BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION 450 N Street, Room 121 Sacramento, California REPORTER'S TRANSCRIPT JULY 14, 2010 ITEM C4 SALES AND USE TAX APPEALS HEARINGS PETITION FOR REDETERMINATION filed by COMMODORE CRUISES AND EVENTS, INC. (Case Nos. 424031 and 514975 CH) 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 Barbara Alby Acting 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 Jeff Angeja 16 Equalization Staff: Tax Counsel 17 Cary Huxsoll Tax Counsel 18 Robert Tucker 19 Legal Department 20 Kevin Hanks Sales and Use Tax Department 21 22 For Petitioner: Bill Shine Representative 23 Ward Proescher 24 Taxpayer 25 Morgan Proescher Taxpayer 26 27 ---OOO--- 28 2 1 Sacramento, California 2 July 14, 2010 3 ---oOo--- 4 MS. YEE: Our next matter, please. 5 MS. OLSON: Our next matter is C4, Commodore 6 Cruises and Events, Incorporated. Please come forward. 7 MS. YEE: Mr. Angeja, you want to introduce the 8 matter, please. 9 MR. ANGEJA: Thank you, Madam Chairwoman. This 10 is -- this matter involves two unresolved issues. 11 First, whether adjustments are warranted to the audited 12 amount of unreported mandatory gratuity charges on food 13 and beverage sales. 14 Second, whether Petitioner was negligent. 15 MS. YEE: Thank you very much. Good morning, 16 gentlemen -- or afternoon. My apologies. 17 If you'll each state your name formally for the 18 record. You have ten minutes for your presentation. 19 MORGAN PROESCHER: Morgan Proescher, Director. 20 MS. YEE: Okay. 21 MR. SHINE: Bill Shine, Board Member. 22 WARD PROESCHER: Acting -- Ward Proescher, CEO. 23 MS. YEE: All right. Thank you. Please 24 proceed. 25 MORGAN PROESCHER: Okay. We're here today 26 saying that basically there's "x" amount of taxable 27 sales reported by us and why reported by the Board of 28 Equalization. We charge prices based on a flat rate per 3 1 person. We have one interpretation of what the taxable 2 amount of that is. The Board has another 3 interpretation. 4 So, I just wanted to go ahead and address 5 different areas pertaining to how we collect sales tax. 6 MS. YEE: Okay. Now, we're primarily in the 7 yacht charter business. We rent out the yacht at -- at 8 a yacht only rental rate, so whether that be $1200 an 9 hour or $2,000 an hour, $3,000 an hour, it all depends. 10 When we collect our sales taxes we back out the 11 amount of that rental rate and then, you know, other 12 non-taxable items and then pay the amount of tax due on 13 what's left over of those taxable sales. 14 During the audit non-taxable items allowed were 15 D. J., port fees, casino, linen, remote boarding fees, 16 just to name a few. And then that hourly yacht charter 17 rate was deducted as we did. And then the 18 established -- the amounts left over were subject to 19 sales tax, I believe 16 and a quarter percent gratuity 20 was used by the auditor, and 8 and three-quarters was 21 percent for tax. 22 When -- when the amount of the contract of the 23 yacht rental rate per hour exceeded the total amount of 24 the contract, in our -- for our purposes we acknowledge 25 that there are food sales there. Typically we use $10 26 to $15 per person for that. 27 Again, we serve -- we serve buffet meals. 28 They're -- they're established ahead of time by a client 4 1 that contracts the yacht. 2 So, anyway, we do -- we do acknowledge that 3 there's $10 or $15 per person there. And that's what we 4 figured in when we were collecting sales tax. 5 So, industry standards -- well, it's fairly 6 simple to say that these are inexpensive meals. In the 7 appendix that you see there you get a list of the 8 ingredients, as well as the costing methods there. 9 Now, the BOE auditor would lead you to believe 10 that we serve very fancy and formal meals out on San 11 Francisco Bay. But I'd like to ask that when was the 12 last time a Board Member went to a really fancy buffet. 13 We were kind of pondering the same question. I 14 mean, one comp. that comes to mind is going to Reno to a 15 buffet, and Las Vegas. And I did a little research. It 16 looks like for $12 you can get a nice dinner at the El 17 Dorado Hotel and Casino. 18 And -- anyway, the reason that they -- that 19 they can charge that kind of a price is because they 20 want to bring people into their hotel. They want to 21 make money on what they're there to make money doing, 22 which is their casino business. 23 Now, likewise, we bring people -- we want to 24 bring people onto the yachts. We make our money in -- 25 on the charter portion, not on the food portion. So we 26 simplify the food portion as much as we can. Like I 27 said, 90 percent of our food service is buffet, which 28 is very similar foods out there. Guests come up, serve 5 1 themselves, return to their table. 2 But, anyway, yeah, the idea is to primarily get 3 people out on the yacht. 4 Other tour operators on San Francisco Bay do 5 the same thing. Some provide food; some don't. One of 6 our competitors charges $24 a person for a one-hour 7 cruise. Typically we're charging somewhere around, you 8 know, $60 to $130 per person for food and the cruise, 9 but that includes three to five hours of cruise time. 10 And then there's other aspects that we face 11 that -- that restaurants don't have to deal with. You 12 know, serving these buffets, it's a double-edged sword. 13 We have fewer servers, so we save money there. 14 We cook more food than needed, so our costs are going to 15 be higher. We don't have cooking facilities on each 16 yacht. 17 So I'm going -- I wasn't able to submit our 18 arguments here today so I'm going out there, try to be 19 as quick as possible. 20 MS. YEE: That's all right. You're doing fine. 21 MORGAN PROESCHER: Anyway, but to be clear, 22 we're in the boat business and not in the restaurant 23 business. We find that there's a synthesis with 24 providing food and beverage while out on a boat, but the 25 idea is that, again, we're getting people out on the 26 yacht. 27 One example again, you know, if someone is just 28 to rent the cruise and go out on San Francisco Bay for a 6 1 sightseeing tour they may only, you know, book our yacht 2 for a two-hour cruise to see the sights. Now, by 3 getting them out on the cruise and serving a meal 4 they're going to be cruising for a four-hour amount of 5 time, so we collect that charter rate for that amount of 6 time. 7 Now, we also wanted to reduce the amount of 8 gratuity that was factored in by the BOE. They 9 basically took the amounts that were left from -- as 10 non-taxable and took 16 and a quarter percent gratuity, 11 and then the rest is tax. 12 If you look in the appendix we have an actual 13 example of one of our contracts. I think it's 831. So 14 you'll see that we charge $80 a person plus 25 percent 15 tax service and port fees. So the -- the auditor 16 basically figured that as just 16 and a quarter percent 17 tax and then 8 and three-quarter -- I'm sorry, 8 and 18 three-quarter tax, 16 and a quarter for the service 19 charge. Didn't allow any port fees at all in that 20 particular case. 21 However, port fees were allowed at our -- 22 when we were to remote locations in San Francisco. So 23 we were curious as to why it wasn't included when we 24 went out of our home port in Alameda. And that item is 25 832, you'll see in -- column L, that those port fees 26 were allowed. 27 And the -- the port fees -- the port fees are 28 implicit but, you know, the costs of our berth, like 7 1 the -- the yacht -- yacht berthing in Alameda, the 2 utilities that go into that. 3 So there's a lot -- lot more cost involved here 4 being a boat rather than just being a restaurant. 5 Restaurants would be a lot simpler. 6 Anyway, our operating costs, there's another 7 item in there in the appendix. I believe you'll find 8 that the food and beverage cost is only about 15 percent 9 of our total operating cost. 10 So, again, keeping -- keeping the yachts well 11 maintained, fuel, other operating costs -- you know, 12 Captains, everything else, that's really our main 13 focus. 14 So there's, again, not so much like a 15 restaurant and more like -- more like a boat. 16 Also, getting back to that gratuity policy, 17 our -- so, again, I'm trying to argue that there's going 18 to be less gratuity figured in there and more port fees. 19 As I said, buffet service -- I mean, when you 20 go to a buffet, what do you -- what do you tip on a 21 buffet? Are you tipping 15 to 20 percent? No, you're 22 leaving a couple dollars on the table and -- and you're 23 walking away. 24 So our servers -- basically, the guests are 25 going up, getting their meals, they're getting up, 26 getting their drinks, we're clearing plates and 27 that's -- that's pretty much it. If a guest asks for 28 something specifically, they can go run that. But, you 8 1 know, we don't have one waiter per three or four tables 2 like a normal restaurant would. You know, maybe we have 3 two servers for up to 60 to 70 guests. So we think that 4 should be calculated differently. That -- that amount 5 should be reduced. 6 And the factor that we're looking having it 7 reduced by is a dollar -- is down to $1.50 per person. 8 You'll see some notes in there. We were looking around 9 at what the average tipping policy would be and found 10 that $1.50 seemed to be acceptable when -- when tipping 11 for a buffet. And, again, 90 percent -- 98 percent of 12 our meals served were buffets. 13 Oh, we also found that for the audit period -- 14 the three-year audit period when the audit was 15 conducted, there was just a sampling taken. 16 Now, when we met with the auditor we agreed 17 that -- I believe February, March, April and December, 18 that was representative of a year. We had one slow 19 month, one really busy month and then two months that 20 were pretty good. 21 However, he ended up just sampling the best 22 year out of the three-year audit period and taking those 23 four months. I believe it was a total of 108 contracts 24 or 108 cruises that took place during that period of 25 time. 26 Anyway, again, the best year out of a 27 three-year period sampling that finding a margin of 28 error on what they felt was taxable sales, and then 9 1 applying that to a whole three-year period, we thought 2 that we were kind of robbed on that one and we'd like 3 the -- the Board to recommend that they go back and take 4 a look. I think there was 199 hours spent on the audit. 5 When I go through and I do Sales Taxes I can go 6 through a month in just a couple of hours. I don't see 7 why it took 199 hours to go through a -- just four 8 months of -- of samples. 9 You see the contract there. It's all pretty 10 simple, pretty well spelled out. He broke it out on a 11 spreadsheet just like we would break it out on a 12 spreadsheet when we were doing our Sales Taxes. 13 MS. OLSON: Time has expired. 14 MS. YEE: Okay. Mr. Proescher, we're going to 15 give you time on rebuttal. Okay. And it may be helpful 16 once you hear what the Department has to say to -- 17 MORGAN PROESCHER: Yeah. 18 MS. YEE: -- rebut back. Okay. 19 Department, please. 20 MR. HUXSOLL: Good morning, Madam Chair, 21 Members of the Board. I'm Cary Huxsoll from the Legal 22 Department along with Robert Tucker and Kevin Hanks, 23 representing staff. 24 Petitioner offers yacht cruises in San 25 Francisco Bay for events such as weddings, business 26 parties and school proms. 27 Petitioner also offers cruises open to the 28 public on certain holidays. Generally Petitioner serves 10 1 meals prepared by employees as part of the cruise. 2 Petitioner charges a lump sum price for its 3 cruise. It does not list a specific price for its meal 4 charges. 5 Petitioner reported the taxable sales using 6 various methods. For some contracts it deducted the 7 amount classified as yacht rental from the total 8 contract amount and reported the balance as taxable food 9 and beverage sales. Petitioner sometimes reported an 18 10 percent gratuity in addition to this amount. 11 On other contracts Petitioner reported tax 12 based on multiplying the number of people attending the 13 event by $10 to $15. It did not report additional 14 mandatory gratuities for these amounts. 15 The auditor examined all contracts for 16 February, March, April and December of 2006. Petitioner 17 had previously agreed that these months accurately 18 represented Petitioner's sales during the audit period. 19 The auditor examined each contract and 20 identified the non-taxable components of the cruise. 21 These included charges such as the yacht rental, port 22 fees, casino, security and charges for entertainers, 23 such as D. J.s and magicians. 24 The non-taxable components of the charge were 25 deducted from the gross amount of the contract. The net 26 amount represented the charge for food, beverage, 27 mandatory gratuity and tax. 28 In order to determine if this amount would be 11 1 sufficient to cover the number of passengers on the 2 cruise, the auditor computed an average per person food 3 charge. 4 When the per person food charge resulted in 5 negative amounts staff multiplied the number of 6 passengers by $15, which included amounts for food, 7 sales tax and mandatory gratuity. 8 Petitioners previously concurred with this 9 amount being -- this $15 being used as the price -- as a 10 per person charge. 11 The auditor developed a percentage of error and 12 applied it to the reported measure. 13 Upon my review of the audit work papers I 14 noticed the Petitioner was not always given an allowance 15 for port fees when these charges were part of 16 Petitioner's lump sum price. 17 We believe adjus --- an adjustment does need to 18 be made to reflect these fees and would recommend a 19 30-30-30 in order to determine the proper allowance for 20 port fees. 21 Mr. Hanks will discuss the information the 22 Department would like Petitioner to provide in order to 23 make the necessary adjustments. 24 MR. HANKS: I note actually in -- in looking at 25 the Petitioner's submission from today, his page 832 26 provides an example of -- of where these port fees were 27 charged. We don't see it in connection with all the 28 contracts, however. So we wanted to ask the Petitioner 12 1 to -- to indicate to us whether or not these port fees 2 are -- are charged routinely for each of these cruises 3 and how they're -- they're calculated, what they're 4 based on. We don't have all of that information in -- 5 in our records and -- but we'd like to incorporate those 6 numbers in -- in our calculations, if we could. And 7 that's why we're -- 8 MS. YEE: Okay. 9 MR. HANKS: -- requesting a 30-30-30 -- 10 MS. YEE: Okay. 11 MR. HANKS: -- review. 12 MS. YEE: Very well. 13 MORGAN PROESCHER: Do you want a response now 14 or should we wait? 15 MS. YEE: Let me just ask the Department, 16 did -- did you have other comments you wanted to make? 17 Why don't you -- 18 MR. HUXSOLL: No, no, I'll save. 19 MS. YEE: Okay. Mr. Proescher, you want to 20 comment -- 21 MORGAN PROESCHER: Respond to that. 22 MS. YEE: Please. 23 MORGAN PROESCHER: Yes. I -- just looking at 24 those, it looks like that's when we -- we headed over to 25 San Francisco. Again, we're home port in Alameda. You 26 know, we have our own port fees there. When -- when we 27 go over to San Francisco they charge a price to dock at 28 their location as well as everything that -- like the 13 1 costs that we incur in transit going over there and what 2 not. That -- that time spent, it takes us roughly an 3 hour to get over there. It's an hour to get back. 4 MS. YEE: So -- so you're saying it's not -- 5 well, I guess in response to the question, are -- are 6 the port fees routinely charged? 7 MORGAN PROESCHER: Every time we go to a 8 location that's not our home port. 9 MS. YEE: Okay. 10 MORGAN PROESCHER: It's -- it's -- it's spelled 11 out there. But, again, our home port, those -- those -- 12 those fees are -- I -- I can give -- provide those to 13 the Board of Equalization. 14 MS. MANDEL: So -- 15 MORGAN PROESCHER: I think it was 200 and -- 16 something like 209,000 for the -- 17 MS. MANDEL: But your port fees at your home 18 port, Alameda, when you -- when someone charters a 19 cruise from -- and they're leaving from -- you're 20 leaving from Alameda and going around and going back to 21 Alameda, does that customer get charged something for 22 port fees, is that what we're looking at? 23 MORGAN PROESCHER: Yes, ma'am. Again, it's -- 24 it's built into the 25 percent. On -- on the contract 25 it says 25 percent tax service and port fees. 26 MS. MANDEL: Okay, so it's built in. 27 MR. HANKS: Yes. 28 MS. MANDEL: Okay, thank you. 14 1 MR. HANKS: Right. 2 MS. YEE: Okay. 3 MS. STEEL: Madam Chair. 4 MS. YEE: Yes, Ms. Steel. 5 MS. STEEL: I -- I can go for 30-30-30 but I 6 want Department to check that -- that taxable charges 7 was less than $10, arbitrarily that Department raised 8 that to $15 because that -- you said that's the -- what 9 taxpayer said that, you know, that's kind of average. 10 So, can you just look at that -- I am just 11 telling you, and then other costs that the taxpayer was 12 asking that not just port fees but other costs that they 13 were talking about. 14 So, you know, I want you to consider that, too. 15 And then another one is that, yeah, for the buffet 16 charge for 16 point some percent that's very high as a 17 tip. 18 So, can you check it out, that what's average 19 industry tip charges for buffet and then can you 20 reconsider that, too? 21 So, I really want Department to talk to the 22 taxpayer that, you know, exactly what kind of contract 23 that they had. If they had for $1.50 per person 24 mandatory then you have to count that as a tax in the 25 tips, not in -- you know, 16 point some percent because 26 I still think that when you do the buffet and 16 27 point -- whatever percent that you charge that's the way 28 too much of a tip. So -- 15 1 MR. HANKS: Ms. Steel, we can certainly look at 2 that but I -- I note that their contract specify that 3 the three charges that -- that are inclusive in -- in 4 this 25 percent charge that they make, and so you've got 5 sales tax reimbursement, you've got the port fees and 6 then you've got the gratuity. And so that's -- that's 7 how we -- we looked at it and that's -- that's how we 8 got our -- our calculations on it. 9 MS. STEEL: So what taxpayer is saying is on 10 the contract that some of them are like $1.50 tip 11 mandatory. That's -- that's what I heard. 12 MORGAN PROESCHER: That's an in -- that's an 13 industry -- 14 MS. STEEL: So -- yes. 15 MORGAN PROESCHER: -- standard. That's -- 16 that's what we -- 17 MS. STEEL: So -- 18 MORGAN PROESCHER: -- came up with. 19 MS. STEEL: Okay. That -- that's the one thing 20 that I want you to look at it. 21 Another thing is that prior audit that came out 22 for markup of 170 percent, and this taxpayers actually 23 followed that so why we came out with different than 24 what we gave them, the directions from the prior audit? 25 So I want you to look at that, too. 26 And then another one is that when you were 27 doing the audit that some -- some of tour -- cruise line 28 tour that they lost the money. Then you -- when you do 16 1 the audit then you added up later on after you did 2 the -- the audit. So, I show you later on that, you 3 know, what I'm having it. 4 So, you know, you have to really look at that, 5 too. If they lost money, lost money, but when you do 6 the audit you cannot really add that as an income, 7 that's not really right way to do the audit. 8 So, I show you what I have here. So, -- I make 9 motion for 30-30-30. 10 MS. YEE: Thank you, Ms. Steel. Let me second 11 that motion. I wanted to just add a couple things. One 12 is -- I believe this is the right case. You've had 13 prior audits before -- yes, this is like the fourth 14 audit of this matter? 15 MORGAN PROESCHER: Just about every three-year 16 periods since 1986. 17 MS. YEE: Okay. And I would agree with Ms. 18 Steel, some of these issues we had actually raised -- my 19 staff had raised with the Department, as well. 20 But I think it might be a good opportunity as 21 we put this over on a 30-30-30 to maybe have an 22 opportunity to sit down with the taxpayer and just kind 23 of go through the basis for why and -- and we did pose a 24 question about why not the markup method as was the 25 prior methodology. 26 But I think that you probably should be given 27 an explanation as to why that's the case. So, I -- 28 MORGAN PROESCHER: Yeah, and the implied 17 1 markup, also was much -- ended up being much larger -- 2 even larger than that. 3 MS. YEE: Right. 4 MORGAN PROESCHER: I think it was 270 5 percent -- 6 MS. YEE: Right. So -- 7 MORGAN PROESCHER: -- versus 170 percent 8 (inaudible). 9 MS. YEE: -- maybe have this be a little bit 10 more of a discussion with respect to, you know, kind of 11 why we're looking at it the way that we are. 12 And -- and there was a lot that actually was 13 taken from your actual invoices. So I want to just 14 point those out, as well, in terms of why we relied on 15 certain percentages and -- and numbers. 16 So we -- other questions, Members? 17 Mr. Horton. 18 MR. HORTON: Madam Chair. 19 MS. YEE: Yes. 20 MR. HORTON: To the taxpayer, how do you 21 determine the port fees? 22 MORGAN PROESCHER: Well, look at the Profit and 23 Loss, and there's just a couple items there. But 24 primarily, you know, rental of our berth. 25 You know, a restaurant, they pay -- a 26 restaurant would pay rent. Well, we pay -- I mean our 27 restaurant is floating, I guess you would call that our 28 vessel lease payments. But the berth, the actual rent 18 1 that we pay for our six slips in Alameda, that plus the 2 utilities that go into -- that go into it, and that's 3 how we calculate it. 4 MR. HORTON: There remains a common area. 5 MORGAN PROESCHER: Oh, yeah, common area, 6 maintenance of -- of the docks in that area. Carpeting 7 the docks. Just making it nice for people to come down 8 to so it's not like they're going down to the wharf or 9 whatever. 10 MR. HORTON: Do you know if the -- the amount 11 that you're charging is sufficient? 12 MORGAN PROESCHER: Which -- which amount? The 13 port -- the port fee amount? 14 MR. HORTON: Port fee amount. Have you -- have 15 you looked at it to determine if it's sufficient, is the 16 actual port fee cost? 17 MORGAN PROESCHER: I'm -- I'm not -- I'm not 18 sure. 19 MR. HORTON: Okay. 20 MORGAN PROESCHER: That's -- we -- we lump 21 it -- it's lumped in together as tax service and port 22 fees. It's -- I mean, the -- the port fee amount is 23 pretty much the same every year because our -- our 24 rental -- the -- the berth rental is just about the 25 same, minus the cost of living increase, I believe. 26 MR. HORTON: Okay. Thank you. 27 MS. YEE: Thank you, Mr. Horton. 28 Other questions, Members? 19 1 Okay, I have a motion for a 30-30-30. Motion 2 by Ms. Steel, second by Yee. Without objection, that 3 motion carries. 4 Mr. Angeja, you want to just kind of lay out 5 what we mean by that so the taxpayer understands that. 6 MR. HORTON: -- did a good job. 7 MS. YEE: Mr. Proescher, you may want to just 8 listen to Mr. Angeja's description of what the process 9 will be going forward. 10 MR. ANGEJA: On the record now? 11 MS. YEE: Yes. 12 MR. ANGEJA: Their order of a 30-30-30 gives 13 you 30 days to come up with additional information, 14 working with the Department. And then the Department 15 will analyze that and come up with a written position at 16 the end of their 30 days. And then Appeals will have 30 17 days to examine the submissions of both sides. And then 18 we'll issue a written supplemental D & R that will give 19 a new rec -- or revised recommendation. 20 MORGAN PROESCHER: And at the end of the 21 process we get something in writing that we can depend 22 on for future audits, as well? 23 MR. ANGEJA: You'll have our written 24 supplemental decision and recommendation. And then that 25 comes before the Board on a nonappearance calendar 26 unless -- 27 MS. YEE: Right. 28 MS. MANDEL: Right. 20 1 MS. YEE: I'm sorry, Mr. Proescher, your 2 question? 3 MORGAN PROESCHER: Oh, I was asking if we'd 4 have something in writing for, you know, future methods 5 of -- 6 MS. MANDEL: Yeah. 7 MORGAN PROESCHER: -- sales tax collection 8 going forward now. 9 MS. MANDEL: They want something that they can 10 rely on -- 11 MS. YEE: Rely on -- 12 MORGAN PROESCHER: Exactly, yeah. 13 MS. YEE: -- going forward. 14 MS. MANDEL: -- past experience. 15 MS. YEE: And that's why I really was -- 16 MORGAN PROESCHER: Yeah. 17 MS. YEE: -- impressing upon having a more 18 extensive discussion with the taxpayer here because it 19 looks like, you know, things have kind of changed 20 from -- you know, obviously what we've done rel -- with 21 the prior methodology and just some certainty going 22 forward and a better understanding of why we're choosing 23 to look at the method that we are looking at now. 24 So let's -- let's be sure that we give you what 25 you feel like you can rely on on the way forward. 26 MORGAN PROESCHER: Yeah. 27 MS. YEE: Or at least understand why we're 28 relying on -- 21 1 MORGAN PROESCHER: And we also want to abate 2 the penalty. 3 MR. HORTON: Yeah. 4 MR. SHINE: We -- we want to go on the record, 5 we'd like to have abatement of the penalty. 6 MS. YEE: We will take that into consideration. 7 MR. SHINE: For obvious reasons, yeah. 8 MS. YEE: Well, yes. Yes. No, we understand. 9 MR. SHINE: Yeah. 10 MS. YEE: So, the Department will be -- confer 11 with them and they will give you a sense of what it is 12 that they're looking for in terms of further 13 documentation, to start this process. 14 Okay. Great. Thank you very much. 15 MORGAN PROESCHER: Thank you. 16 MS. YEE: Thanks for your patience. 17 MORGAN PROESCHER: Okay, Members, let's recess 18 until 1:30. 19 ---oOo--- 20 21 22 23 24 25 26 27 28 22 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 July 14, 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 22 13 pages constitute a complete and accurate transcription 14 of the shorthand writing. 15 16 Dated: September 15, 2010. 17 18 19 ____________________________ 20 BEVERLY D. TOMS 21 Hearing Reporter 22 23 24 25 26 27 28 23