1 BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION 2 450 N STREET 3 SACRAMENTO, CALIFORNIA 4 5 6 7 8 REPORTER'S TRANSCRIPT 9 FEBRUARY 23, 2011 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 Jerome E. Horton of Equalization: Chairman 4 5 Michelle Steel Vice-Chairwoman 6 7 Betty T. Yee Member 8 9 George Runner Member 10 11 Marcy Jo Mandel Appearing for John Chiang 12 State Controller (per Government Code 13 Section 7.9) 14 15 Diane G. Olson Chief, Board 16 Proceedings Division 17 18 For Board Staff: David Levine Tax Counsel IV 19 20 21 22 ---OOO--- 23 24 25 26 27 28 2 1 450 N STREET 2 SACRAMENTO, CALIFORNIA 3 FEBRUARY 23, 2011 4 ---o0o--- 5 MR. HORTON: Ms. Olson? 6 MS. OLSON: Okay, that concludes our 7 administrative session. 8 Our next matter is those items that have been 9 taken under submission. 10 MR. HORTON: Members, do you desire a break or 11 can we keep rolling? 12 MS. MANDEL: Keep going. 13 MR. RUNNER: Let me get ready here. 14 MS. YEE: Let's go. 15 MR. HORTON: Okay. 16 MS. OLSON: Our first -- would you like to take 17 a break? 18 MR. HORTON: Ms. Olson, how about -- can you 19 give us -- can you delineate the items that will be 20 before us? 21 And as you do that, we flip back through the 22 pages and get them? 23 MR. RUNNER: That would be nice. 24 MS. OLSON: Okay, our first item is C7a, 25 Richard Caldron and Cb, Caldron's Jewelers, Inc. 26 ---o0o--- 27 28 3 1 C7a RICHARD CALDRON 2 NO. 422927 (KH) 3 C7b CALDRON'S JEWELRY, INC. 4 NO. 418580 (KH) 5 ---o0o--- 6 MR. HORTON: Okay. 7 MS. MANDEL: Okay. 8 MR. HORTON: Thank you very much, Ms. Olson. 9 What's our first item? 10 MS. OLSON: That's our first item. 11 MR. HORTON: All right. Members, before us is 12 C7. 13 What's your pleasure? 14 MS. MANDEL: I think what I would like to 15 move -- and what I would like to move -- is a 30-30-30 16 and -- for the purpose of -- on the amnesty penalty, the 17 test period was a period outside the amnesty eligible 18 period. 19 So, if those books are available for the 20 Department to look at, I'd like them to look at them so 21 that we can know the answer to that question that I 22 asked. 23 Because we weren't looking at the amnesty 24 eligible period. And I understand that the taxpayer was 25 very focused on the statute of limitations issue, which 26 if he wins everything, you know, those things go away. 27 I'm not persuaded -- you know, I am not 28 persuaded by the statute of limitations. So -- but I -- 4 1 I'd like them to look, since they didn't look at the 2 amnesty eligible period. 3 MR. LEVINE: And -- 4 MR. HORTON: Okay. 5 MR. LEVINE: -- you are looking for -- 6 MS. MANDEL: Well -- 7 MR. LEVINE: -- questions of tax reimbursement? 8 MS. MANDEL: -- tax reimbursement that was the 9 in the journals that the guy thought was not his taxable 10 journals -- at least that's the way it's described in 11 the D & R. 12 MR. LEVINE: Yes. And I have talked to the 13 Department a little further -- and not that a 30-30-30 14 wouldn't be warranted, just to clarify things, but my 15 understanding is the Department did a bank deposit 16 analysis -- 17 MS. MANDEL: Right. 18 MR. LEVINE: -- and accepted, regardless of how 19 we have described it -- accepted all of the claimed 20 repair labor. 21 So, they didn't actually assess on fabrication 22 labor, they accepted that. And the deficiency is all 23 just, in effect, excess bank deposits. 24 But we can clarify that on -- 25 MS. MANDEL: Right. As you heard me go on at 26 length, I focused on it because of the way it was 27 written up in the D & R. And I really thought that 28 there was potential for not having -- potential for not 5 1 having the amnesty penalty on the way it was written up 2 in the D & R. 3 So, I -- and I -- anyway, so, that was why I 4 was thinking a 30-30-30. And on the -- with respect to 5 the amnesty penalty portion. 6 And I think I wound up a little bit confused 7 about the finality penalty. It sounds like they 8 wouldn't be able to pay it within the 30 days of our 9 decision, but it seemed that it would be appropriate to 10 give them that opportunity. 11 So, it would -- 12 MR. HORTON: All right, so moved. 13 Second by Ms. Yee. 14 Further, discussion Members? 15 Hearing none, such will be the order. 16 ---o0o--- 17 18 19 20 21 22 23 24 25 26 27 28 6 1 MR. HORTON: Next matter?. 2 MS. OLSON: The next item is C8, Guaranty RV, 3 Incorporated. 4 ---o0o-- 5 C8 GUARANTY RV, INC. 6 NO. 391657 (EH) 7 ---o0o--- 8 MR. HORTON: Discussion, Members? 9 Mr. -- Ms. Mandel? 10 MS. MANDEL: No, but he's -- 11 MR. HORTON: Mr. Runner? 12 MR. RUNNER: Well, yeah, I am -- I think there 13 were a number of issues that maybe could -- could -- 14 could have some discussion attached to them in regards 15 to staff going back and doing some things. 16 But I'm trying to -- there are -- there are 17 what, four issues here, two of which -- the first issue 18 was a split between the Oregon issue and the California 19 issue. 20 So, I'm trying to figure out exactly the way to 21 phrase my motion at this point. The bottom line is I'd 22 like to grant in the petition direction the Oregon 23 portion. And then at that point, part of the discussion 24 then is the fact that if you take away that large 25 portion of that of that particular tax liability, then I 26 question the whole issue of the negligence, in light of 27 the fact that that takes down the total amount by 80 28 percent. And I -- it seems to me that doesn't then come 7 1 up to that level of exposure. 2 MR. HORTON: Ms. Mandel? 3 MR. RUNNER: That would be my direction, my 4 thought. 5 MS. MANDEL: I want to go back to these 6 papers. 7 MR. RUNNER: Okay. 8 MS. MANDEL: On the Oregon sales, I tend to 9 agree on the Oregon sales. 10 The negligence penalty, I guess I'm not sure -- 11 I understand that it's -- you know, leaves us 12 substantially less of the tax measure outstanding once 13 you cut the Oregon sales, but for the full analysis of 14 the negligence penalty, I think I'd have to see kind of 15 what's left and on what basis the Department might think 16 it would still imposed. 17 And then there were a couple of other things, 18 like the one that Mr. Horton was talking about, which 19 was statistical samples, but certainly on the Oregon 20 sales, I -- I agree. 21 MR. HORTON: Okay. So, is that a -- 22 MR. RUNNER: Is it proper for us to do a series 23 of motions on a particular item like this? 24 Like, for instance, take one thing off the 25 table, such as the Oregon sales portion? 26 MS. YEE: You could probably do it issue by 27 issue, yes. 28 MR. LEVINE: If want to take one thing off the 8 1 table and deal with the rest, that's certainly 2 appropriate. 3 MR. RUNNER: Then I would make the motion to 4 take the Oregon sales issue portion of this off and find 5 in the Petitioner's favor. 6 MR. HORTON: Well -- so, there's a motion by 7 Mr. Runner, second by Ms. Mandel. 8 Discussion, Members? 9 I -- I am going to have to -- 10 MS. YEE: Objection. 11 MR. HORTON: -- have to oppose that motion on 12 the basis that the taxpayer, by their own testimony, 13 indicated that they participated in the sale and that 14 the out-of-state factory could not -- could not 15 transact -- could not make a transaction. 16 They could not consummate the transaction. The 17 only thing they could possibly do was deliver the 18 property out of state. 19 The transaction had to be consummated by a 20 dealer and the -- the taxpayer was silent on whether or 21 not they would -- sales had actually came to the Oregon 22 manufacturer, whether they would refer that to their own 23 sister corporation or to their competitor in California. 24 And I would venture to say capitalism sort of 25 charged them to try to enhance their own operations. 26 MS. MANDEL: Mr. Horton, the taxpayer not a 27 manufacturer, they are just a dealer. And they had 28 locations in California and they had a location in 9 1 Oregon, which was a much larger location. 2 It happened that the location in Oregon was 3 near to where there were some RV manufacturers. And, 4 so, I think that's where it got a little confused. 5 Because the RV manufacturers themselves, which 6 are separate people, did not make -- make sales, but 7 would refer someone to a dealer. 8 But the Oregon location that's involved in this 9 case is a dealership itself in Oregon. They also had 10 two dealership locations in California. 11 MR. HORTON: The logic behind the Oregon 12 retailer was the fact that the reason why the customers 13 would go there would be because they could, in fact, 14 benefit from viewing the manufacturing facilities and on 15 and on and on and that there was joint participation in 16 the marketing of these products. 17 So, now you have a customer remember that is 18 going to Oregon to save $9,000 in tax, arguably because 19 you avoid the -- you avoid the sales tax if you do so. 20 And then -- and, in turn, in going to Oregon 21 for that mere reason to -- you sort of take away that 22 reason when -- so, there was no continuity in their 23 argument if that was the basis for their argument and 24 there was, by their own admission, that their was 25 participation by the own -- their California entities -- 26 MS. MANDEL: I. -- 27 MR. HORTON: -- and shared management, shared 28 sales, in fact, they had shared revenue contractual 10 1 relationships with the salesmen. 2 And, so, it was -- it's just challenging for me 3 to look at the extenuating circumstances and the 4 evidence that's before us and then take -- take a 5 position that overturns the presumption of liability. 6 But, I mean, I think we're all entitled 7 to different views. 8 MS. MANDEL: Yeah. It's -- I think it's an 9 issue with the Montgomery Ward case that you have to 10 have actual participation in the particular 11 transactions. And it just seems that there's too much 12 assumption that the people must have gone into the -- 13 into California dealerships and been so advised. 14 I feel that there is a missing link. And in 15 light of the Montgomery Ward case, which is California 16 Court of Appeal that -- 17 MR. HORTON: Okay, further discussion, Members? 18 It's moved by Mr. Runner, second by Ms. Mandel. 19 Ms. Olson, please call the roll. 20 MS. OLSON: Mr. Horton? 21 MR. HORTON: No. 22 MS. OLSON: Ms. Steel? 23 MS. STEEL: Aye. 24 MS. OLSON: Mr. Runner? 25 MR. RUNNER: Aye. 26 MS. OLSON: Ms. Yee? 27 MS. YEE: No. 28 MS. OLSON: Ms. Mandel? 11 1 MS. MANDEL: Aye. 2 MS. OLSON: Motion carries. 3 MR. HORTON: The next matter? 4 MS. MANDEL: Or next issue? 5 MR. HORTON: Next issue? 6 MR. RUNNER: Part of it now goes to this issue 7 of negligence, right? 8 Now, in terms of the fact -- and I don't -- 9 again, you're going to have to help me here, is there a 10 way for us to hear back from staff in light of this 11 newer liability that's now placed, whether or not the 12 balance would typically expose a taxpayer to negligence? 13 MS. MANDEL: I -- one way to do that, there was 14 the other issue, when I was -- was the statistical 15 sampling, which there was a suggestion earlier that that 16 should -- could go for a -- 17 MR. HORTON: Pull out that one item? 18 MS. MANDEL: -- go for 30-30-30. 19 MR. RUNNER: Put the rest of it into a 20 30-30-30. 21 MS. MANDEL: Yeah. If there was interest in 22 doing that on statistical sampling, then, presumably, 23 staff will come back with some recommendation if they 24 think there's any overall impact on the negligence 25 penalties. 26 Is that how it normally -- 27 MR. LEVINE: We would get the numbers on how 28 the remaining -- how much the remaining liability 12 1 compares. 2 MR. RUNNER: That makes sense. 3 MR. LEVINE: What we have left, the -- not 4 counting the purchases subject to use tax on the sales, 5 if there is no further adjustments, it would be 7 and a 6 half million dollars, which by itself isn't chopped 7 liver. So -- 8 MS. MANDEL: Right. 9 MR. LEVINE: -- it's not an incidental amount, 10 but it still is relevant, the percentage it bears to the 11 reported sales. 12 And we'd have to compare that for the 13 California locations since we're pulling Oregon out. 14 So, we don't have that percentage. So, we certainly 15 would include that in our analysis and that would be a 16 factor. 17 MR. RUNNER: I think the balance of the issue 18 going to a 30-30-30 is certainly -- I'd make that 19 motion, if that's -- 20 MR. LEVINE: Okay, can I ask for a 21 clarification? 22 I am not clear on -- is the Board saying to go 23 back and replace the items that were pulled? 24 MS. MANDEL: I don't remember what Mr. Horton 25 was suggesting on the statistical sampling. 26 MR. LEVINE: What we did is we pulled -- when 27 there was inadequate documentation to -- the Department 28 regarded some as errors and some accepted replacement. 13 1 Appeals concluded that they all had to be the 2 same. And we're big on following the audit plan, which 3 the taxpayer agreed to, which in this case was that 4 missing documentation equals errors. So, we said treat 5 it all as error. 6 So, we'd need direction from you if you want us 7 to change that. But that's where it stands now is we 8 treated missing documentation as errors. 9 MR. HORTON: Mr. Runner? 10 MR. RUNNER: Just -- let me just see if I 11 understand that. 12 The idea that was once -- once -- when an -- 13 when an item was pulled from the -- from the pool, that 14 it was then counted as an issue against the taxpayer? 15 MR. LEVINE: When it's selected, taxpayer has 16 the burden of producing the documentation -- 17 MR. RUNNER: Right. 18 MR. LEVINE: -- so it's not taxable. If so, it 19 counts in the statistical sample as properly reported. 20 And if they can't provide documentation that shows it 21 was nontaxable, it's treated as taxable. 22 That could be because there is a smoking gun 23 that says it's taxable or it could be because they just 24 can't document it. 25 And there are some that were -- were just 26 missing documentation, I believe, are the ones 27 completely and those, the Department replaced a couple 28 and on the others treated them as errors. 14 1 And if -- I'm am not sure, but I think the ones 2 that were replaced were the Oregon ones, which are 3 pulled out. 4 So, if that's true, we just accepted what the 5 Department did for the California deficiency. 6 MR. RUNNER: Well, again my issue actually to 7 have it relooked at is the negligence issue in light of 8 the fact that, at least as I had heard staff come up 9 with it, it was what drove -- as they talked about the 10 size of the event that they assumed all of those were 11 tax due issues that were sold in Oregon. Therefore, 12 that's one of the major factors that drove the negligent 13 issue. 14 Now that that's gone, I just -- I don't know 15 whether or not the staff recommendation still comes up 16 to that level. That's -- that's my frustration with 17 being able to take an action on this now. 18 MR. HORTON: Members, if I -- if I may? 19 I mean, we as a body, could decide that the 20 $7 million understatement was the result of a 21 misunderstanding or something that was other than 22 negligence. 23 That's a decision that is predicated on the 24 Board's interpretation of where the -- how the error 25 occurred. Staff has the facts that are before them and 26 their decision is based on -- is a fact-based decision, 27 not what -- that will be based on the liability, the 28 relativity of the liability, the availability of the 15 1 records and so forth and the other provisions provided 2 for in the FAM. 3 So, I mean, if it's the desire of the Board, I 4 don't know if 30-30-30 is going to change their 5 recommendation. 6 Maybe Mr. Levine can sort of speak to that 7 based on his experience. 8 MR. LEVINE. There's a large -- again, if there 9 is no change -- I don't think even if there was it would 10 be a significant change -- there is still a large 11 liability. It has to be at least 12 percent, which in 12 some cases we consider a lot and in some cases we don't, 13 depends on the circumstance. 14 This taxpayer is an experienced taxpayer who 15 really should know the paperwork. So, I don't think 16 it's likely our -- our recommendation would change. 17 But, again, I don't have that number of how 18 much this liability bears to the total reported for 19 California and it is a factor. 20 MS. MANDEL: But it's 7 -- 7 disputed -- the 21 measure is upwards, almost close to at least 7 and a 22 half, if not 10 million? 23 MR. LEVINE: Yeah, it's 9 million included -- 24 including the purchases subject to use tax. 25 MS. MANDEL: It's 9 million, right. 26 MR. LEVINE: But on the ones that -- 27 MS. MANDEL: Right. So, it's 9 million -- 28 MR. LEVINE: Right, pretty sizable. 16 1 MS. MANDEL: That's a lot of -- a sizeable 2 measure itself. 3 I -- and if the statistical sampling thing is 4 not something that has to go back, then -- okay. 5 MR. HORTON: I mean I am good on the sampling 6 methods. 7 MS. MANDEL: Okay. 8 MR. HORTON: I mean, generally accepted 9 accounting principle says you can allow it. There's an 10 audit plan where previously established requirements and 11 so forth, it appears that it is. 12 We have to stay consistent with that in order 13 to -- in the interest of the taxpayer, actually, because 14 typically they set those plans in a way that they 15 believe will be in their best interests, so -- 16 MS. MANDEL: Okay. Then I am okay with the 17 rest, I just thought you would want to send it out on 18 the sampling. 19 MR. HORTON: No. 20 MS. MANDEL: Okay. 21 MR. HORTON: So, is there a motion on the 22 balance? 23 MS. MANDEL: Redetermine the balance then. 24 MR. HORTON: So moved to redetermine. 25 MS. YEE: Second. 26 MR. HORTON: Second by Ms. Yee. 27 Objection, Members? 28 MR. RUNNER: Yeah. 17 1 MR. HORTON: Ms. Olson, please call the roll. 2 MS. OLSON: Mr. Horton? 3 MR. HORTON: Horton, aye -- aye. 4 MS. OLSON: Ms. Steel? 5 MS. STEEL: Steel, aye. 6 MS. OLSON: Mr. Runner? 7 MR. RUNNER: No. 8 MS. OLSON: Ms. Yee? 9 MS. YEE: Aye. 10 MS. OLSON: Ms. Mandel? 11 MS. MANDEL: Aye. 12 MS. OLSON: Motion carries. 13 ---o0o--- 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 18 1 MS. OLSON: Our next item is C9, Granite 2 Business Solutions, Incorporated. 3 ---o0o--- 4 C9 GRANITE BUSINESS SOLUTIONS, INC. 5 NO. 492239 (KH) 6 ---o0o--- 7 MR. HORTON: Discussion members? 8 MS. MANDEL: This is the one where staff's 9 recommending deleting -- 10 MS. YEE: The one. 11 MS. MANDEL: -- the part measure. 12 MS. YEE: Right. 13 MR. LEVINE: $36,446. 14 MS. YEE: Okay. I'll move the revised staff 15 recommendation. 16 MR. HORTON: So moved by Ms. Yee. Second by 17 Ms. Mandel. 18 Discussion, Members? 19 Hearing none, such will be the order. 20 ---o0o--- 21 22 23 24 25 26 27 28 19 1 MS. OLSON: Our next item is D1, Sahand Enterprises, Incorporated. 2 This was a waived appearance. 3 ---o0o--- 4 D1 SAHAND ENTERPRISES, INC. 5 NO. 440941 (MT) 6 ---o0o--- 7 MS. MANDEL: Move staff recommendation. 8 MR. HORTON: Moved by Ms. Mandel. 9 MS. YEE: Second. 10 MR. HORTON: Second by Ms. Yee. 11 Discussion? 12 MS. STEEL: I have a problem with this case. 13 The storage tank fee was paid by lessee, the wrong 14 person, and he was asking -- this taxpayer was asking us 15 to get refund then we can go can after the owner of the 16 storage tank. 17 Why we are refusing to do that? 18 MR. LEVINE: Because the Petitioner paid the 19 amount. 20 MS. STEEL: Without knowing. 21 MR. LEVINE: No, it was pursuant to the 22 contract that the lessee -- as between the lessee and 23 the lessor, the lessee agreed to pay it. 24 And the lessee paid it under the owner's name. 25 So, it was a voluntary payment on behalf of the owner. 26 And it's not overpaid, it's properly due. And 27 it's also -- 28 MS. STEEL: It isn't overpaid, but paid by the 20 1 wrong person. 2 Do we have that contract? Somehow, I didn't 3 see it. 4 MR. LEVINE: I don't remember if we have it. 5 But I think this is a case where the person who 6 was the lessee figured out, after he agreed to pay it 7 and paid it, that, perhaps, he could have argued about 8 it with the lessor. 9 But, practically speaking, the lessor wouldn't 10 have entered into the lease with someone who wouldn't 11 pay the tax. 12 MS. STEEL: Do we that have lease? 13 MS. MANDEL: There's -- there is some pages of 14 it, looks like attached to the D & R. 15 MR. LEVINE: Exhibit 3. 16 MS. MANDEL: Exhibit 3 on the D & R, it's like 17 the next to last page of the materials. 18 MS. STEEL: I'll look at it because I cannot 19 open mine. 20 MS. MANDEL: Oh. 21 MS. STEEL: Thank you, Marcy. 22 MR. LEVINE: If you can read that, that would 23 amazing. 24 MS. STEEL: I can't. 25 MR. HORTON: Ms. Steel is amazing. 26 MS. STEEL: But this is the wrong person who 27 paid it without knowing. 28 But I don't see the contract that -- or lease 21 1 signed by this lessee with the lessor that he's paying 2 for the storage tank fee. 3 MR. LEVINE: The bottom line is this person 4 paid it without compunction from the Board on behalf of 5 the person who owed it. 6 MS. STEEL: This person paid it without knowing 7 that he is not liable for this tax, this fee. 8 You know what, let's just vote. 9 MS. MANDEL: Yeah, I think there's also -- at 10 least in -- it's come up in other areas of tax law, 11 longstanding principal, that when you pay someone else's 12 taxes for them that -- that you can be in the position 13 of -- you are in the position of a volunteer. 14 And, so, you don't get it back just because, 15 you know, I decided to pay Ms. Yee's taxes in her 16 name. 17 MS. YEE: Thank you. 18 MS. MANDEL: Don't count on that. 19 MR. RUNNER: This could come down to whether or 20 not that was a part of the contract and the agreement, 21 correct? 22 I mean, it's one thing to go ahead and pay 23 something that you didn't know you shouldn't have paid, 24 you went ahead and paid it for that person and later on 25 you found out, "Whoops, that's not part of my agreement 26 I made with you." 27 MR. LEVINE: I think that's a matter -- it 28 explains why it was done. It makes perfect sense why it 22 1 was done. 2 But when push comes to shove, it was -- it 3 could have been a gift. It could have been someone who 4 stepped up and said, "I'm going to pay for you. Give me 5 your return." 6 And they file it with us. We accept it. We 7 don't give it back. It was money due. 8 And that's why the person who owed it didn't 9 pay it, because someone else also paid it for them. 10 It's also why the Board didn't go after the 11 person who would have owed it because the volunteer 12 stepped up. 13 The contract is only relevant to understand why 14 the tenant did it. 15 It agreed to. 16 MS. STEEL: But, Mr. Levine, that's just 17 assumption here because what kind of people is going to 18 pay fees or taxes for other people? How many people out 19 there doing that? 20 So, well, I don't see the contract. I can not 21 read that. I don't think that's -- 22 MR. LEVINE: That's commonly done here, it's 23 why we have the problem with the ownership in the first 24 place that was put in the regulation a few years ago 25 because the people who actually do the business that 26 this tax is incurred on are the people who are running 27 the fuel through the tanks, the gas station that's a 28 tenant, but the owner is one who legally owes it. 23 1 So, it's common for the tenant to agree to pay 2 the tax because it's -- 3 MR. RUNNER: I agree. 4 MS. STEEL: Right, that's the reason that I 5 want to see the lease. 6 But I don't see the lease and I cannot -- 7 MR. LEVINE. We've been trying to get that. 8 MS. STEEL: -- I don't think this is -- 9 MR. HORTON: Mr. Levine? 10 MS. STEEL: So, we can just vote and then we 11 can just move on. 12 MR. HORTON: Thank you very much. 13 It's been moved by Ms. Yee, seconded by 14 Ms. Mandel. 15 Ms. Olson, please call the roll. 16 MS. OLSON: Mr. Horton? 17 MR. HORTON: Horton, aye. 18 MS. OLSON: Mr. Horton? 19 Did he say aye? 20 MS. YEE: Uh-huh. 21 MS. OLSON: Okay, thank you. 22 Ms. Steel? 23 MS. STEEL: No. 24 MS. STEEL: No. 25 MS. OLSON: Mr. Runner? 26 MR. RUNNER: No. 27 MS. OLSON: Ms. Yee? 28 MS. YEE: Aye. 24 1 MS. OLSON: Ms. Mandel? 2 MS. MANDEL: Aye. 3 MS. OLSON: Motion carries. 4 ---o0o--- 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 25 1 MS. OLSON: Our next item is D2, Roger Jacob Nehme. 2 ---o0o--- 3 D2 ROGER JACOB NEHME 4 NO. 552300 (ET) 5 ---o0o--- 6 MR. HORTON: Discussion, Members? 7 Is there a motion? 8 MS. YEE: Move the staff recommendation. 9 MR. HORTON: It's been moved by Ms. Yee. 10 MS. MANDEL: Second. 11 MR. HORTON: Second by Ms. Mandel. 12 Objection, Members? 13 Without objection, such will be the order. 14 ---o0o--- 15 16 17 18 19 20 21 22 23 24 25 26 27 28 26 1 MS. OLSON: Our next is D3, Vinay Vohra and Viramune 2 Ora. 3 ---o0o--- 4 D3 VINAY VOHRA AND VIKRAM VOHRA 5 NO. 553888 (ET) 6 ---o0o--- 7 MS. MANDEL: This is the one where the 8 gentleman said they might have the piece of paper of the 9 transfer but they kept it at the other store. 10 MS. STEEL: Grant the petition. 11 MR. RUNNER: Second. 12 MS. YEE: What was the motion? 13 MR. HORTON: It's been moved by Ms. Steel to 14 grant the petition, second by Mr. Runner. 15 Discussion, Members? 16 MS. YEE: Have we seen the document? 17 MS. MANDEL: The piece of paper? 18 MS. STEEL: When they bring the piece of paper. 19 MR. HORTON: Oh, you want to -- 20 MS. STEEL: Is that okay? 21 MR. HORTON: You want a 30-30 or -- 22 MS. STEEL: The motion would -- no, no, no, it 23 doesn't have to be 30-30 with the documents because we 24 already saw all the invoices. They had more that they 25 brought the extra invoices that taxpayer provided. 26 So, motion to grant the petition, but we can 27 ask taxpayer to bring the paperwork that documents it 28 was transferred from one store to another. 27 1 MR. HORTON: If we grant, there is no 2 recourse. 3 MS. STEEL: Okay, then we just grant. 4 MR. HORTON: Okay. It's been moved and 5 seconded to grant the petition. 6 Members, I have to share that -- 7 MR. RUNNER: If they're nice, they'll bring it. 8 MR. HORTON: -- I have got a tad bit of concern 9 because what happens when you transfer this product from 10 one store to another, you also transfer liability. 11 And, so, cognizant of the fact that if the 12 document does exist, you are actually transferring 13 liability because what you are theoretically is that 14 this store had this product, or the product came from 15 this store, so, you are shifting inventory around. 16 And, particularly when the taxpayer has -- 17 subsequent to this whole transaction could sit down and 18 write this document, give it to us and we would accept 19 it. 20 Except the consequences of them doing that 21 could be equal or greater to the -- than the 22 consequences that they face if they don't do. 23 So, that's always the challenge for me in 24 dealing with that. 25 MS. STEEL: I totally understand. 26 But this law is -- tried to get illegal items 27 these store owners are selling, but this was -- this 28 taxpayer was actually asking investigators to go to 28 1 another store to show that invoice, plus there is a 2 note. 3 But our investigators totally ignore that, 4 so -- 5 MS. MANDEL: That's right. 6 It would be kind of nice to see this transfer 7 document. 8 MR. HORTON: Okay, it's been moved to grant. 9 Second? 10 Ms. Olson, please call the roll. 11 MS. OLSON: Mr. Horton? 12 MR. HORTON: No. 13 MS. OLSON: Ms. Steel? 14 RHTT: Aye. 15 MS. OLSON: Mr. Runner? 16 MR. RUNNER: Aye. 17 MS. OLSON: Ms. Yee? 18 MS. YEE: No. 19 MS. OLSON: Ms. Mandel? 20 MS. MANDEL: No, but I'd like to see the 21 transfer document. 22 They made it sound like they really were 23 keeping a record, but at the other store. 24 MR. HORTON: Is there a motion to -- 25 MS. MANDEL: So, could we -- 26 MR. RUNNER: Have a 30-30-30? 27 MS. YEE: Yeah, let's put it over until we -- 28 MR. HORTON: Do you want to put it over or -- 29 1 MS. MANDEL: Ask them to -- with the 2 30-30-30. 3 MR. HORTON: Okay. 4 The motion's for a 30-30-30. 5 MS. YEE: Second. 6 MR. HORTON: Moved by Ms. Mandel, second by 7 Ms. Yee. 8 Without objection, Members, such will be the 9 order. 10 ---o0o-- 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 30 1 MS. OLSON: Our next item, and last for today, 2 is D4, Kashmir Singh Khinda. . 3 ---o0o--- 4 D4 KASHMIR SINGH KHINDA 5 NO. 536518 (ET) 6 ---o0o--- 7 MR. HORTON: Discussion, Members? 8 Hearing none, is there a motion? 9 MS. YEE: Move the staff recommendation. 10 MR. HORTON: It's moved by Ms. Yee, second 11 by -- 12 MS. MANDEL: Second. 13 MS. STEEL: Objection. 14 MR. HORTON: I didn't hear the second. 15 MS. MANDEL: Oh, second. 16 MR. HORTON: Okay, second by Ms. Mandel. 17 Noted objection. 18 Ms. Olson, please call the roll. 19 MS. OLSON: Mr. Horton? 20 MR. HORTON: Aye. 21 MS. OLSON: Ms. Steel? 22 MS. STEEL: No. 23 MS. OLSON: Mr. Runner? 24 MR. RUNNER: Aye. 25 MS. OLSON: Ms. Yee? 26 MS. YEE: Aye. 27 MS. OLSON: Ms. Mandel? 28 MS. MANDEL: Aye. 31 1 MS. OLSON: Motion carries. 2 ---o0o--- 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 32 1 ---o0o--- 2 REPORTER'S CERTIFICATE 3 4 State of California ) 5 ) ss 6 County of Sacramento ) 7 8 I, JULI PRICE JACKSON, Hearing Reporter for the 9 California State Board of Equalization certify that on 10 FEBRUARY 23, 2011 I recorded verbatim, in shorthand, to 11 the best of my ability, the proceedings in the 12 above-entitled hearing; that I transcribed the shorthand 13 writing into typewriting; and that the preceding pages 1 14 through 32 constitute a complete and accurate 15 transcription of the shorthand writing. 16 17 Dated: March 3, 2011 18 19 20 ____________________________ 21 JULI PRICE JACKSON 22 Hearing Reporter 23 24 25 26 27 28 33