 6 Barbara Alby Acting Member 7 Michelle Steel 8 Member 9 Marcy Jo Mandel Appearing for John Chiang 10 State Controller (per Government Code 11 Section 7.9) 12 Diane Olson Chief, Board 13 Proceedings Division 14 For Board of Grant Thompson 15 Equalization Staff: Tax Counsel Appeals Division 16 17 For Franchise Tax Suzanne Small Board: Tax Counsel 18 Karen Smith 19 Tax Counsel 20 For Appellant: Peymon Mottahedeh 21 Representative 22 Marci Kline 23 ---oOo--- 24 25 26 27 28 2 1 Culver City, California 2 June 16, 2010 3 ---oOo--- 4 MS. OLSON: Our next matter is B20a, Rick 5 Burningham; B20b, Arturo Cueva; c, Karl Eisenhammer; d, 6 Randolph Frodsham; e, Carol Grant; f, Richard Grant; g, 7 Christopher Gyorgy; h, Demeris Parks; i, Dan Pickell; j, 8 Jintau Two; and k, Anthony Wiest. 9 Please come forward. 10 MS. YEE: Okay, actually before we start this 11 matter, could I ask the -- Mark, could we turn up the 12 heat in this room? Doing a great job of keeping us 13 awake but it is cold up here. 14 MS. OLSON: Paul can assist us. 15 MS. YEE: Great. Thank you. 16 What is it now? 17 (Inaudible). 18 MS. YEE: It's 70 now? It's doesn't feel like 19 (inaudible.) 20 MR. HORTON: Here, you can hold my jacket 21 sleeve. 22 MS. YEE: My hands are cold. (inaudible) Why 23 don't you turn it up like three -- three degrees. My 24 hands are -- 25 MR. HORTON: Bring you some carrots just in 26 case. 27 MS. YEE: Okay, thank you. 28 Okay, Members, we are on item B20. This is a 3 1 consolidated appeal of several parties. Appeals, you 2 want to introduce the matter, please? 3 MR. THOMPSON: Yes. Good afternoon. Grant 4 Thompson for the Appeals Division. 5 The questions in this appeal are: One, whether 6 an appellant has demonstrated error in his or her 7 respective tax assessments. 8 Two, if a notice and demand penalty and/or late 9 filing penalty was imposed by the FTB in a particular 10 appeal whether there is reasonable cause for the 11 appellant's failure to file upon the FTB's demand and/or 12 failure to file a timely return. 13 Three, if a filing enforcement fee was imposed 14 by the FTB in a particular appeal, whether we can grant 15 relief -- the Board can grant relief from the filing 16 enforcement fee. 17 Four, whether the Board has jurisdiction to 18 consider any post-amnesty penalties. 19 Five, whether the Board should impose a 20 frivolous appeal penalty or penalties on the appellants. 21 MS. YEE: Okay. Thank you, Mr. Thompson. Good 22 afternoon. 23 MR. MOTTAHEDEH: Good afternoon. 24 MS. YEE: Welcome back. Please introduce 25 yourselves formally for the record. You have ten 26 minutes. 27 MR. MOTTAHEDEH: Mr. Peymon Mottahedeh for the 28 appellants. 4 1 MS. YEE: Okay. 2 MR. MOTTAHEDEH: And being -- being assisted by 3 my -- my assistant, but I'll be speaking only. 4 MS. YEE: Okay. Please proceed. 5 MR. MOTTAHEDEH: Before we go on, I think there 6 was a case on the calendar of Karl Eisenhammer which was 7 previously dismissed, but it still shows up on the 8 calendar. I just want to confirm that. That was a -- 9 perhaps a clerical error. Case number 476721. It was 10 previously on another memorandum of October -- I'm 11 sorry, October 14, '09 that this appeal should be 12 dismissed as to the -- 13 MS. YEE: Is this relating to the 2006 tax 14 year? 15 MR. MOTTAHEDEH: Yes, it is signed by Susan 16 Smith, I believe, Tax Counsel. 17 MS. YEE: Appeals? 18 MR. MOTTAHEDEH: I have a letter. You want to 19 look at it? 20 MS. SMALL: Yes. 21 MS. YEE: Okay, is that -- 22 MS. SMALL: Yes, that's correct. 23 MS. YEE: Okay. So, let's see. So the appeal 24 of Karl Eisenhammer is dismissed. So that should not 25 be -- that's not before us then, correct? 26 Okay. Okay, Mr. Mottahedeh, you want to 27 proceed? 28 MR. MOTTAHEDEH: Yes, I'd like to thank the 5 1 Board for giving me the opportunity to be here today. 2 I'm an immigrant from Iran of Jewish descent, where many 3 citizens do not enjoy equal rights. And the government 4 there is oppressive and they don't listen to people. 5 And I appreciate the elected Board, such as you, who 6 takes the time to listen to the citizens' inquiries 7 and -- and give them a fair shake. 8 The -- the point that I'd like to present to 9 you today is the fact that FTB has denied wholesale 10 hearing at all to all the people that I'm representing 11 here today. They simply were denied a hearing. 12 Now, as to why they were denied a hearing, I -- 13 I can guess, I can tell you my opinion, but they were 14 denied a hearing. 15 Until recently I was not able to have or 16 collect the documentation necessary to provide proof to 17 the Board that that is the case, that this is not just 18 some -- as some people might claim, a frivolous claim. 19 I have conducted and assisted others with 20 hearings with FTB for people who file tax returns and 21 those who had not. And whenever there's a -- FTB 22 conducts a hearing by the protest section, the protest 23 section Hearing Officer provides the hearing with an 24 officer who's trained in that field. And that Hearing 25 Officer at the end, conclusion of the hearing, will 26 issue what's called a position letter. 27 In fact, the most recent one I did was for an 28 individual named Michael Gorman for years 2003, '4 and 6 1 '5, on April 26 in Santa Ana. And this is -- I can 2 provide a copy of this. This is recently to the Board 3 for your consideration that -- to verify this. 4 And the FTB Hearing Officer name is Rhonda 5 Marshall Morgan. And here is what she said. "Basically 6 what will happen is on resolution as we get to the point 7 of conclusion I will issue a position letter." And my 8 response was, "A position letter?" 9 And Rhonda Marshall Morgan continues, "Right. 10 And after I issue you a position letter I will give you 11 30 days to respond to that position letter," okay, 12 "depending on the response that you give me. If it is 13 material enough then I will respond to that. But if 14 it's not, if I determine that it is not material enough, 15 what I will be doing from that point on is I will issue 16 my Notice of Action either to withdraw, revise or 17 affirm." 18 Okay. Then from that point you still have 30 19 days to appeal on a revision or affirmation -- you have 20 30 days to appeal this Board of Equalization. If it's a 21 withdrawal, there is nothing more you need to do. 22 Very well, that all makes sense. That's the 23 way it should be and I fully agree with that. 24 You have before you a documentation we obtained 25 by fax on June 14th. This is very recent, from the FTB. 26 You see the fax cover sheet here. And you'll see it's 27 addressed to me, Peymon, it says from Greg Thomas, 28 Franchise Tax Board. This is the FTB's disclosure 7 1 office speaking. 2 And if you go to the next page this is 3 regarding one of the cases that I'm presenting to you 4 today, Anthony Wiest. And all these cases, they do have 5 something in common as the Board saw. All of them went 6 through the same process as Mr. Wiest has here. 7 If you notice, it's dated June 3, 2010 8 regarding Anthony Wiest, year 2006. "I am responding to 9 your correspondence received May 14, 2010, under the 10 Information Practices Act." And "The numbered responses 11 pertain to the numbered items in your request. One 12 through three, Ms. Kwis -- Kris Welsh affirmed the 13 Notice of Proposed Assessment. Enclosed please find a 14 copy of her position duty statement. Her title is 15 Administrator I and her business address is Franchise 16 Tax Board, Accounts Receivable Management Division" in 17 Rancho Cordova. 18 Paragraph 4, "Ms. Lisa Martini issued the 19 notice of oral hearing. Enclosed please find a copy of 20 her position duty statement." 21 In all these cases before you Lisa Martini is 22 the -- the individual allegedly assigned to conduct the 23 hearing. 24 "Please see the chain of command below for Ms. 25 Kris Welsh. And please notice under paragraph 5 the 26 chain of command is listed there several level going up 27 to Mrs. Selvi Stanislaus. Underneath that is Mr. Bill 28 Jones, II., Chief, Accounts Receivable Management 8 1 Division. 2 So the Kris Welsh who affirmed the notice of 3 proposed assessment works for the Collection Division of 4 the FTB. Why isn't she a Hearing Officer? And her 5 address is in Rancho Cordova. We never saw Ms. Welsh, 6 never knew about her for years. 7 This is the kind of case that they've been 8 doing to the citizens without our knowledge. 9 And if you go to the next -- second page it 10 says, "Please see the chain of command below for Ms. 11 Mar -- Lisa Martini", which you see up in the chain of 12 command is again Mr. Bill Jones, II, Chief of Accounts 13 Receivable Management Division. 14 And then you see in paragraph 6, "Please find a 15 copy of the organizational chart of FTB 1250 for the 16 Franchise Tax Board." 17 So, we -- we go to that -- just a moment, right 18 now, which is, you will find, one, two, three pages in. 19 You go three pages in, you see the Franchise Tax Board 20 chart. And you see in that chart that under Executive 21 Officer Selvi you have the Accounts Receivable 22 Management Division Bill Jones and next to that, a whole 23 different division, is our division headed by Debbie 24 Lasoner (sic). And Debbie Lasoner -- or however you say 25 her name, I apologize if I don't say it right -- she 26 is -- is in Audit Division. Protest Division is under 27 her. She's supposed to be doing all the hearings. 28 That's how FTB's organized this, to give you a real 9 1 hearing. 2 But, you know, in America for the longest time, 3 unfortunately, Indians -- American Indians were -- were 4 mistreated. The Supreme Court of the United States rule 5 the Black men are not equal to white men. And they have 6 no -- no equal rights. Therefore, you have separate 7 accommodations for those who are not equal to the rest 8 of us. 9 And today we have a new class of perceived 10 enemies of the State, like in Iran or Soviet Union or -- 11 about Blacks and American Indians, those who had for one 12 reason or another not filed, like Mr. Gary Laub you saw 13 over here who only earned about $5500. FTB came after 14 him, they assumed he made a lot more. And he filed -- 15 ended up owing nothing, is entitled to a refund, anyhow, 16 because they were denied due process wholesale on his 17 FTB hearings. 18 For the documents I have after the first two 19 cover -- three pages you see Franchise Board position 20 duty statement. There's two of them. 21 The first one is for Administrator I, which is 22 for the unknown officer Lisa -- Kris Welsh. This is the 23 person who gave -- who did the hearing, who decided it. 24 How can you have a hearing when you're not even face to 25 face or never write or speak directly to the person 26 who's supposed to do the hearing? That is not a 27 hearing. You know, whether the -- Lisa Martini makes a 28 recommendation, sends it over to Kris Welsh, who had the 10 1 collection for affirms or denies the hearing. So these 2 pers -- people never had any. This is what's going on. 3 Now, here we go. 4 MS. OLSON: Time has expired. 5 MR. MOTTAHEDEH: Well, I'd like just before 6 that said that everything else about the position of 7 these individuals and how they label people, and once 8 they get caught up in the trap of being labeled they 9 cannot get out of it, such as Blacks or American 10 Indians, as you -- in the exhibits you can see for 11 yourself. 12 MS. YEE: Thank you, Mr. Mottahedeh. We'll 13 give you time on rebuttal. 14 Franchise Tax Board. 15 MS. SMALL: Good afternoon, Chairwoman, Members 16 of the Board. I am Suzanne Small, and to my right is 17 Karen Smith. We are representing the Franchise Tax 18 Board. 19 Before you the multiple consolidated cases, 20 each of those assessments were based on either wages or 21 1099 information or license information regarding those 22 particular taxpayers. 23 The taxpayers have not presented any evidence 24 that they did not receive that income and therefore they 25 have not carried a burden of proof that there is any 26 error in the assessments. 27 If you have any questions on the individual 28 assessments I'd be happy to answer them. 11 1 MS. YEE: Okay. Thank you, Ms. Small. 2 Mr. Mottahedeh, why don't you take five minutes 3 on rebuttal. 4 MR. MOTTAHEDEH: Okay. Well, as you noticed, 5 on -- the Franchise Tax Board was not able to rebut 6 anything I presented before you. So, the FTB knows that 7 this is a fact. 8 And, unfortunately, this -- the FTB hurts 9 individuals by misrepresenting or omitting facts. So, 10 to come back to this issue of position duty statement, 11 you see the next page is under Administrator I, which is 12 Kris Welsh, the unseen person in Sac -- Rancho Cordova. 13 On the general statement of her duties, number 14 one, she -- she -- it's managing and resolving decedent 15 collection case inventory. That makes sense, she works 16 for the Collection Division. But then you have this 17 frivolous activity non-filer or FAN. Conducting 18 hearings, processing FAN requests, responding to FAN 19 correspondence and phone calls. 20 I've conducted hearings for many years and I 21 thought that now we know who the real Hearing Officer 22 is. For years. And I've been before some of you. 23 You've seen me in previous years perhaps, and you 24 recognize me. 25 When -- we knew that -- we're not getting a 26 hearing, that somebody in Sacramento, we don't know, 27 looks at this and affirms or denies, doesn't issue any 28 position letter about what you found so we can discuss 12 1 it, argue it, which is deny a hearing. This is again no 2 different than, well, we put the Blacks over here, they 3 get that, you know. And the Blacks today are people who 4 commit the crime of not having filed because, like Mr. 5 Gary Laub, perhaps, they had no taxable income. 6 Now, these cases are not -- as was told by FTB, 7 they're not just as they mention alleged W-2 or 1099 8 income or licensing. FTB does the thing, for example 9 they claim in one of these cases my assistant is 10 bringing me, and you have in your file, where the person 11 made a mortgage payment, so they must have made four 12 times that income. 13 So, you know, based upon that we're going to 14 tax a person. So if someone makes a $2500 a month 15 mortgage payment they must have made $10,000 a month. 16 We're going to tax him based upon that. 17 How many people do you know in Southern 18 California who go for a loan and do that? That four 19 times thing was -- I was in mortgage business 25 years. 20 Go back, then they did that. These days they don't do 21 that. You seen our -- our mortgage crisis going on 22 across Southern California. Banks loaning to anybody 23 that moves a body. You know -- you know, fixed 24 adjustable interest only, don't have to show income, all 25 this stuff. 26 But FTB uses antiquated 25 -- 30 year standard 27 of an industry that to qualify for a loan you had to 28 have four times income, therefore you had that income 13 1 now, you had the loan for, who knows, five years -- 2 10 -- 20 years from now. 3 I mean, this is completely arbitrary that 4 they're doing. But -- so, that's one of the cases that 5 you had before you -- or licensing. Just because 6 someone holds a license doesn't mean that they use it. 7 Carol Grant never has worked as a hair stylist, even 8 though she got a license. A lot of women get that. 9 Okay. They got one, they never use it. 10 As a physical therapist, thank you. Doesn't 11 use it. So how do you prove I didn't use a license? 12 You know, FTB says, oh, you just have made the average 13 income, the person who has a license. Well, a lot of 14 people hold a license and don't -- don't use it or have 15 it -- I didn't use my insurance license for years. I 16 said, well, I had it just in case I come across somebody 17 who needs insurance, I might sell insurance and make a 18 few hundred dollar commission. And if I don't, I don't. 19 But just because I have a license means I full 20 time used it and made an average income? 21 So this is what's going on here and we don't 22 even get a hearing to address these issues. And if you 23 go to the -- Lisa Martini's position duty statement, 24 which is -- on the top right says Lisa Martini Lisa, on 25 the very bottom paragraph it says, "You will be the 26 frivolous activity non-filer, FAN, hearing 27 representative from all southern region offices. 28 How did the people get to be entitled to this process? 14 1 Because the IRIS -- FTB computer designate them as such? 2 You're a non-filer, you will not get the -- the normal 3 due process that the Legislature has done for you. It's 4 like in the South we have certain laws, but we have 5 certain laws we blink for the Blacks. You know, you 6 don't give them the thing, you just send them over 7 there. We all know about it without saying -- 8 MS. YEE: Mr. Mottahedeh, I'm -- 9 MR. MOTTAHEDEH: --it's in a formal policy. 10 MS. YEE: -- I'm going to ask you to complete 11 your presentation, but I think your comments are out of 12 order. Please focus on the matters before us. 13 MR. MOTTAHEDEH: All right. Well, so basically 14 what's going on here is that we never got a hearing and 15 we -- in our -- in our communications we asked to have 16 this case forwarded to a real Hearing Officer so we get 17 a real hearing so we could try to rebut FTB's claim. 18 But we were never given the opportunity to do so. So -- 19 MS. OLSON: Time has expired. 20 MS. YEE: Okay. Thank you. I think we've 21 heard your last point. 22 Questions, Members? 23 Very well, hearing none may I have a motion, 24 please? 25 MS. MANDEL: Take the matter under -- oh -- 26 MR. THOMPSON: I'm sorry. Go ahead. 27 MS. MANDEL: Oh, okay. You confused me. 28 Take the matter under submission. 15 1 MR. THOMPSON: My apology. 2 MS. MANDEL: We make the motions, yeah. 3 MR. MOTTAHEDEH: I'd just like to ask the 4 Board, if I may, the transcript of the hearing that they 5 did of Mr. Gorman, which I didn't have a chance to 6 present before you, I'd like to make a copy of that, 7 provide you for your review in this case, if I may. 8 MS. YEE: I don't know that's pertinent for the 9 matter before us. 10 MS. ALBY: Second to the motion. 11 MS. YEE: Okay. We have a motion by Ms. Mandel 12 to take the matter under submission. Second by Ms. 13 Alby. 14 Without objection, that motion carries. 15 Mr. Mottahedeh, we will discuss your 16 consolidated matter later today. I appreciate your 17 bringing the transcript but I don't believe it will be 18 relevant to our deliberations. 19 Thank you very much. Without objection. 20 MS. OLSON: May -- may we -- may Board 21 Proceedings ask to see the dismissal he has? We can't 22 find it in our records. 23 MS. YEE: Oh. Let's take a look. 24 MS. OLSON: Okay. 25 MS. YEE: The dismissal with respect to Mr. 26 Eisenhammer. 27 MR. MOTTAHEDEH: Karl Eisenhammer. 28 MS. YEE: Yes. 16 1 MR. MOTTAHEDEH: The letter. 2 MS. YEE: Yes. May we see a -- 3 MR. MOTTAHEDEH: That should -- 4 MS. YEE: -- copy of that? 5 MR. MOTTAHEDEH: Sure. 6 MS. SMALL: Is it -- he did file one. 7 MS. OLSON: Oh, did you -- 8 MS. SMALL: It's only -- it's only a -- 9 MS. KLINE: We only file -- 10 MS. SMALL: -- a request for dismissal but we 11 never got the dismissal from the Board of Equalization. 12 That's why it's still on calendar. 13 MS. YEE: Okay. Mr. Mottahedeh, if you could 14 provide that document to us we will -- let us resolve 15 the status of that particular appeal. 16 MR. MOTTAHEDEH: Okay. And there is a very 17 unique matter separate from all of these in one of the 18 cases about Demeris Parks, it's -- I'd like to address. 19 It's -- 20 MS. YEE: No, actually your time is up. You 21 had an opportunity to -- 22 MR. MOTTAHEDEH: It's a clerical issue as -- as 23 you discussed. So, it's really not part of 24 argumentation. It's -- there's a motion where NPA was 25 going to withdraw the -- FTB was going to withdraw the 26 NPA and there was administrative confusion -- error with 27 the FTB on the withdrawal issue. 28 So I'd like to address that so that we can 17 1 resolve that minor issue. It's unique, it's not 2 anything about all this. If I have my assistant -- 3 Marci, who knows more -- 4 MS. YEE: Wait. Wait -- hold on. 5 MR. MOTTAHEDEH: Yes. If I may. 6 MS. YEE: We're trying to resolve the status of 7 the appeal on Mr. Eisenhammer. 8 MR. MOTTAHEDEH: Oh, okay, sorry. 9 MS. YEE: You produced something that was a -- 10 that indicated that that matter had been dismissed. 11 MR. MOTTAHEDEH: Yes. 12 MS. YEE: Okay. Will you please submit a copy 13 of that -- or -- 14 MR. MOTTAHEDEH: That's -- 15 MS. YEE: -- Franchise Tax Board, do you have 16 a -- 17 MS. SMALL: It's a request for dismissal by 18 Franchise. 19 MS. YEE: Okay. 20 MS. SMALL: However, the Board of Equalization 21 did not act on that as far as we know because we never 22 got the dismissal. 23 MS. YEE: Okay. So the appeal is properly 24 before us. 25 MS. MANDEL: With the pending -- 26 MS. SMALL: We don't know -- 27 MS. MANDEL: -- dismissal by -- 28 MS. YEE: Depends what the -- 18 1 MS. MANDEL: -- request by FTB? 2 MS. YEE: Okay. 3 MS. SMALL: Pardon? 4 MS. MANDEL: With the pending dismissal request 5 by FTB? 6 MS. SMALL: Yeah. 7 MR. MOTTAHEDEH: This was a dismissal request 8 by -- 9 MS. YEE: Okay. 10 MR. MOTTAHEDEH: -- FTB that was not processed. 11 MS. YEE: Mr. Mottahedeh, stop. Stop. 12 MR. MOTTAHEDEH: Yes, ma'am. 13 MS. YEE: We're trying to get on top of the 14 status of the appeals before us. Okay. Please. 15 Okay, Ms. Olson, do you know what the status of 16 the request is? 17 MS. OLSON: Right. Board Proceedings had not 18 responded to the dismissal request. 19 MS. STEEL: Because? 20 MS. OLSON: We don't have the document. 21 They've gone through everything -- 22 MS. YEE: Okay. 23 MS. OLSON: -- back at headquarters. 24 MS. YEE: So we -- we -- from your perspective 25 we didn't receive it? 26 MS. OLSON: Right. 27 MS. YEE: Okay. Okay. Well, we know the 28 status of that so let's kind of talk about that -- 19 1 MS. OLSON: Okay. 2 MS. YEE: -- later. Okay. 3 Yes, let's have a -- let's get a copy of the 4 FTB's request -- 5 MS. OLSON: Okay. 6 MS. YEE: -- for dismissal so that we can look 7 at that. 8 MS. OLSON: Okay. 9 MS. YEE: Ms. Small, do you have a copy of that 10 or -- Mr. Mottahedeh, okay, we'll make copies of that. 11 MR. MOTTAHEDEH: Yes, I do. Karl Eisenhammer. 12 MS. YEE: All right. Now, Mr. Mottahedeh, you 13 had one other administrative clarification issue with 14 respect to one of the appeals before us. Which one is 15 that? 16 MR. MOTTAHEDEH: This is a case of Demeris 17 Parks. I.D. number 476896. 18 MS. YEE: And what is the issue? 19 MR. MOTTAHEDEH: Marci -- she's better 20 qualified to explain the -- 21 MS. YEE: Okay, please introduce yourself for 22 the record. Speak into the microphone and tell us what 23 the issue is. 24 MS. KLINE: My name is Marci Kline. And back 25 in -- it was responded to back in April, I believe -- 26 no, February. We received a letter from your Board 27 stating that Franchise Tax Board says they made a 28 mistake on the NPA, and they stated wrongfully that 20 1 it -- the source was miscellaneous bank, but it -- 2 actually the source -- they corrected it and it said the 3 source is Kern County. 4 On February 11th and April 23rd FTB filed a 5 memorandum in response to our motion, but we haven't 6 heard from you on the motion. 7 MS. YEE: Okay. Appeals, are you aware of 8 this? Let us take a look. 9 MS. KLINE: Based from a letter on -- 10 MS. YEE: Okay. 11 MS. KLINE: -- from Claudia Mard -- Madrigal. 12 MR. THOMPSON: Just a second. 13 MS. YEE: Okay. 14 MR. THOMPSON: There are a number of appeals. 15 MS. YEE: This is relating to Demeris Parks. 16 MR. THOMPSON: I -- I do not see it in the FTB 17 concessions. Is this -- is this correct in FTB's view? 18 MS. YEE: Okay. Board Proceedings, do you have 19 a sense of what Ms. Kline is referring to? 20 MS. OLSON: No. 21 MS. YEE: Some correspondence from -- okay. 22 MS. KLINE: Our motion was based on the demand 23 for a tax return September of '07 that specifically 24 stated EMC Mortgage Corporation as being the source of 25 their contact with Ms. Parks. So we -- we presented 26 this motion after receiving a letter from Claudia 27 Madrigal for explanations from both the Franchise Tax 28 Board and us about how she derived her income for that 21 1 year. 2 MS. YEE: Okay. Franchise Tax Board, do you 3 recall that inquiry? 4 MS. SMALL: I do recall. When the brief was 5 originally -- when the demand went out it had the 6 mortgage interest information on it. However, when the 7 NPA went out it had the actual wage information from 8 Kern County. 9 The NPA went final based on the wage 10 information from Kern County. However, when the matter 11 was briefed by one of our people they based the brief on 12 the wage information -- 13 MS. KLINE: Not on the wage information. 14 MS. SMALL: Excuse me, on the -- the mortgage 15 information. 16 MS. KLINE: Right. 17 MS. SMALL: Then on reply that was corrected 18 and said no, no, no, in accordance with the amounts on 19 the NPA it was actually Kern County wage information. 20 And then the Board asked if we could have clarification. 21 Our clarification was the -- was in our reply, which was 22 it was the amount stated on the NPA. 23 And they filed what she's referring to. 24 MS. YEE: Okay. I just want to be sure that -- 25 if there needed to be a response or if there had to be 26 anything else that needed to be followed up on that that 27 indeed did happen. But -- and I don't know if there 28 needed to be anything. 22 1 MR. THOMPSON: Just to confirm, so FTB has not 2 made any concessions from the amount set forth? 3 MS. YEE: No. 4 MS. SMALL: No, we have not made any 5 concessions. 6 MS. YEE: Okay. So, that appeal is -- is 7 before us. 8 MR. MOTTAHEDEH: Well, the -- the reason 9 because, you know, the -- the Revenue and Taxation Code 10 Section 19033 states that in no case shall the 11 determination of the deficiency be arbitrary or without 12 foundation. And Section 19034 states each notice shall 13 set forth the reasons for the proposed deficiency and 14 the computation thereof. 15 So, in this case obviously the FTB's coming 16 after Ms. Parks in two different ways. 17 MS. YEE: Okay. 18 MR. MOTTAHEDEH: Of course they do it -- 19 MS. YEE: Okay. 20 MR. MOTTAHEDEH: So that's the issue. 21 MS. YEE: Okay, I think we understand the 22 issue. That appeal is before us. We will take a look 23 at it as we put the case under submission, among the 24 others. 25 And I guess what I would tell you is in the 26 future I really -- I really wish you would spend your 27 time wisely and speak to the issues like this during 28 your testimony before the Board. You missed an 23 1 opportunity for your client. 2 Okay. 3 MS. OLSON: May I speak to Karl Eisenhammer? 4 MS. YEE: Yes. 5 MS. OLSON: The one that was dismissed is for 6 year 2007. 7 MS. YEE: Okay. 8 MS. OLSON: They're different case I. D.s. 9 MS. YEE: 2006 year is properly before us. 10 MS. OLSON: Before us. 11 MS. YEE: All right. Okay. Thank you. I 12 think we're clear now with respect to the status of all 13 the appeals in this matter. 14 Thank you very much, Mr. Mottahedeh, Ms. Kline. 15 We will discuss your matter later this 16 afternoon and send you a written decision. 17 ---oOo--- 18 19 20 21 22 23 24 25 26 27 28 24 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 June 16, 2010 I recorded verbatim, in shorthand, to the 10 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 24 , 13 pages constitute a complete and accurate transcription 14 of the shorthand writing. 15 16 Dated: July 8, 2010. 17 18 19 20 ____________________________ 21 BEVERLY D. TOMS 22 Hearing Reporter 23 24 25 26 27 28 25