1 BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION 2 450 N STREET 3 SACRAMENTO, CALIFORNIA 4 5 6 7 8 REPORTER'S TRANSCRIPT 9 NOVEMBER 18, 2010 10 11 12 13 14 15 FINAL ACTIONS 16 (HELD OVER FROM NOVEMBER 17, 2010) 17 18 19 20 21 22 23 24 25 26 27 REPORTED BY: Kathleen Skidgel 28 CSR NO. 9039 1 TOWN & COUNTRY DEPOSITION SERVICE (530) 642-0333 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 13 Board Proceedings Division 14 For Board of David Levine Equalization Staff: Staff Counsel 15 16 17 ---OOO--- 18 19 20 21 22 23 24 25 26 27 28 2 TOWN & COUNTRY DEPOSITION SERVICE (530) 642-0333 1 450 N STREET 2 SACRAMENTO, CALIFORNIA 3 NOVEMBER 18, 2010 4 ---o0o--- 5 MS. YEE: Good morning. Let us convene today's 6 Board of Equalization meeting. 7 Ms. Olson, what I'd like to do is to return back to 8 the items that were held under submission from yesterday's 9 calendar if we could. And thank you, Members, for your 10 indulgence in allowing me to review the proceedings in 11 those matters overnight. 12 And our first item held under submission from 13 yesterday? 14 MS. OLSON: Our first item is C2, Mark Dieter 15 Hanf. 16 MS. YEE: Okay. 17 MS. MANDEL: I'd move to redetermine and have staff 18 give them whatever OI -- offer in compromise information is 19 appropriate. 20 MS. YEE: Okay. 21 MR. HORTON: Second. 22 MS. YEE: All right. We're on item C2, Mark Dieter 23 Hanf. And we have a motion by Ms. Mandel to redetermine 24 and direct staff to provide information about offer in 25 compromise payment plan, other sources of assistance. 26 Second by Mr. Horton. 27 Discussion? Objection? Hearing none, that motion 28 carries -- oh, I'm sorry. Ms. Steel, please. 3 TOWN & COUNTRY DEPOSITION SERVICE (530) 642-0333 1 MS. STEEL: Can I ask Mr. Levine, that it really 2 bothers me about embezzlement means that there's no fund. 3 So by the law, that there's anything that we can do for the 4 taxpayer that -- you know, when they are supposed to have 5 fund willfully failed when funds available. So if there's 6 no funds because somebody took it, is there any way that we 7 can help taxpayer to proportionally or -- I mean, I know 8 I'm pushing it, but -- stretching it a little bit here, but 9 by the law -- 10 MR. LEVINE: No, actually you're not. If the 11 embezzlement had taken all the funds so there were no funds 12 available, then he wouldn't have been willful. But the 13 evidence, and I never -- I don't recall hearing him ever 14 refute this, was that they were still selling yachts. So 15 money was coming in. 16 So they -- assuming there was embezzlement, as it 17 sounds, clearly they lost a big chunk of money, but they 18 still had money coming in. So they would have been able to 19 pay the tax, even though they were hurt badly from the 20 embezzlement. 21 MS. STEEL: So my next question is, when there was 22 embezzlement and that amount has to be proved by the Court 23 or like a police or some record -- because according to 24 this taxpayer, that they proved only $140,000. So if 25 that -- kind of like proof of that embezzlement, what kind 26 of documents or what do we need to, you know, give them any 27 break there? 28 MR. LEVINE: Well, what we're looking -- what we're 4 TOWN & COUNTRY DEPOSITION SERVICE (530) 642-0333 1 focusing on is at the time the taxes are due, is there 2 money available to pay it? And if they're receiving -- 3 MS. STEEL: So if there's a stream of money coming 4 in -- 5 MR. LEVINE: If there's a stream, even if they had 6 a half million dollars in the bank and someone took it two 7 weeks before, but they're selling enough vessels to have 8 it, then we would say you had the money for taxes. 9 MS. STEEL: Okay. Thank you. 10 MS. YEE: Okay. Thank you, Ms. Steel. Thank you, 11 Mr. Levine. 12 We have a motion, a second. Without objection, 13 motion carries. 14 Next item, please. 15 MS. OLSON: Next item is C3, Five Friends. 16 MS. YEE: Okay. Item C3 from yesterday's calendar, 17 Five Friends. May I have a motion? 18 MS. MANDEL: Move to redetermine. 19 MR. HORTON: Second. 20 MS. YEE: Motion by Ms. Mandel to redetermine. 21 Second by Mr. Horton. 22 Discussion? 23 MS. STEEL: I don't have discussions, but I have 24 objection. 25 MS. YEE: Okay. 26 Ms. Alby, are you okay? 27 MS. ALBY: Yeah. I didn't have it. I couldn't 28 remember it. 5 TOWN & COUNTRY DEPOSITION SERVICE (530) 642-0333 1 MS. YEE: Oh, okay. No problem. 2 All right. We have a motion by Ms. Mandel, second 3 by Mr. Horton to redetermine. Please call the roll. 4 MS. OLSON: Madam Chair. 5 MS. YEE: Aye. 6 MS. OLSON: Ms. Alby. 7 MS. ALBY: No. 8 MS. OLSON: Ms. Steel. 9 MS. STEEL: No. 10 MS. OLSON: Mr. Horton. 11 MR. HORTON: Aye. 12 MS. OLSON: Ms. Mandel. 13 MS. MANDEL: Aye. 14 MS. OLSON: Motion carries. 15 MS. YEE: Okay. Next item, please. 16 MS. OLSON: Our next item is C4, Rong Gin, 17 Incorporated. 18 MS. YEE: Okay. Item C4 from our calendar 19 yesterday, Rong Gin, Incorporated. May I have a motion? 20 MS. MANDEL: Move to redetermine and also with 21 information on offer in compromise. I think they did go 22 outside yesterday -- 23 MS. YEE: Mm-hmm. 24 MS. MANDEL: -- to talk about offer in 25 compromise. 26 MS. YEE: Okay. 27 MR. LEVINE: Ms. Fong confirmed that she did talk 28 with them. 6 TOWN & COUNTRY DEPOSITION SERVICE (530) 642-0333 1 MS. MANDEL: Okay. Thank you. 2 MS. YEE: All right. Thank you. 3 Motion by Ms. Mandel to redetermine, with direction 4 to the staff to work with petitioner on offer in 5 compromise. Second by Ms. Alby. 6 Discussion? 7 MS. STEEL: I think this is petitioner's first 8 audit, and I think we should abate the negligence penalty 9 at least. So I would vote no for this. 10 MS. YEE: Okay. All right. Any other discussion? 11 Ms. Alby. 12 MS. ALBY: I'm going from memory because I don't 13 have that folder with me this morning. Didn't Appeals 14 already give them about a 40, 50 percent reduction already? 15 MR. LEVINE: Yes. We didn't like the audit 16 methodology of the Department. But they did have enough 17 information, and we used the credit card ratio which is 18 normally a pretty good method, and it reduced it by about 19 half. 20 MS. ALBY: Thank you. 21 MS. YEE: Okay. Very well. We have a motion, a 22 second, to redetermine, with staff working with petitioner 23 on the offer in compromise. Please call the roll. 24 MS. OLSON: Madam Chair. 25 MS. YEE: Aye. 26 MS. OLSON: Ms. Alby. 27 MS. ALBY: Aye. 28 MS. OLSON: Ms. Steel. 7 TOWN & COUNTRY DEPOSITION SERVICE (530) 642-0333 1 MS. STEEL: No. 2 MS. OLSON: Mr. Horton. 3 MR. HORTON: Aye. 4 MS. OLSON: Ms. Mandel. 5 MS. MANDEL: Aye. 6 MS. OLSON: Motion carries. 7 MS. YEE: Okay. 8 MS. OLSON: Okay. That concludes our matters that 9 were taken under submission from yesterday. 10 MS. YEE: Okay. Thank you very much, Ms. Olson. 11 (The matter concluded at 9:41 a.m.) 12 ---oOo--- 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 8 TOWN & COUNTRY DEPOSITION SERVICE (530) 642-0333 1 REPORTER'S CERTIFICATE 2 3 State of California ) 4 ) ss 5 County of Sacramento ) 6 7 I, KATHLEEN SKIDGEL, Hearing Reporter for the 8 California State Board of Equalization certify that on 9 November 18, 2010 I recorded verbatim, in shorthand, to the 10 best of my ability, the proceedings in the above-entitled 11 hearing; that I transcribed the shorthand writing into 12 typewriting; and that the preceding pages 1 through 8 13 constitute a complete and accurate transcription of the 14 shorthand writing. 15 16 Dated: December 3, 2010 17 18 19 ____________________________ 20 KATHLEEN SKIDGEL, CSR #9039 21 Hearing Reporter 22 23 24 25 26 27 28 9 TOWN & COUNTRY DEPOSITION SERVICE (530) 642-0333