BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION 450 N Street, Room 121 Sacramento, California REPORTER'S TRANSCRIPT APRIL 27, 2011 FINAL ACTIONS Reported by: Beverly D. Toms No. CSR 1662 1 1 2 P R E S E N T 3 4 For the Board Jerome E. Horton of Equalization: Chairman 5 Michelle Steel 6 Vice-Chairwoman 7 Betty T. Yee Member 8 George Runner 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 Division 14 15 16 --oOo--- 17 18 19 20 21 22 23 24 25 26 27 28 2 1 ITEM C6 2 Sacramento, California 3 April 27, 2011 4 ---oOO--- 5 MS. OLSON: Our next item -- excuse me, are 6 those matters that have been taken under submission. 7 Our first item is C6, Cypress Semiconductor 8 Procurement, LLC. 9 MR. HORTON: Discussion, Members? 10 MR. RUNNER: Is the -- I'd -- I'd -- I'm trying 11 to remember, in terms of the motion, the question before 12 us was whether or not it meets the test? To -- so 13 the -- 14 MR. HORTON: Mr. Levine. 15 MR. LEVINE: The question is whether this 16 taxpayer made the sale to the -- made a sale of this 17 property. One of the arguments was that the other -- 18 the owner of this taxpayer made the sale and we 19 addressed that in the D & R that it didn't matter who 20 they sold to, they sold as TPP. But that's the 21 question, did they sell it as TPP? 22 MR. RUNNER: So the motion would be to support 23 the taxpayer position? 24 MR. LEVINE: Or if -- to grant. 25 MR. RUNNER: To grant -- 26 MR. LEVINE: If that's -- 27 MR. RUNNER: -- grant -- 28 MR. LEVINE: -- what you -- 3 1 MR. RUNNER: -- grant, okay. 2 MR. LEVINE: If you disagree with our 3 conclusion -- 4 MR. RUNNER: Right, okay. 5 MR. LEVINE: -- I think I can make it simple. 6 MR. RUNNER: That's -- I move to grant. 7 MS. STEEL: Second. 8 MR. HORTON: It's been moved and second to 9 grant. 10 Discussion, Members? 11 Objection, Members? 12 MS. YEE: Objection. 13 MR. HORTON: Objection noted. 14 Ms. Olson, please call the roll. 15 MS. OLSON: Mr. Horton. 16 MR. HORTON: No. 17 MS. OLSON: Ms. Steel. 18 MS. STEEL: Aye. 19 MS. OLSON: Mr. Runner. 20 MR. RUNNER: Aye. 21 MS. OLSON: Ms. Yee. 22 MS. YEE: No. 23 MS. OLSON: Ms. Mandel. 24 MS. MANDEL: No. 25 MS. OLSON: Motion fails. 26 MR. HORTON: Members, there was -- there was 27 some -- I'm trying to recall now. We've -- it's been a 28 long day. 4 1 There was some items that I was -- wasn't quite 2 clear as to the relationship between the corporation and 3 the LLC, and whether or not the LLC retained the rights 4 and ownership of the property by virtue of their 5 contractual relationship as a wholly owned subsidiary 6 making the decisions for the -- for the partnership, and 7 that consequently the original purchase was a purchase 8 by the corporation and therefore tax due on the original 9 purchase price, and which would negate the lease. 10 But -- and I do understand that that was a 11 stretch, but I just didn't seem to have enough 12 information and would entertain an opportunity to -- to 13 ask the Department to look at that concern. But I'm 14 also prepared to move on the transaction. 15 MR. LEVINE: I could give you an answer to 16 that. When we have related parties like this, wholly 17 owned, we honor the transactions between them as long as 18 they're done at -- as if at arm's length. Basically, if 19 they recover all their costs and there's no -- I'm not 20 aware of any discussion that -- that the LLC was -- the 21 lease was not geared to recover all the costs. So the 22 Department accepted that as a legitimate transaction. 23 Otherwise, if they were not going to recover 24 all their costs, including their cost of having paid the 25 money up front and recover it in the lease receipts, we 26 would have disregarded that lease and said that's not a 27 real transaction. 28 MR. HORTON: Yeah, therein was the challenge 5 1 for me. I -- we went from a testimony of three months 2 to three years, and I can't remember the amount but I 3 think -- I thought it was three point some million 4 dollars in lease receipts and -- and so when the 5 question was asked relative to the cost and -- and the 6 transaction in and of itself I didn't get that much 7 clarity on it. 8 But I'm certainly prepared to make a decision 9 based on the facts that I hear today, but I'm also 10 prepared to consider -- 11 MR. RUNNER: Yeah, I think it was $670,000 12 worth of sales taxes paid during the lease. 13 MR. HORTON: Right. But to date I don't know 14 the purchase price. I don't know if this was -- as Mr. 15 Levine points out, whether or not the lease in and of 16 itself based on the relationship, based on the 17 acquisition cost would be considered not a lease and 18 actually an original purchase. 19 Anyway, I know it's a stretch but -- 20 MS. YEE: Yeah. 21 MR. LEVINE: It would be -- 22 MR. HORTON: -- it would still be a concern. 23 MR. LEVINE: -- too late to assess a purchase 24 price -- 25 MR. HORTON: Yeah. 26 MR. LEVINE: -- I note, so -- 27 MS. YEE: Mr. Chairman? 28 MR. HORTON: Yes. Member Yee. 6 1 MS. YEE: I'm prepared to move to redetermine, 2 and let me just say this, where I found I was troubled 3 was the Petitioner's great reliance on Regulation 1596 4 and the Standard Oil case and really not interpreting 5 the application of the United States Lines case 6 appropriately, which I think really plainly spoke to the 7 transfer of fixtures along with the land, so -- 8 MR. HORTON: Yes. So it's been moved by Ms. 9 Yee to redetermine. Is there a second? 10 MS. MANDEL: Second 11 MR. HORTON: Second by Ms. Mandel. 12 Objection, Members? 13 MR. RUNNER: Yes. 14 MR. HORTON: Objection noted by Mr. Runner. 15 Ms. Olson, please call the roll. 16 MS. OLSON: Mr. Horton. 17 MR. HORTON: Aye. 18 MS. OLSON: Ms. Steel. 19 MS. STEEL: No. 20 MS. OLSON: Mr. Runner. 21 MR. RUNNER: No. 22 MS. OLSON: Ms. Yee. 23 MS. YEE: Aye. 24 MS. OLSON: Ms. Mandel. 25 MS. MANDEL: Aye. 26 MS. OLSON: Motion carries. 27 ---oOo--- 28 7 1 ITEM C7a and C7b. 2 MS. OLSON: Our next item is C7a, Black Hawk 3 Tobacco, Incorporated and C7b, Frederick Allen 4 McAllister. 5 MR. HORTON: Discussion, Members? 6 Is there a motion? 7 MS. YEE: Move to redetermine. 8 MR. HORTON: Moved by Ms. Yee to redetermine, 9 second by Ms. Mandel. 10 Discussion, Members? 11 MS. STEEL: Objection. 12 MR. HORTON: Objection. Ms. Olson, please call 13 the roll. 14 MS. OLSON: Mr. Horton. 15 MR. HORTON: Aye. 16 MS. OLSON: Ms. Steel. 17 MS. STEEL: No. 18 MS. OLSON: Mr. Runner. 19 MR. RUNNER: Aye. 20 MS. OLSON: Ms. Yee. 21 MS. YEE: Aye. 22 MS. OLSON: Ms. Mandel. 23 MS. MANDEL: Aye. 24 MS. OLSON: Motion carries. 25 ---oOo--- 26 27 28 8 1 ITEM C9. 2 MS. OLSON: Our next item is C8, Edmond A. 3 Heinbockel and Lydia Rose Heinbockel. 4 MR. HORTON: Is there a motion, Members? 5 MS. YEE: Move to adopt the staff 6 recommendation. 7 MR. HORTON: It's been moved by Ms. Yee, second 8 by -- 9 MS. MANDEL: Second. 10 MR. HORTON: -- Ms. Mandel. 11 Objection, Members? 12 MS. STEEL: Objection. 13 MR. HORTON: Note -- so noted objection. 14 Ms. Olson, please call the roll. 15 MS. OLSON: Mr. Horton. 16 MR. HORTON: Aye. 17 MS. OLSON: Ms. Steel. 18 MS. STEEL: No. 19 MS. OLSON: Mr. Runner. 20 MR. RUNNER: Aye. 21 MS. OLSON: Ms. Yee. 22 MS. YEE: Aye. 23 MS. OLSON: Ms. Mandel. 24 MS. MANDEL: Aye. 25 MS. OLSON: Motion carries. 26 ---oOo--- 27 28 9 1 ITEM C9. 2 MS. OLSON: Our next item is C9, Media 3 Management Services, Incorporated. 4 MR. HORTON: Discussion, Members? 5 MR. RUNNER: I would move to grant. 6 MS. STEEL: Second. 7 MR. HORTON: It's been moved and grant -- moved 8 and second to grant. 9 Without objection, Members? 10 MS. YEE: Objection, I think. 11 MR. HORTON: Objection noted. 12 Ms. Olson, please call the roll. 13 MS. OLSON: Mr. Horton. 14 MR. HORTON: No. 15 MS. OLSON: Ms. Steel. 16 MS. STEEL: Aye. 17 MS. OLSON: Mr. Runner. 18 MR. RUNNER: Aye. 19 MS. OLSON: Ms. Yee. 20 MS. YEE: No. 21 MS. OLSON: Ms. Mandel 22 MS. MANDEL: No. 23 MS. OLSON: Motion fails. 24 MR. HORTON: Subsequent motion, Members? 25 MS. YEE: Let me see. 26 MS. MANDEL: I just feel so confused about the 27 top. 28 MS. YEE: Yeah. 10 1 MR. RUNNER: Well, I would hope that -- you 2 know, obviously I would -- I'd feel the taxpayer was -- 3 MR. HORTON: For purpose of discussion I'd move 4 to adopt staff recommendation. Is there a second for 5 purpose of discussion? 6 MS. YEE: I'll -- I'll second it to open 7 discussion. 8 MR. HORTON: It's been second. The item is now 9 on the floor for discussion. 10 MR. RUNNER: Okay, thank you. 11 MR. HORTON: Mr. Runner. 12 MR. RUNNER: Yeah, I would hope -- you know, 13 obviously I felt the taxpayer was wrong greatly in this 14 process and hoped that we could find a way through this 15 for him -- for them. 16 But certainly I would hope that we could 17 have -- at least help him avoid some penalty in this 18 process, and would seem to be at least a reasonable 19 reach. 20 MS. YEE: Can -- can we get a summary of the 21 penalties and how they might be subject to waiver. 22 MR. HORTON: Mr. Levine. 23 MR. LEVINE: Let me just refresh my 24 recollection. 25 MS. YEE: I think it's a finality and 26 amnesty-related penalties, right? 27 MR. LEVINE: Well, the amnesty penalty is 28 always a little bit easier to deal with. 11 1 MS. YEE: Uh-huh. 2 MR. LEVINE: The finality penalty -- they 3 didn't pay it because they didn't believe tax was due 4 and that's not really a good excuse. You have to 5 petition it or pay it and file a claim. 6 But, again, there was a statement signed under 7 penalty of perjury so the minimum daily requirements 8 were satisfied, and it's matter of discretion. 9 MR. RUNNER: The -- all -- all those matters 10 are -- all of those penalties are a matter of 11 discretion? 12 MR. LEVINE: Yes. The test of discretion is 13 whether it was reasonable to have not paid it, but the 14 standard not -- it's basically the opposite of being 15 negligent, showing that they weren't negligent in 16 failing that caused the penalty -- in the failure that 17 caused the penalty. 18 MS. MANDEL: Didn't -- didn't they also think 19 that their refund claim was kind of part of the appeal 20 somehow? 21 MR. LEVINE: That was one of the statements, 22 that it believed the claim for refund would be 23 consolidated into the appeal it planned to file for the 24 audit liability. I guess -- 25 MS. MANDEL: Well, that's the way it was 26 written up in the D & R. 27 MR. LEVINE: Right. 28 MS. MANDEL: I don't know what words the 12 1 taxpayer used -- actually used. 2 MR. LEVINE: I don't, either. 3 MS. MANDEL: Yeah. 4 MR. RUNNER: So the motion on the floor is the 5 staff recommendation, including all the penalties, 6 correct? 7 MR. LEVINE: That's the current motion. 8 MR. HORTON: Yes. Mr. Levine, I don't believe 9 I heard your advice relative to the amnesty penalty. 10 MR. LEVINE: I -- my advice have -- 11 MR. HORTON: -- 12 MR. LEVINE: -- doesn't change. Basically they 13 knew the amnesty program was available and they didn't 14 apply. And they chose not to. And so, basically we 15 don't recommend relief under those type of facts. 16 So our advice doesn't change. 17 MR. HORTON: Okay. Further discussion, 18 Members? 19 Hearing none, there's a motion and a second to 20 adopt staff recommendation. 21 Objection, Members? 22 MR. RUNNER: Yes. 23 MR. HORTON: Objection noted by Mr. Runner. 24 Ms. Olson, please call the roll. 25 MS. OLSON: Mr. Horton. 26 MR. HORTON: Aye. 27 MS. OLSON: Ms. Steel. 28 MS. STEEL: No. 13 1 MS. OLSON: Mr. Runner. 2 MR. RUNNER: No. 3 MS. OLSON: Ms. Yee. 4 MS. YEE: Aye. 5 MS. OLSON: Ms. Mandel. 6 MS. MANDEL: Aye. 7 MS. OLSON: Motion carries. 8 ---oOo--- 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 14 1 ITEM C10. 2 MS. OLSON: Our next item is C10, Living Spaces 3 Furniture, LLC. 4 MR. HORTON: Is there a motion for discussion 5 or -- I tell you what, why don't we just open it up for 6 discussion. I mean, it was pretty lengthy. I think 7 we're gonna -- 8 MS. YEE: Okay. I -- I can entertain a motion 9 if (inaudible). 10 MR. HORTON: Okay. Ms. Yee. 11 MS. YEE: I'm going to move to grant the 12 petition but to uphold the staff with respect to the 13 taxable fabrication labor. 14 MR. HORTON: At what -- what rate? There's a 15 25 percent and a 60 percent. 16 MR. RUNNER: Or 100 percent. 17 MR. LEVINE: A hundred percent of the 60 -- 18 MR. HORTON: Yeah. 19 MR. LEVINE: -- percent. 20 MR. HORTON: Yeah. 21 MS. YEE: Right. 22 MS. STEEL: Okay, let's make it clear, so that 23 60 percent means that it's total of warranty, that's 24 what -- 25 MR. LEVINE: What the Department did is first 26 they figured out that 60 percent of the business is 27 fabric. 28 MS. YEE: Fabric, right. 15 1 MR. RUNNER: Uh-huh. 2 MS. STEEL: Right. 3 MR. LEVINE: So they took out 40 percent and 4 then they looked at 60 percent -- 5 MS. STEEL: So that's not just a kit, itself, 6 but we are talking about whole warranty of the 60 7 percent? 8 MR. LEVINE: The -- the last -- when the 9 Department increased it, it was to regard the entire 10 charge for the -- 11 MS. STEEL: Of warranty. 12 MR. LEVINE: -- warranty for fabric -- 13 MS. YEE: Right. 14 MR. LEVINE: -- as fabrica -- as taxable 15 fabrication labor. 16 MS. STEEL: So it's entire warranty, that's 17 what -- 18 MR. LEVINE: Right, the entire charge -- 19 MS. STEEL: So we are -- 20 MR. LEVINE: -- for the fabric. 21 MS. STEEL: Okay, so we are saying that kit was 22 warranty? 23 MS. YEE: That -- that's -- 24 MS. STEEL: You know -- 25 MS. YEE: -- my mo -- 26 MS. STEEL: -- because there's other 27 services there, so it's not just kit itself was the 28 warranty, itself. So that's -- 60 percent was fabric -- 16 1 MS. MANDEL: Was all the charges -- 2 MS. STEEL: -- all the charges -- 3 MS. MANDEL: -- all the charges -- 4 MS. STEEL: -- of warranties that they -- 5 MS. MANDEL: -- on fabric. 6 MS. STEEL: Okay. 7 MS. YEE: Right. 8 MS. STEEL: I can't go for that. 9 MR. RUNNER: Can I -- can I get just some 10 clarification in regards to the -- some of the number 11 then? 60 -- this was -- it was determined that 60 12 percent was fabric and then the calculation then is a 13 hundred percent in regards to the fabrication. 14 How -- what the number of that? What's the -- 15 what's the liability? 16 MR. LEVINE: I did rough -- subtracting the 17 amount they concurred for other amounts looking at tax, 18 because that's the numbers I ran -- 19 MR. RUNNER: Right. 20 MR. LEVINE: -- the Department first assessed 21 tax of 72,721 on fabrication for fabric -- for the 22 fabric furniture and that's measured at 25 percent. 23 MS. MANDEL: 20 -- 25 percent of the 60 -- 24 MS. YEE: Of the 60 -- 25 MS. MANDEL: -- percent? 26 MS. YEE: Yeah. 27 MR. LEVINE: Right. We're only looking at the 28 fabric -- 17 1 MS. YEE: Right. 2 MR. RUNNER: Right. 3 MR. LEVINE: -- so we're only looking at 60 4 percent of the business. 5 MR. RUNNER: The total. 6 MR. LEVINE: And then for the warranties sold 7 for the fabric furniture -- 8 MS. YEE: Uh-huh. 9 MR. LEVINE: -- the Department assessed tax 10 based on 25 percent regarding that as the fabrication 11 labor charge. 12 MS. MANDEL: And their reason for 25 percent 13 was just because it was 25 percent? 14 MR. LEVINE: Yes, I believe that's it. Then it 15 was increased, they regarded -- still on the theory of 16 fabrication they increased it to a hundred percent and 17 that again by my calculations is 290,883, which would be 18 all of the -- for tax on the measure for all the charge 19 for fabric -- the warranty sold with the fabric. 20 MR. RUNNER: 293,000. 21 MR. LEVINE: 290,883. 22 MS. MANDEL: That -- that's the tax. 23 MS. STEEL: That's the 60 percent you're 24 talking about right now? 25 MR. LEVINE: Right, 100 percent of the 60 26 percent. 27 MR. RUNNER: 100 percent of the 60 percent, 28 okay. 18 1 But in testimony today I thought I heard them 2 say they don't spray every -- 3 MR. HORTON: Right. 4 MR. RUNNER: -- every -- every piece of fabric. 5 MS. YEE: Uh-huh. 6 MR. LEVINE: Well, yeah, maybe -- I understand 7 it like maybe they missed some but I -- I understood the 8 goal is to spray it all but -- 9 MR. HORTON: That the -- Members, if I may, 10 the -- the challenge is I think the Department testified 11 that the test was not specifically done. Evidently 12 there was some -- some evidence or some information that 13 caused them to come to a conclusion of the 25 percent. 14 MR. RUNNER: Can -- 15 MR. HORTON: But there was no -- in the working 16 papers there's no way to make a determination, so it's 17 kind of incumbent upon us to either yay or nay or find a 18 place somewhere in the middle or re -- remit it back for 19 an actual observation or some type of test that can 20 determine what the fabrication was. 21 MR. RUNNER: On the fabric? Yeah. 22 MR. HORTON: Or whatever the pleasure of the 23 Board is. 24 MS. MANDEL: Well, it almost seems like you'd 25 have to not -- you'd -- you'd be -- have to be asking 26 what -- what they would have charged someone. If I -- I 27 just wanted -- I just wanted to have a treated piece of 28 furniture and they paid nothing to Guard -- gave them 19 1 the -- they paid nothing to Guardian for the -- Guardian 2 gave them the -- the stuff that they're going to 3 spray -- now, granted, they had a tremendous markup on 4 the -- on the other but -- and they testified that it 5 takes their guy, you know, 30 seconds to sshht, spray -- 6 spray the thing. 7 So, I don't know, that they were able to get 8 1500 for a warranty, but I don't know how you -- how you 9 pick -- pick a number -- 10 MS. YEE: Yeah. 11 MS. MANDEL: -- for it. 12 MR. LEVINE: The Department does has -- have 13 experience. If you send it back the Department would 14 have to come up with the theory, it would come back to 15 you on nonappearance. If it made sense then you'd 16 accept it and if not then you'd have to either send it 17 back with more instructions or pick a -- 18 MS. MANDEL: Yeah. 19 MR. LEVINE: -- different number. 20 MS. MANDEL: Because it's -- it's hard because 21 what the people are buying, what -- what the sense seems 22 to be is what the people are really buying is an 23 optional warranty. That's what they want, that's what 24 they get, that's what they think they're paying for. At 25 least that's what I thought I was hearing generally. 26 And so, I -- I -- I just have a hard time 27 thinking how you -- how you -- 28 MS. YEE: I guess let me ask a question -- 20 1 MS. MANDEL: -- come up with a number. 2 MS. YEE: -- procedurally. 3 If we were to -- if I were to amend my motion 4 to send the matter back to determine the taxable measure 5 related to the fabrication labor should we hold up the 6 entire decision on -- on this case until then? 7 MR. LEVINE: If you've reached a decision 8 that -- there's no reason to calculate fabrication if 9 you were to adopt our recommendation. So the only 10 reason to do that is that you reject our decision -- our 11 recommendation so it -- I think it makes it simple if 12 you include that in your motion rather than just -- 13 MS. YEE: Okay. 14 MR. LEVINE: -- send it back, though we can 15 bring it back with a -- a number, but I think it's more 16 effective if you reject our recommendation -- 17 MS. YEE: Yes. 18 MR. LEVINE: -- that you just make that part of 19 your motion -- 20 MS. YEE: Okay. 21 MR. LEVINE: -- now. 22 MS. YEE: All right. Well, let me do this. 23 MS. MANDEL: And -- 24 MS. YEE: Well -- 25 MS. MANDEL: Okay. 26 MS. YEE: Let me revise the motion, maybe we 27 can get a little further. Incorporate, Mr. Chairman? 28 MR. HORTON: Yes, my concern goes to the lapse 21 1 of time. Clearly the taxpayer is asking for direction 2 and this has been a -- an excellent process, I think, 3 where the Board has exercised in its judiciary 4 discretion as it gets into this area of true object of a 5 contract. 6 And the motion of 25 percent of the 60 7 percent -- the only concern is going back conducting 8 further tests and evaluation and so forth. But that -- 9 you know, that's our -- our discretion. I'd certainly 10 be supportive of that. 11 MS. YEE: Is -- 12 MR. RUNNER: But the staff's recommendation was 13 a hundred percent of the 60 percent. 14 MR. LEVINE: The second conclusion -- 15 MR. RUNNER: Right. 16 MR. LEVINE: -- was a hundred percent, but the 17 Department conceded that it would not take that position 18 now. 19 MR. RUNNER: Correct, that's what I thought I 20 heard, yeah. 21 MR. LEVINE: And -- well, I hope if I pay 22 15,000 for a piece of furniture they'll spend a full 23 minute on it, but I think that part of it would be to go 24 and say, let me sit here and watch for a few minutes 25 while you do this. And they're doing the same thing -- 26 I'm sure this is not the type of thing that's going to 27 be different. They're doing what they were doing. the 28 Department can take a look, it won't take long, and then 22 1 they can think of some basis for calculating and -- and 2 we can bring it back and you can see if it makes sense 3 to you. 4 MS. YEE: Yeah, I mean, I -- I can't imagine it 5 would take that long, but -- 6 MR. HORTON: Okay. 7 MS. YEE: -- it's a matter of when we can get 8 somebody out to do that. So -- 9 MS. MANDEL: I have -- 10 MR. HORTON: So moved. 11 MR. RUNNER: I'm sorry, was that -- was that a 12 second on that? Or what was the motion? 13 MS. YEE: Well, let me revise the motion. It's 14 to grant the petition with respect to the warranty -- 15 MR. RUNNER: Uh-huh. 16 MS. YEE: -- but to send the matter back for 17 further refinement and determination of the taxable 18 measure related to the fabrication. 19 MR. HORTON: Okay. I'd second that motion. 20 MS. STEEL: What does that mean, exactly? 21 MR. HORTON: It means -- 22 MS. STEEL: Grant the petition with -- that 23 it's going to send it back. So Department is going to 24 decide -- I mean, what -- what base here, that some of 25 them sprayed and some of them not, or -- I mean -- 26 MR. HORTON: It -- 27 MS. STEEL: Actually, Department was very much 28 confused from the audit till Appeals Division -- right 23 1 now there is four or five steps where there's I think we 2 have to give them a little more clear guidancy here 3 because I don't know what kind of decision is going to 4 come out from the Department side. 5 MR. LEVINE: Can I address that? 6 MS. STEEL: That means that I cannot really 7 trust Department in this case. 8 MR. LEVINE: But that motion is kind of go back 9 to -- to the Department's original decision except don't 10 pick 25 percent, pick a number that fits the actual -- 11 MS. YEE: Exactly. 12 MS. STEEL: Okay. 13 MR. LEVINE: -- labor. 14 MS. YEE: Exactly. 15 MR. LEVINE: It's going to be substantially 16 less. 17 MS. STEEL: Okay, thank you. 18 MS. YEE: Yeah. 19 MS. STEEL: Okay. 20 MS. MANDEL: It's going to be like $50. 21 MS. YEE: Could be. 22 MR. LEVINE: Could be. 23 MS. MANDEL: In total. 24 MR. LEVINE: Well, probably each or something. 25 MS. MANDEL: No, not each. The thing's only 26 70, you're already above the 25 percent. 27 MS. STEEL: Right, you can't do that. 28 MR. HORTON: Okay. 24 1 MS. STEEL: Okay. 2 MR. HORTON: Further discussion, Members? 3 MR. RUNNER: Yeah, just help me understand 4 procedurally, is this -- in terms -- as that goes out. 5 How does that -- how does that work in terms of that 6 particular discussion, the Board makes -- or the staff 7 makes that determination, they have discussion with the 8 taxpayer, if there's an agreement, boom, it's done? If 9 it's -- 10 MR. LEVINE: No, we will -- 11 MR. RUNNER: No? Okay. 12 MR. LEVINE: -- unless -- unless that was part 13 of your order -- 14 MR. RUNNER: Okay. 15 MR. LEVINE: -- what the plan would be is the 16 Department will go and take a look, they'll write a memo 17 to Appeals and we will bring it back on a -- 18 MR. RUNNER: Okay. 19 MR. LEVINE: -- recommendation on an 20 adjudicatory calendar. 21 MR. RUNNER: Okay. So to come back here, how 22 long does that -- 23 MR. LEVINE: You'll have to -- 24 MR. RUNNER: -- process take? Is that two -- 25 two meetings away? 26 MS. YEE: Well, I -- I'd like to see if we can 27 get somebody out within the next 30 days. 28 MS. MANDEL: We need somebody to want to buy a 25 1 piece of furniture that's protected. 2 MS. YEE: I don't -- 3 MS. MANDEL: Otherwise he's not going to be 4 spraying anything. 5 MR. LEVINE: I think there will be some -- some 6 of these furnitures -- 7 MR. HORTON. Oh, yeah. 8 MS. MANDEL: Okay. 9 MR. LEVINE: --- without our employees having 10 to buy any furniture. 11 MR. RUNNER: So, this is in the next meeting -- 12 or two meetings from now, or three, is that -- 13 MS. YEE: I think at the first -- 14 MR. RUNNER: -- is that fair? 15 MS. YEE: -- three meetings, yeah. 16 MR. LEVINE: Yeah. 17 MR. RUNNER: Okay. Could -- I just -- I'm 18 trying to get a grasp -- 19 MR. LEVINE: Couldn't be May. 20 MR. RUNNER: -- of the process. 21 MR. LEVINE: Couldn't be May. June is -- is in 22 Culver City. 23 MS. YEE: But it could be on a nonappearance 24 calendar in Culver City, yes? 25 MR. LEVINE: Yeah, adjudicatory. 26 MR. RUNNER: Yeah. 27 MS. YEE: Yeah. 28 MR. LEVINE: It's -- 26 1 MR. HORTON: Yeah. 2 MR. RUNNER: Okay. 3 MR. LEVINE: I would suggest July, but -- 4 MS. YEE: Okay. 5 MR. HORTON: If the taxpayer's in agreement 6 with the audit amount they can actually pay it and stop 7 the interest from accruing, I believe. Yeah. 8 Further discussion, Members? 9 Objection, Members? 10 Hearing none, such will be the order. 11 MR. LEVINE: I'm sorry, what did -- was July -- 12 MS. YEE: I think July at the farthest out 13 point. 14 MR. LEVINE: Okay. 15 MS. YEE: Okay. 16 MR. RUNNER: Yeah. 17 ---oOo--- 18 19 20 21 22 23 24 25 26 27 28 27 1 REPORTER'SCERTIFICATE 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 April 27, 2011 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 27 13 pages constitute a complete and accurate transcription 14 of the shorthand writing. 15 16 Dated: May 6, 2011. 17 18 19 ____________________________ 20 BEVERLY D. TOMS 21 Hearing Reporter 22 23 24 25 26 27 28 28