1 BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION 2 5901 GREEN VALLEY CIRCLE 3 CULVER CITY, CALIFORNIA 4 5 6 7 8 REPORTER'S TRANSCRIPT 9 OCTOBER 21, 2010 10 11 12 13 14 15 FINAL ACTIONS 16 17 18 19 20 21 22 23 REPORTED BY: JULI PRICE JACKSON 24 CSR NO. 5214 25 26 27 28 1 1 P R E S E N T 2 3 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 G. Olson Chief, Board 13 Proceedings Division 14 15 ---OOO--- 16 17 18 19 20 21 22 23 24 25 26 27 28 2 1 5901 GREEN VALLEY CIRCLE 2 CULVER CITY, CALIFORNIA 3 OCTOBER 21, 2010 4 ---o0o--- 5 MS. OLSON: Our next item are those maters 6 taken under submission. 7 The first one is C14, Susan Hilary Tregub. 8 ---o0o--- 9 C14 SUSAN HILARY TREGUB 10 NO. 425147 (AS) 11 ---o0o--- 12 MS. YEE: Okay, we're on item C14, Susan Hilary 13 Tregub. 14 May I have a motion. 15 MS. STEEL: I want to move the Petitioner is 16 not responsible person from October 1st, '03 to 17 June 30th, '04 and adopt the staff recommendation for 18 only third quarter of 2004 that she reported. 19 MS. YEE: Okay, we have a motion by Ms. Steel 20 -- I'm sorry, I'm going to ask you to repeat that? 21 MS. STEEL: She's only responsible for third 22 quarter of 2004. 23 MS. YEE: Okay. 24 MS. STEEL: Not responsible for other time. 25 MS. MANDEL: Well -- 26 MS. YEE: Okay, motion by Ms. Steel to find 27 Petitioner as a responsible person for the third quarter 28 of 2004 only. 3 1 Is there a second? 2 MS. ALBY: Second. 3 MS. YEE: Second by Ms. Alby. 4 Discussion? 5 MS. STEEL: I think we should go after the 6 right people here, especially Mr. Kass that, you know, 7 we missed the statute there, that's not really fair. 8 And then somebody who tried to be the delivery 9 person, that -- who tried to be a messenger between BOE 10 and the company and she didn't have a clue that tax was 11 not paid. 12 And we know exactly who was the day-to-day 13 person here. So, I don't think she's really liable for 14 other taxes, but at least all we can impose her that she 15 is liable the last quarter because she reported for tax 16 return, even she didn't sign it. 17 MS. YEE: We just took action on one of the 18 other potential responsible persons. I think what's 19 troubling about this particular matter is that there was 20 no clear line between her counsel duties and her 21 involvement in financial affairs, which I -- I wasn't 22 convinced that she didn't have knowledge of some the 23 financial affairs of the entity. 24 Ms. Mandel? 25 MS. MANDEL: You know, the responsible person 26 cases are always kind of -- well, they're so heavily 27 factual, we -- and we short title them, you know, 28 responsible person cases or responsible person 4 1 liability. 2 And you can be a responsible person, which is 3 one of the criteria for the liability, you can 4 technically be a responsible person, you can technically 5 have responsibility for sales and use tax matters and 6 still not bear the liability if you don't have the 7 willfulness category, which is not, you know, bad, evil 8 intent. 9 But I guess my question is whether the 10 Department has to really show that a responsible person 11 had authority over the money, which usually we see that 12 they've written checks and they didn't even get the bank 13 account information. 14 And I guess that's the part that's sort of 15 sticking with me is we don't -- it's an assumption 16 because she was Secretary of the LLC that she must have 17 had some authority and that she had signed the seller's 18 permit as Manager of the entity that she must have had 19 some authority over the money. 20 But there's no -- am I correct, Mr. Levine, 21 there was no direct evidence that she ever signed any -- 22 MR. LEVINE: That's my understanding. 23 MS. MANDEL: -- checks? 24 And then she came in and -- I mean, I don't 25 have an issue -- there were blurred lines and she -- you 26 know, she was -- even the retainer that was to handle 27 legal and business matters, you know, could blur you 28 into being a business manager, you know, like a lot of 5 1 lawyers act as business managers, but then they often 2 have the checkbook. So -- 3 MR. LEVINE: I would just point out that 4 there've been cases where people have signed checks and 5 we have found that they weren't responsible -- 6 MS. MANDEL: Right. 7 MR. LEVINE: -- weren't liable. 8 MS. MANDEL: Right. 9 MR. LEVINE: And cases that they never got 10 close to a checkbook -- 11 MS. MANDEL: They were liable. 12 MR. LEVINE: -- they were liable. 13 And it -- like you say, it's fact based, it 14 depends on the circumstances, it depends on what you 15 believe. 16 As far as -- there is -- when you get to 17 authority -- and that's some refinement that we've -- 18 that Appeals developed -- of the willfulness to try and 19 really get to the heart of the matter, but some of 20 that's wholly within the knowledge of the taxpayer. 21 And it's my belief that once the prima case -- 22 the prima facie case has been made -- 23 MS. MANDEL: By the -- 24 MR. LEVINE: -- on the responsible person, 25 there was enough money, there's reason to believe that 26 they could have controlled it, then the taxpayer has to 27 come up with enough to convince you that they -- for 28 example, if it's authority, which that's only part of 6 1 her argument, because I think her argument's really that 2 she's not responsible at all. 3 MS. MANDEL: Right. 4 MR. LEVINE: But once it gets up to that point, 5 it's -- if there's no smoking gun -- and sometimes there 6 is -- then you just have to decide what you believe. 7 MS. ALBY: Madam Chair? 8 MS. YEE: Ms. Alby? 9 MS. ALBY: Just to tag along with this, I don't 10 think we heard any evidence that she was calling the 11 shots at the LLC or that she had anything really at the 12 restaurant that they owned. 13 So, I think she -- she seems almost like a 14 victim to me. 15 MR. LEVINE: And I'd point out, becauseI had 16 some interaction with the conference holder who -- or 17 person who wrote the D & R, who reminded me that she 18 didn't hold the conference. 19 The original conference holder departed 20 Appeals. We offered another conference. I think that 21 was a mistake because she didn't have the opportunity -- 22 and maybe it wouldn't have mattered because it -- if the 23 conference holder didn't believe her, the same result, 24 but if the conference holder would have believed her, 25 you never would have had a chance to hear it because we 26 would have just granted. 27 So, she lost that opportunity. I think that 28 was a mistake because it couldn't have hurt her to have 7 1 another conference. 2 So, the person who wrote the D & R did not sit 3 face-to-face, you're the only ones who sat in the 4 position to decide who sat face-to-face with her. 5 MR. HORTON: Madam Chair? 6 MS. YEE: Mr. Horton? 7 MR. HORTON: Well, I think she -- she 8 participated in the distribution of revenue. But it 9 sounded as if, though, she participated in allocating or 10 distributing revenue after there was a challenge or 11 conflict or problem with the operation. 12 And then the entity began to direct those types 13 of decisions to their attorney. And it sounded like 14 maybe she was sort of acting in her capacity as an 15 attorney and advising them to move forward. 16 Is this a situation where it appears she 17 actually had knowledge that it was the intent of the 18 taxpayer not to pay the taxes or to negotiate some sort 19 of settlement down the road. 20 But, there again, it appears that she was 21 operating in her capacity as an attorney and doing what 22 a client has directed her to do. 23 Therein is where it gets a little -- 24 MS. MANDEL: It's -- 25 MR. HORTON: -- muffling for me. 26 So, I think she meets all of the criteria to be 27 a -- to be a responsible party by her actions, but the 28 question that I have is was she -- what capacity was she 8 1 acting? 2 Was she acting in the capacity of a Secretary? 3 An office holder? Or was she acting in the capacity as 4 a consultant to the entity? 5 That was the complexity of this. And it was 6 helpful to know that she didn't receive any 7 compensation, any K1s -- at least this was her 8 testimony -- K1s, W2, that the compensation was solely a 9 retainer, sort of implying that she's being compensated 10 for her services as an attorney. 11 So, if we are to grant the petition, I would 12 grant entirely; if not, I would not grant it entirely. 13 So, those are the tea leaves. 14 MS. STEEL: I can retrieve my motion and I can 15 make it grant. 16 MS. YEE: Okay. 17 MR. HORTON: But I'd like to give hear from my 18 colleagues on -- I don't know. 19 MS. MANDEL: Yeah, I guess what -- I guess what 20 I hear is that if the Department -- if the Department 21 made a prima facie case, then it's incumbent on the -- 22 which can be based on inferences from the evidence that 23 they have and the person's positions as to willfulness 24 or control over the money, then it's incumbent on the 25 Petitioner to -- by documents or otherwise -- persuade 26 us that she didn't have control over the money. 27 MS. YEE: Okay, let's dispense with the motion 28 on the table. 9 1 We have a motion and second by Ms. Steel, 2 Ms. Alby to find the Petitioner's a responsible person 3 for the fourth quarter of 2004 only. 4 Please call the roll. 5 MS. OLSON: Madam Chair? 6 MS. YEE: No. 7 MS. OLSON: Ms. Alby? 8 MS. ALBY: Aye. 9 MS. OLSON: Ms. Steel? 10 MS. STEEL: Aye. 11 MS. OLSON: Mr. Horton? 12 MR. HORTON: No. 13 MS. OLSON: Ms. Mandel? 14 MS. MANDEL: No. 15 MS. OLSON: Motion fails. 16 MS. YEE: Okay, may I have another motion? 17 Mr. Levine, do we have the ability to assign 18 priority here? 19 MR. LEVINE: As far as collection? 20 MS. YEE: Uh-huh. 21 MR. LEVINE: If you were to find her liable -- 22 you direct staff how to collect, yes. 23 If she -- if she's -- if you find that she's 24 liable for some or all and you want to -- you can direct 25 staff to level, it can be absolute best efforts, wait a 26 year to go after her. 27 The Board, in the past, has adopted all 28 different permutations. I think just yesterday, it was 10 1 not in the motion, but it was just a sense, "use your 2 best judgment." 3 And I put in my two cents about the best 4 judgment and the Department will use its best judgment. 5 And you can do that. 6 You can -- however, you want. You can say, 7 "Wait a year" or "Don't collect against her unless you 8 are fairly certain -- confident that you're not going to 9 get any more from the other guy." 10 There is only one other guy in this, the 11 Department didn't pursue Mr. Kass. 12 MS. YEE: Okay. 13 MS. STEEL: But interest is growing? 14 MR. LEVINE: Oh, yeah, interest is growing. 15 MS. STEEL: And the other person is famous that 16 he's not paying anything, that's what she said, so -- 17 MR. LEVINE: Interest is going to grow until it 18 gets paid. 19 So, yes, that's always a negative. 20 MS. YEE: Okay. May I have another motion? 21 I'll move to redetermine. 22 Is there a second? 23 Okay, that motion dies for lack of a second. 24 Shall we pass over this and continue? 25 All right, let's move on. 26 ---o0o--- 27 28 11 1 MS. YEE: Next item, please? 2 MS. OLSON: Our next item is C15, Davood 3 Behdadnia. 4 ---o0o--- 5 C15 DAVOOD BEHDADNIA 6 NO. 421809 (AS) 7 ---o0o--- 8 MS. YEE: Okay. Item C15, Davood Behdadnia, 9 may I have a motion? 10 MS. MANDEL: Move the staff recommendation. 11 MS. YEE: Okay. Motion by Ms. Mandel to adopt 12 the staff recommendation. 13 Is there a second? 14 MR. HORTON: Second. 15 MS. YEE: Second by Mr. Horton. 16 Discussion? 17 MS. STEEL: Mr. Levine, that Department allowed 18 20.11 percent reduction for sales tax not collected on 19 Medicare for the second audit. 20 Can they go back -- I just -- can we -- can 21 they go back for first audit too for that part because 22 they never really deducted anything for the Medicare 23 portion? 24 MR. LEVINE: Whatever the Board orders. 25 I don't know if any Medicare was included, I 26 don't know if it says it here -- 27 MS. STEEL: It was -- 28 MR. LEVINE: -- I don't recall. 12 1 MS. STEEL: -- included for the second audit. 2 So, they deducted the portion of it, but they 3 didn't do it for the first audit. 4 MR. LEVINE: I don't know if they picked it up 5 in the first against the corporation. 6 If they didn't have Medicare liability at all 7 in the first determination. I don't remember if it 8 discusses it here. 9 But unless they picked it up in the first 10 audit, then there wouldn't be any need for an 11 adjustment. 12 It's possible -- we could look at it some 13 more. 14 MS. STEEL: Yeah, can we just look at that 15 part? 16 MR. LEVINE: But I couldn't give you an answer 17 right now because I don't -- I don't know and it's 18 possible that the Department might know or the 19 Department might have to go back and do some 20 examination. 21 MS. YEE: Okay. 22 MR. LEVINE: Also if you want to make the 23 order, make an allowance, if warranted, we can do that 24 too. 25 So that you could make your order and send the 26 Department back to confirm that -- whether there is or 27 not a nontaxable -- a nontax reimbursement portion of 28 the first liability. 13 1 MS. YEE: Okay. Ms. Mandel, you want to 2 reflect that in your motion? 3 MS. MANDEL: What he said is in my motion. 4 MS. YEE: Okay, very well. 5 Motion by Ms. Mandel, second by Mr. Horton. 6 Without objection, motion carries. 7 ---o0o--- 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 14 1 MS. YEE: Next item? 2 MS. OLSON: Our next item is C16, Club 3 Habanos -- 4 MS. YEE: Okay. 5 MS. OLSON: -- Incorporated. 6 ---o0o--- 7 C16 CLUB HABANOS, INC. 8 NO. 426183 (KH) 9 ---o0o--- 10 MS. YEE: Item C16, Members, Club Habanos, 11 Incorporated, may I have a motion? 12 MR. HORTON: Madam Chair, I'd like to seek some 13 direction, but we need to put it on the floor for 14 discussion. 15 MS. YEE: We can discuss it before making a 16 motion. 17 MR. HORTON: Thank you. 18 Members, it's -- in the conclusion of the 19 testimony it appears that we were -- you know, they 20 narrowed down their -- their happy hour, if you will, or 21 discount sales period, from every Friday -- members who 22 had -- the hundred members who received it, 20 percent 23 discount, and on special occasions. 24 It appeared that the Department didn't give any 25 weight to a discount at all and conducted a shelf test 26 based on their bar fact sheet data, when it is somewhat 27 evident in that they had memberships prior to for the 28 tobacco facility that they would continue that type of 15 1 membership. And the fact that it's nominal even gives 2 it more credence that they didn't understand the impact 3 necessarily. 4 And that there could have been on special 5 occasions -- I believe there was something in the 6 writeup, I don't know if it was my staff or the Appeals 7 staff -- that said that there was maybe 12 events a year 8 where there was some discount. And I wasn't clear as to 9 whether or not the Department had taken that under 10 consideration. 11 Mr. Levine, do you know -- did you catch any of 12 that or -- 13 MR. LEVINE: I couldn't -- it didn't seem like 14 it, but that doesn't -- I can't say I followed 15 everything in detail to know that. 16 It assumed that 10 percent of the drinks were 17 sold at happy hour prices and that for -- so, they 18 did -- the Department did make an adjustment, 14.04 19 percent of the drinks were sold with a 20 percent 20 members' discount, so, they did take that into 21 account. 22 MR. HORTON: Okay, motion to adopt staff 23 recommendation. 24 MS. YEE: Okay, motion by Mr. Horton to adopt 25 the staff recommendation. 26 Is there a second? 27 MS. MANDEL: Second. 28 MS. YEE: Second by Ms. Mandel. 16 1 Further discussion? 2 MS. STEEL: Just, Mr. Levine, how about those 3 every Fridays, they're open 365 days and every Friday 4 that they give out -- what they call -- I forget what 5 they call, like coupons or something and then you, you 6 know, charge for going in for free price then you get 7 drink and -- 8 MS. MANDEL: The cover charge? 9 MS. STEEL: -- or they charge -- cover 10 charge. 11 MR. HORTON: She testified that the prices 12 never changed. 13 MS. STEEL: No, no, but they paid cover charge 14 on Fridays that they take it and then they get free 15 drinks or something. 16 MR. HORTON: She said the prices never 17 change. 18 MS. YEE: Yeah, the cover charge -- 19 MS. STEEL: Cover charge is not prices never 20 changed but the drink is different. 21 MS. MANDEL: Yeah, I think -- I think that 22 might have come up when the Department was explaining 23 when cover charges get into the tax base. 24 But I don't think that she said that their 25 cover charges were related to the -- how many drinks you 26 get or whether you would get two for one or anything. 27 That was the Department giving examples, in my 28 notes -- 17 1 MR. HORTON: Yeah, I -- 2 MS. MANDEL: -- of when -- of when a cover 3 charge would be taxable. 4 Maybe your notes are different? 5 MR. HORTON: Well, I specifically asked -- 6 MS. YEE: Yeah. 7 MR. HORTON: -- is there a correlation between 8 the cover charges and the prices? 9 And I only remember because I asked it three 10 different ways and -- in an attempt to provide the 11 taxpayer with some understanding of the implication of 12 her answer. 13 But she repeatedly said no, so -- 14 MS. YEE: Okay. 15 MR. HORTON: -- best I could do. 16 MS. YEE: All right, we have a motion by 17 Mr. Horton, second by Ms. Mandel to adopt the staff 18 recommendation. 19 Objection? 20 MS. STEEL: Objection. 21 MS. YEE: Okay, please call the roll. 22 MS. OLSON: Madam Chair? 23 MS. YEE: Aye. 24 MS. OLSON: Ms. Alby? 25 MS. ALBY: No. 26 MS. OLSON: Ms. Steel? 27 MS. STEEL: No. 28 MS. OLSON: Mr. Horton? 18 1 MR. HORTON: Aye. 2 MS. OLSON: Ms. Mandel? 3 MS. MANDEL: Aye. 4 MS. OLSON: Motion carries. 5 ---o0o--- 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 19 1 MS. YEE: Okay, next item, please? 2 MS. OLSON: Our next item is C17, Aftershock 3 Power Boats, Incorporated. 4 ---o0o--- 5 C17 AFTERSHOCK POWER BOATS, INC. 6 NO. 334423 (EH) 7 ---o0o--- 8 MS. MANDEL: I move to redetermine. 9 MS. YEE: Okay. 10 MR. HORTON: Second. 11 MS. YEE: Okay, motion by Ms. Mandel on item 12 C17, Aftershock Power Boats, Incorporated -- motion by 13 Ms. Mandel to adopt the staff recommendation, second by 14 Mr. Horton. 15 Discussion? 16 MS. STEEL: Offers-In-Compromise or generous 17 payment plan? 18 MS. YEE: I don't know about OIC on this one. 19 Mr. Levine, do you know? 20 Oh, I see -- 21 MR. LEVINE: I don't recall that they didn't -- 22 MS. YEE: -- I guess on the basis of them being 23 a closed entity, okay. 24 MR. LEVINE: If they're closed out -- 25 MS. YEE: Yes. 26 MR. LEVINE: -- then they'd be eligible to at 27 least apply. 28 MS. YEE: Okay. Well, let's be sure we provide 20 1 that information to the Petitioner then. 2 Okay, motion and second to adopt the staff 3 recommendation with direction to provide information 4 about the OIC program. 5 Without objection, motion carries. 6 ---o0o--- 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 21 1 MS. YEE: Okay, next item? . 2 MS. OLSON: Our next item is C18, Iradj 3 Nazarian. 4 ---o0o--- 5 C18 IRADJ NAZARIAN 6 NO. 400357 (FH) 7 ---o0o--- 8 MS. YEE: Okay. Item C18, Iradj Nazarian, may 9 I have a motion? 10 MS. ALBY: Move to grant the petition. 11 MS. YEE: Okay, motion by Ms. Alby to grant the 12 petition. 13 Is there a second? 14 MS. STEEL: Second. 15 MS. YEE: Second by Ms. Steel. 16 Discussion? 17 MS. ALBY: Would you like something from me? 18 MS. YEE: If you wish, Ms. Alby? 19 MS. ALBY: I'd just repeat the Department did 20 not prove their case. 21 If the taxpayer didn't show up here with 22 records and gave the excuse they didn't have records -- 23 they do and we're not very sympathetic. 24 So, I think this is appropriate to award. 25 MS. YEE: I will agree with you the Department 26 definitely had some deficiencies in how handled this, 27 but I think given the practice of the Investigations 28 Division, and albeit there were notes and records 22 1 missing in terms of what transpired relative to this 2 particular matter and the fact that, as Ms. Mandel 3 pointed out, there was not any attempt to pursue 4 any documentation that had been submitted to the 5 San Diego's District Attorney's office, I'd like to see 6 the Department do better in terms of, at least, 7 articulating its expectations about its involvement in 8 these types of matters. 9 MS. ALBY: Let's go. 10 MS. YEE: Okay. 11 MR. HORTON: Madam Chair? 12 MS. YEE: Yes, Mr. Horton? 13 MR. HORTON: Much like when the taxpayer does 14 not have adequate books and records, we -- or I have 15 attempted to treat it as the exception and not the rule 16 and try to look to subjective evidence to support what 17 the taxpayer's testimony is. 18 In light of that, I'd have to say that true 19 enough that the Department made some errors, but it is 20 the exception and not the rule. 21 The rule is that we are here to policy and 22 procedure of the Board of Equalization, that there is a 23 process by which the authorization of a settlement takes 24 place and -- and so, I would lean to -- not lean to the 25 exception to the rule that, in fact, they made a 26 mistake. 27 And then the evidence that could have been 28 available, you've got a number of third parties that we 23 1 could have solicited -- the taxpayer could have 2 solicited information from in order to support their 3 case. 4 The ultimate dollar amount, in my mind, wasn't 5 reflective of the liability and -- nor was it -- the 6 ultimate dollar amount of the assessment was not 7 reflective of the liability and it was a little 8 difficult for me. 9 I couldn't get to a point where -- despite my 10 efforts, to a point where I could even presume that the 11 court had taken all of that under consideration. 12 MS. YEE: Okay. 13 MR. HORTON: So, unless someone heard something 14 different -- 15 MS. YEE: Okay, we have a motion to grant the 16 petition by Ms. Alby, second by Ms. Steel. 17 Please call the roll. 18 MS. OLSON: Madam Chair? 19 MS. YEE: No. 20 MS. OLSON: Ms. Alby? 21 MS. ALBY: Aye. 22 MS. OLSON: Ms. Steel? 23 MS. STEEL: Aye. 24 MS. OLSON: Mr. Horton? 25 MR. HORTON: No. 26 MS. OLSON: Ms. Mandel? 27 MS. MANDEL: Abstain. 28 MS. OLSON: Motion fails. 24 1 MS. YEE: Okay, may I have another motion 2 please? 3 Are you going to be abstaining? 4 MS. MANDEL: Yeah, I think I will, so -- 5 MS. YEE: Okay. 6 MR. HORTON: Well, maybe we ought to put it 7 over. 8 MS. YEE: Let's put this matter over then to 9 the next meeting. 10 ---o0o--- 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 25 1 MS. YEE: All right, next item, please?. 2 MS. OLSON: Our next item is C20, Kenneth 3 Kreisel. 4 ---o0o--- 5 C20 KENNETH KREISEL 6 NO. 470151 (AC) 7 ---o0o--- 8 MS. YEE: Okay, item C20, Kenneth Kreisel, may 9 I have a motion? 10 MS. MANDEL: Did we get any kind of written 11 statement from him? 12 MR. LEVINE: No. Depending on what you -- I 13 will contact him. 14 And if there is room for him to submit 15 something, I'll explain it to him and if not, I'll tell 16 him it's no, depending on what you decide as I -- you 17 could just deny. You could -- unless you -- you could, 18 of course, grant. 19 If you're going to deny on the substance -- you 20 could hold off any decision. 21 MS. MANDEL: Okay, we'll here's -- 22 MR. LEVINE: And we'll just bring it all back 23 to you. Or you could just leave it to us to deal with 24 the penalties. 25 MS. MANDEL: He sounded so incredibly confused 26 about whether -- whether and when and what he was 27 supposed to do about the penalty relief. 28 MR. LEVINE: I don't know if he'll be able to 26 1 come up with an adequate explanation. 2 MS. MANDEL: Yeah, I don't know. 3 MR. LEVINE: He was definitely confused about 4 it. 5 MS. MANDEL: He was confused. I don't know 6 that he will either. 7 So, and -- and I will -- want to make sure that 8 the Department looks into whether exempt funds were 9 levied. 10 So, I guess, it would be a motion to 11 redetermine and -- with the Department to investigate 12 whether they have, I mean -- levied exempt funds? 13 MR. LEVINE: And, if so? 14 MS. MANDEL: And, if so -- I mean, that's 15 supposed to be refunded, isn't it, if he -- 16 MR. LEVINE: Well, if you say so, then I won't 17 have to. 18 MS. MANDEL: -- well, I mean I don't want it 19 refunded if it's not supposed to be refunded, but if 20 they levied exempt funds and you're not supposed to levy 21 exempt funds, then -- 22 MR. LEVINE: I can't give you an answer. 23 MS. MANDEL: Okay. 24 MR. LEVINE: You're not supposed to levy exempt 25 funds. So, we're not supposed to be in this position. 26 That's the simple answer. 27 It makes sense to refund. 28 MS. MANDEL: So, you're going to look? So, 27 1 should I make this redetermine, look at the question of 2 the levy exempt funds and -- 3 MR. LEVINE: Refund it if it's required. 4 MS. MANDEL: -- and refund if it's required, 5 does that cover it? 6 MR. LEVINE: I think that covers it if you 7 trust us to make that decision. 8 We'll look into it and see what the -- if 9 it's -- what the remedy is. 10 MS. MANDEL: Okay. 11 MR. LEVINE: At this point, if you're holding 12 it -- 13 MS. MANDEL: And I'd only -- I'd only give -- 14 MS. YEE: Ms. Mandel, I'm -- 15 MS. MANDEL: -- 30 days to -- 16 MS. YEE: Yes. 17 MS. MANDEL: -- right, to figure out whether 18 he's going to give you a penalty statement or not. 19 MS. YEE: That's fine. 20 MS. STEEL: But this taxpayer still owes us 21 money, though? 22 MS. ALBY: Yeah. 23 MR. HORTON: Second what Ms. Mandel said. 24 MS. YEE: Okay, actually, Ms. Alby seconded the 25 motion. 26 Without objection -- 27 MR. LEVINE: I missed the 30 days. 28 MS. YEE: For the waiver? 28 1 MS. MANDEL: For the penalty. 2 MR. LEVINE: To talk to him and get it within 3 30 days and -- 4 MS YEE: At your discretion. 5 MS. MANDEL: Right. 6 And Ms. Steel's point is that if the money gets 7 refunded, he'd still owe the money, in which case he'd 8 have interest. 9 And, so, if he has to get the money back 10 because it was exempt, he needs to understand that and 11 maybe he doesn't want the money back, right? 12 MS. STEEL: Right. 13 MS. MANDEL: Is that Ms. Steel's point? 14 MR. LEVINE: I will discuss that with him after 15 we figure out -- 16 MS. MANDEL: Thank you. 17 MR. LEVINE: -- what it should be. 18 MS. YEE: Okay. Motion by Ms. Mandel, second 19 by Ms. Alby. 20 Without objection, that motion carries. 21 ---o0o--- 22 23 24 25 26 27 28 29 1 MS. YEE: Okay, next item? 2 MS. OLSON: Is C21, Store2door, Incorporated. 3 MS. YEE: Actually, that was a reaudit we voted 4 on. 5 MS. OLSON: I'm sorry. 6 Next one D1, Kamal F. Batech and Wafaa Elias 7 Batech. 8 ---o0o-- 9 D1 KAMAL F. BATECH AND WAFAA ELIAS BATECH 10 NO. 533038 (ET) 11 ---o0o--- 12 MS. YEE: Okay, item D1, Kamal F. Batech and 13 Wafaa Elias Batech, a motion, please? 14 MS. MANDEL: Move to redetermine. 15 MS. YEE: Motion -- 16 MR. HORTON: Second. 17 MS. YEE: -- motion by Ms. Mandel to 18 redetermine, second by Mr. Horton. 19 Without objection, that motion carries. 20 MS. MANDEL: If you -- 21 MS. YEE: Okay. 22 ---o0o--- 23 24 25 26 27 28 30 1 ---o0o---. 2 C14 SUSAN HILARY TREGUB 3 NO. 425147 (AS) 4 ---o0o--- 5 MS. OLSON: And the last one was C14, did you 6 want to discuss that or bring it back? 7 MS. YEE: C14, Members, Susan -- 8 MS. MANDEL: Can we -- can we maybe bring it 9 back? 10 MS. STEEL: I make a motion grant the 11 petition. 12 MS. ALBY: Second. 13 MS. YEE: Okay, motion by Ms. Steel to grant 14 the petition, second by Ms. Alby. 15 Please call the roll. 16 MS. OLSON: Madam Chair? 17 MS. YEE: No. 18 MS. OLSON: Ms. Alby? 19 MS. ALBY: Aye. 20 MS. OLSON: Ms. Steel? 21 MS. STEEL: Aye. 22 MS. OLSON: Mr. Horton? 23 MR. HORTON: No. 24 MS. OLSON: Ms. Mandel? 25 MS. MANDEL: Abstain, can we please bring this 26 one back? 27 MS. YEE: Yes. 28 MS. MANDEL: Thank you. 31 1 MS. YEE: This will be back on the next 2 calendar. 3 MS. OLSON: Okay. 4 MS. YEE: Okay, next item? 5 MS. OLSON: That's all our items today. 6 MS. YEE: Great, thank you very much. We are 7 adjourned. 8 ---O0O--- 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 32 1 REPORTER'S CERTIFICATE. 2 3 State of California ) 4 ) ss 5 County of Sacramento ) 6 7 I, JULI PRICE JACKSON, Hearing Reporter for the 8 California State Board of Equalization certify that on 9 OCTOBER 21, 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 pages 1 13 through 32 constitute a complete and accurate 14 transcription of the shorthand writing. 15 16 Dated: NOVEMBER 10, 2010 17 18 19 ____________________________ 20 JULI PRICE JACKSON 21 Hearing Reporter 22 23 24 25 26 27 28 33