BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION 450 N Street, Room 121 Sacramento, California REPORTER'S TRANSCRIPT JULY 27, 2011 ITEM P7 EXTERNAL AFFAIRS DEPUTY DIRECTOR'S REPORT 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 Board of Equalization 15 Staff: Anita Gore Deputy Director, External 16 Affairs Department 17 Jeff McGuire Deputy Director, Sales and 18 Use Tax Department 19 --oOo--- 20 21 22 23 24 25 26 27 28 2 1 Sacramento, California 2 July 27, 2011 3 ---oOO--- 4 MR. HORTON: Ms. Olson, what is the next 5 matter? 6 MS. OLSON: Our next matter is P7.1, Use Tax 7 Survey/Statewide Poll. 8 MS. GORE: Good afternoon, Chairman -- 9 MR. HORTON: Good afternoon. 10 MS. GORE: -- and Members. 11 I'm Anita Gore, Deputy Director of the External 12 Affairs Department and with me is Jeff McGuire, the 13 Deputy Director of the Sales and Use Tax Department. 14 You have before you a memo outlining the 15 prospect of polling consumers and taxpayers about Use 16 Tax. What they know about it. If they pay it. If they 17 don't pay it, why they don't pay it. And what it would 18 take them to pay it. 19 We're moving forward with an internal effort, 20 distributing the survey to our event participants. 21 We've just gotten a handful of responses so far but it 22 does give us data that we didn't previously have and we, 23 as staff, believe it's a worthwhile effort. 24 However, we're not professional pollsters 25 trained to obtain statistically significant data. If we 26 wanted to obtain that kind of data we'd need to hire a 27 firm with that sort of expertise. 28 As outlined in the memo you have before you, 3 1 for as little as $25,000 or as much as $50,000 a private 2 polling firm could be hired to create and conduct a 3 survey and offer analysis of the results. 4 This information would be helpful in our 5 ongoing Use Tax marketing efforts. We would know who 6 our target audience might be and have an indication of 7 what might influence people to pay Use Tax. 8 Once we have the information we can begin to 9 develop a marketing plan and determine if a broad-based 10 campaign, including paid advertising, would be 11 appropriate. And we are here to answer any questions 12 you have on this issue. 13 MR. HORTON: Discussion, Members. 14 Mr. Runner. 15 MR. RUNNER: Thank you. And I think that one 16 of the things that I -- I think was touched on even in 17 an earlier comment that Member Yee made is that this 18 whole discussion of -- of Use Tax, of consumers' roles, 19 of -- of retailers' roles is something that we struggle 20 with. 21 We -- we clearly disagree on many of the issues 22 about it. But I think that one of the issues that -- 23 that we can agree on is that our efforts to go ahead 24 and -- and collect and get remittance on the individual 25 taxpayers' side when it comes to the Use Tax is -- is -- 26 is -- is not very spectacular, and in fact anything 27 that's spectacular about it is -- that it -- is that it 28 fails. 4 1 And let me just kind of -- and even -- I mean, 2 even some of the issues that we dealt with even in this 3 last day kind of point that out. We had a discussion 4 yesterday in regards to the -- to the chart. The goal 5 of the chart if everybody would participate in that 6 chart was going to be -- I mean, would -- would probably 7 bring in, if everybody participated at -- at a level -- 8 at the appropriate level, about $700 million. 9 However, I think the Legislature has booked $10 10 million on it. You know, clearly we'd know that that's 11 not going to be the cure-all. It's another tool. 12 The Qualified Purchaser program, right now 13 we're coming back at about 90 percent saying zero. So, 14 clearly, again, an outreach. And, again, the numbers 15 there -- the booked numbers that that program was 16 supposed to collect, I think we have been collecting at 17 the most -- you know, and esp -- and I think it will go 18 down in the future -- but maybe 20 percent of what the 19 book number was supposed to be. 20 So clearly we are just not getting an 21 understanding out there. I think to a degree what our 22 tendency has been is to say we just inform people about 23 the Use Tax and therefore they will pay. And I think 24 that clearly is not the case. And I think that it's 25 time for us then to ask ourselves why. What's happening 26 out there? What can we do differently? 27 And to do that I think we need to figure out 28 what is the attitudes of Californians when it comes to 5 1 that issue. 2 The -- this last week I was struck by the poll 3 that the L. A. Times did -- I think I mentioned it 4 yesterday -- where 80 -- 82 percent I think it was or 5 something like that -- 82 or 83 percent of the people 6 said they pay little -- or they buy little or nothing on 7 the internet. 8 Now, I don't know what the definition of 9 "little" is, but it -- it certainly struck me that 10 that's a figure that caught me off guard. And that was 11 a poll. That wasn't just somebody's just little survey; 12 that was a poll. 13 And so I'd like to know more about that. I'd 14 like to know more about that in regards to who -- when 15 they say "little", what's little? 16 I'd like to know a little bit more so that we 17 can make good decisions in regards to that. 18 The other issue that we are I think -- and, 19 again, in the context of Use Tax and all these 20 discussions that are taking place -- the L. A. Times had 21 an editorial this weekend where again they don't credit 22 the BOE very well with our education to Use Tax and 23 think -- in fact, they call us out that we don't. 24 And so I -- my thought is that I think -- I 25 think it's good to do these surveys. We have -- we 26 interface a lot with -- with taxpayers on our different 27 events, and I think that's good information that we can 28 use. 6 1 But on the other side of that, I would really 2 encourage us to go outside professionally to determine 3 in measure who are those folks out there and what do 4 they know? And how -- how much do they purchase? And 5 if they purchased and they didn't know then they 6 don't -- then they don't remit. But how many of them 7 actually know and don't remit? And then what are the 8 arguments that can be made in order to help motivate and 9 change their behavior, because ultimately that's what we 10 should be doing, is we should be trying to figure out 11 how to change a behavior. 12 I was struck watching -- or not -- not 13 watching, listening to the radio as I was thinking about 14 this, and all of a sudden a commercial came on for Cal. 15 Recycle. And I thought, you know, we're spending 16 millions of dollars on helping people to know how often 17 they need to change their oil; they don't need to do it 18 every 6,000, they only need to do it every three. We're 19 telling them not to throw their batteries away. 20 And so we're spending millions of dollars to 21 educate the public at that point, but yet we're not 22 spending any money, really, on educating the public in 23 regards to the issue of Use Tax, and we don't even know 24 what arguments to use for them if we were going to 25 educate them. 26 So my opinion is that this is a very little 27 investment for what could be a very big return for us to 28 try to enhance then and help people understand the 7 1 responsibility of Use Tax. 2 So I appreciate the -- the information and I 3 would hope that we could ask the staff to move forward 4 in order to both do their own surveying internally and 5 our people, but also go externally and get some good 6 information that then we can create a strategy out there 7 as to how we can communicate. 8 MR. HORTON: Thank you, Mr. Runner. 9 Further discussion, Members? 10 MS. YEE: Yeah. 11 MR. HORTON: Member Yee. 12 MS. YEE: Thank you. I -- I'm not opposed to 13 education. In fact, we need to do more of it. 14 I guess what I'd like to see is maybe broader 15 dissemination of the survey that we're already 16 undertaking. We have -- I think it was suggested here 17 that we would look to disseminate the surveys to our 18 interested parties list and some of the other external 19 parties, which I think is helpful. I think some of the 20 tax preparer -- practitioner community as well as some 21 of the professional associations would be helpful. 22 I mean, I think there's a lot we can do with 23 respect to the current survey to get at least basic 24 information about what we may want to do in terms of a 25 focused educational effort with respect to the Use Tax. 26 But I'd like to see us, Mr. Runner, look much more 27 broadly beyond just those who attend our events and I 28 think we have a lot of good relationships with those who 8 1 would be cooperative in disseminating the survey. 2 At least getting some of that information back first. 3 I'm not adverse to having an outside entity 4 come in, but I don't know how to define that right now, 5 in terms of what we would want that entity to do. And I 6 think I'd like to learn more with respect to some of the 7 responses we get back more broadly after we get the 8 survey out to a -- a greater number of people. 9 Thank you. 10 MR. HORTON: Further discussion, Members? 11 Any Members want to take a shot at giving some 12 directions to staff? 13 MR. RUNNER: Well, I -- I -- let me speak real 14 quick to the issue. I think we're -- I think we know 15 what questions to ask in a poll. And I think that -- 16 that the staff and professional pollsters know what 17 questions to ask the poll. And I think that their -- 18 again, I don't mind sampling and taking a look, and I 19 think that internally and -- and broadening it out to 20 those people who we already had contact, but yet I think 21 we, particularly as elected officials, understand the 22 difference between a self-selected survey of people and 23 a -- and a scientifically established poll which goes 24 out to seek what Californians feel, because any numbers 25 that we -- any people who we have are already kind of 26 a -- they're self-selected, we have a relationship with 27 them in some way or another. 28 And we can't -- we could never, never apply 9 1 that then to how California feels. And so just as I 2 think for us we would -- we would never -- if we were 3 running an election, say, hey -- to our staff, hey, 4 let's go ahead and call up our mailing list and ask them 5 a few questions, and let's see how we're doing. Because 6 we would know that they're self-selected. And we'd 7 know, we would -- we would ask for an unbiased poll to 8 ask the kinds of questions, why -- I mean, I think -- 9 I'm stunned, maybe others aren't -- I'm stunned that 82 10 percent of the people or whatever said they pay little 11 or -- or they buy little or -- nothing or little on the 12 internet. 13 I'm -- I'm stunned by that number. And I'd 14 like to know more about that number. And I'm not going 15 to find out more about that number by internal polls -- 16 or internal surveys. I'm only going to go out and do 17 that by professionally going out and getting that 18 information and then being able to act on it. 19 So I -- you know, I -- we should be doing 20 absolutely everything. Clearly, clearly, we've got a 21 huge gap there that we all keep talking about. And it 22 seems to me a very small investment to get information. 23 And I'm confident the staff would have the capacity 24 along with -- with the contracting with professionals 25 out there at a very reasonable price -- I think we 26 found -- the price there is between 25 and -- and $50 27 thousand. The pollsters have told us that they would be 28 adequate in doing that. 10 1 So I would -- I would -- I would ask one of 2 the -- I would -- I would -- I'll segment this. I would 3 ask the staff to do two things. Number one, continue to 4 expand the internal pro -- surveying and accumulate that 5 information and learn from it, glean from it and get 6 back to us on what they find on that, but on top of that 7 I would ask for us to go out and engage a professional 8 poll on the issue of Use Tax and public opinion in 9 regards to Use Tax. 10 MS. YEE: I -- 11 MR. HORTON: Members, I'm only going to 12 interject because I get the sense that it sounds like we 13 have a win-win situation here, as if though -- I mean 14 that both of the Members are saying somewhat the same 15 thing. And -- and I'm not going to interpret for them. 16 I'm going to go to them in a minute. 17 But let me put this on the table, if you will, 18 just for discussion. Mr. Runner has indicated that he 19 has been informed by a Los Angeles poll and that 20 information has certainly enabled him to formulate what 21 we might ask about in the -- in a future poll. 22 And so staff is sharing with us that they're -- 23 they're conducting an internal poll and we're going to 24 expand that to include others, and that information may 25 be informative, as well, as we go forth and look at the 26 possibility of doing an outside polling. 27 The challenge that we have with those polls -- 28 or outside polling is always how do you formulate the 11 1 questions and relative to the Board of Equalization is 2 unique -- I mean there are certain -- you've got to be 3 very careful in how you put those questions together. 4 It's not only from a legal perspective but also from 5 just soliciting the right questions and so forth. 6 So it would be informative to have some 7 direction or information on how we formulate this. Not 8 necessary -- didn't sound like the debate is to do it or 9 not to do it, is that we are not adverse -- at least I'm 10 hearing that the body is not adverse to doing it, it 11 just want to have some -- be informed about how to go 12 about doing it. 13 MS. MANDEL: Mr. Horton -- 14 MR. HORTON: I -- I re -- I -- in the 15 Legislature a poll was conducted on all of the Members 16 of the Legislature. And what the poll said was, is that 17 85 percent of the members are not known in their own 18 districts. 19 And it was interesting, and they said, "Well, 20 how many people did you poll?" And they said, "We 21 polled 300." 22 So -- so the Member responded, "Well, you must 23 have missed the 67 percent that voted for me." 24 So -- or, at any rate, just a -- so, Ms. Yee 25 and then Ms. Mandel. 26 MS. YEE: Thank you, Mr. Chairman. 27 I just want to be very clear what the goal is 28 of the survey and a poll. I thought what we were really 12 1 trying to do was to understand what potential issues 2 people had around the Use Tax so that we could develop 3 appropriate educational tools around it for compliance. 4 It makes me always nervous when I hear kind of 5 like political kind of poll because that's not -- I 6 don't think there's a place for that here in this 7 discussion. 8 But I really want to understand what the goal 9 is. In the memo that we received from Ms. Gore in terms 10 of the free survey options, I think we should do all of 11 those. And when we get -- I'm not adverse to a poll but 12 I just want to know what the goal is. If it's an 13 attitudinal poll about what people think about the Use 14 Tax we can save our money. But if it's an issue about 15 that we get informed about relative to the responses to 16 the survey -- and the survey are going to go to people, 17 at least on this list, yeah, that have a -- that have a 18 relationship with the Board, that they are a little bit 19 better informed, I think, particularly with some of the 20 interested parties. They're not necessarily members of 21 the public unless they're coming to an event and wanting 22 to learn more. 23 So it is a -- it is an audience that is 24 distinct from the general public, I understand that. 25 But I think it's still informative with respect to more 26 informed kind of audience and disseminating the survey 27 and getting those responses back that then may help 28 further instruct what we may want to feel relative to a 13 1 poll. 2 But I just want to get very clear about what 3 the goal is of each, but my understanding was to really 4 try to ascertain where we have just kind of the public's 5 general knowledge about the Use Tax, not whether they 6 like it or not, but just their general knowledge -- 7 whether -- how they -- may be information that they 8 may -- or what they already know about it, what they 9 already don't, what they may not know about it that then 10 can help us shape what kind of educational outreach to 11 do around the Use Tax. 12 So I see kind of a chronology of things 13 happening, but I think all of these free survey options 14 ought to be taking place on the natural. And then when 15 we come to the polling -- I mean, if we're going to 16 spend on polling I would like to really see -- if we're 17 going to engage members of the public, this is not a 18 simple conversation to have with the public. It's 19 emotionally charged. It's about taxes. And if we're 20 going to do that with members of the public towards the 21 goal of trying to figure out what educational strategies 22 can help with compliance, I think it might be 23 appropriate to do focus groups. I go further than a 24 poll. 25 And I'd love to see the questions and 26 response -- what the questions were that were asked in 27 that poll that you're citing, Mr. Runner, because I 28 think that could further inform us with respect to the 14 1 types of responses we got back. 2 MR. HORTON: Okay. Ms. Mandel. 3 MS. MANDEL: Just really as a -- since we're 4 just having a general discussion and it sounds like 5 you're trying to give direction and at -- at this point 6 I'm not prepared to support, you know, spending money on 7 a professional poll. But I'm just one, so, just as 8 information in terms of the direction. 9 Thank you. 10 MR. RUNNER: Well, I -- I don't think we should 11 ever be afraid of information and -- 12 MS. MANDEL: Not -- not afraid of information. 13 MR. RUNNER: Well -- no, no, I wasn't -- 14 MS. MANDEL: That's my -- 15 MR. RUNNER: I wasn't -- 16 MR. HORTON: Members -- 17 MR. RUNNER: I wasn't pointing to you at all. 18 MS. MANDEL: Okay. 19 MR. RUNNER: That's a general comment. 20 I don't think we should be afraid of 21 information and I -- I actually agree that we should -- 22 and I -- and I think in talking with -- with Ms. Go -- 23 Gore, we -- we -- one of the -- one of the -- one of the 24 providers actually suggested starting with a focus 25 group, doing a poll and -- and ending with another focus 26 group. 27 And so I think that there are some solutions 28 out there, and I think this is a complicated issue and 15 1 you may need to go down that kind of a -- that kind of a 2 path. 3 In regards to the issue, you know, the thought 4 is, well, if it's an attitudinal poll about Use Tax then 5 we can save our money, I'm not sure about that. I've 6 talked with enough people who -- and -- and I've read -- 7 quite frankly I've read enough comments after articles 8 to realize that people just don't -- a lot of people 9 just don't know. 10 And then I want to know -- I want to know what 11 is it that convinces them? What is the arguments? 12 The other thing I want to know is what are the 13 age groups? Who isn't paying their Use Tax? Who -- 14 who's actually buying on the internet and who isn't 15 paying it? And what are their reasons for not doing 16 that? 17 And I want to know the differences because that 18 would target how it is that we do our -- our own 19 communication out to people. I mean, if we find out 20 that the hardest group to convince is -- you know, I 21 don't know, 18- to 22-year-olds and they only spent -- 22 they're only ten percent of the spending on the internet 23 and the easiest to convince are -- are moms that are 30 24 to 40 because all of a sudden they realize their kids 25 aren't getting some money for schools, then that's our 26 target. 27 And -- and so I think that that's -- that's 28 what -- but we don't know that now. And so that's the 16 1 objective, is to try to get information so that we can 2 actually do things in a very smart way with our limited 3 resources. 4 Because again I'll say what we're doing right 5 now by just telling people isn't working. 6 And so I think that's the -- the idea behind 7 it. So, again, I -- and I don't have any issue with the 8 pro -- I mean, you know, at this point if it's -- if a 9 proposal was to come back to us saying, hey, here's a 10 proposal that starts with the focus groups, ends up with 11 a poll and ends up with another focus group for how to 12 enter -- how to -- how to give direction or -- or how to 13 deal with some education issues, that's great. I just 14 think we need to step away from ourselves and get that 15 unbiased view out there so that we know what it is we 16 need to do. 17 So -- and -- and, you know, as far as how do 18 you word questions, you know, that's what pollsters do. 19 Our -- our -- our -- this isn't any more -- this is 20 complicated but, believe me, they poll a lot more 21 complicated issues than this and professionals know how 22 to do that. 23 And I think that that -- with information we 24 can make better decisions and, quite frankly, I think we 25 will end up with more revenue. 26 MR. HORTON: Member Yee. 27 MS. YEE: With respect to the free survey 28 options that the staff has identified, why I believe 17 1 this is a good starting point is that the outreach to 2 the parties that are identified in these options really 3 serve as partners with us with respect to compliance. 4 And I mean if we can't even get those partners 5 on board and -- and get a feel for them as to why -- as 6 to what some of the hurdles are with having better 7 compliance, I mean they're -- they're going to continue 8 to serve in that role. 9 But I'd like to hear from them first because 10 they certainly have relationships with any member of the 11 public, whether they be clients or employees, whatever 12 it is. 13 But I'd like to kind of -- I see kind of a 14 tiered approach with this being -- we should have at 15 least the knowledge of those who are really our partners 16 in compliance first and then developing a more 17 sophisticated instrument, whether it's the poll or a 18 focus group, whatever it is, that I -- I think we're 19 going to be informed by some of the responses to this -- 20 to this free survey option. 21 I don't want to spend money if it's really not 22 going after what we're going after. I want more 23 information. It -- it feels a little too much of a 24 free-for-all and I think we could hurt ourselves in the 25 process if we don't learn more information. 26 MR. HORTON: Okay. 27 MR. RUNNER: Quick observation in regards to 28 money. We spent four or five times that amount of money 18 1 in sending out delinquent notices to Qualified 2 Purchasers a couple of months ago. And our return on 3 that has been an 80 percent zero. So I think again, you 4 know, there -- there's money spent in lots of things 5 that we do here. And to me getting to know what people 6 are thinking out there in your taxpayers is a well good 7 investment in order to get them to understand what their 8 behavior is. 9 MS. YEE: I don't disagree. 10 MR. HORTON: It's interesting how you -- how we 11 can sometimes say the same thing totally different ways. 12 I think it was Robert Orben who said that, "Do 13 you ever get the feeling that we have -- the reason we 14 have elections is so that we can determine if the poll 15 was right?" 16 Anyway, so let's see if we can -- if you can 17 come back to the Board and make a recommendation as to 18 what the process would be. 19 Clearly, I mean, I would share the opinion that 20 we need to be informed about what we're going to do 21 and -- and how a poll should be structured. 22 My concern is the ultimate outcome. I mean, a 23 poll that would reflect that individuals between a 24 particular age are not aware of the -- of the Use Tax 25 liability and that it was -- it was enacted in 1934 and 26 that that would make a little bit of sense. A poll that 27 would say that an individual at a certain age feels a 28 sense of entitlement because they have not been notified 19 1 of the liability -- effectively notified, or they have 2 been notified but no aggressive action has been taken. 3 And some of the other issues that Mr. Runner has 4 articulated that in and of itself indicates that we need 5 to have a little more information about how we proceed. 6 And -- and if we're looking at a marketing 7 campaign we have a universe that is extremely large and 8 so I think most pollsters will tell you that -- or most 9 marketing folks will tell you that you're going to have 10 to communicate to that universe in order to have an 11 influence anywhere from three to ten times. 12 And if that means communicating to a universe 13 of millions of people three to ten times we're not 14 really talking about peanuts here in a marketing 15 program. We're -- could be talking about hundreds of 16 billions of dollars. 17 And so not that I'm adverse to that but from a 18 cost benefit analysis hopefully we can -- the 19 information -- the Department will come back and share 20 what our alternatives are from a marketing perspective. 21 I will share mine. I -- I believe that we 22 ought to focus on the practitioners and have the 23 practitioners become our partners, become informed and 24 educated practitioners about not only their moral 25 obligation as -- as professionals to themselves pursuant 26 to GAAP and all the other requirements out there that 27 govern licensed professionals, but to their clients to 28 make sure that their clients are educated and informed 20 1 and to minimize their clients' liability as it relates 2 to audit penalties and interest. 3 And that partnership will serve as well and it 4 may be -- in -- in my estimation it will probably be the 5 most effective use of our marketing skills. But, again, 6 I don't know. 7 And so, it reminds me of another story when I 8 was elected to the Assembly we were treated differently, 9 where there was a presumption that we did know just 10 because we got elected. One person said we had ascended 11 to heaven when many of us felt that we had descended 12 elsewhere. 13 At any rate, so thank you for the presentation. 14 Is that helpful or do you need additional direction? 15 MS. GORE: We will move forward with internal 16 polling and report back to the Board. 17 MR. RUNNER: I thought I heard that it was 18 broader than that. 19 MR. HORTON: It -- it is. 20 MS. YEE: It -- it is broader. Let me -- Mr. 21 Chairman, if I may. 22 MR. HORTON: Sure. 23 MS. YEE: I -- I think -- I don't think there's 24 any dispute with respect to the survey options that 25 you've identified in the memo. I think we all feel like 26 those could go forward. It's then what's the next step 27 with respect to -- I mean, how could you fashion kind of 28 a broader program? 21 1 But I guess before I would have the staff do 2 that is I just -- I just want to under -- I hope we're 3 all of the same mind with respect to what the goal of 4 this is. That's -- that's what I really am troubled by. 5 I think there are multiple objectives to this and I 6 would just kind of like to hear some articulation of the 7 goal as we're directing staff to try to develop what the 8 broader program looks like. 9 MR. HORTON: Okay. Mr. Runner. 10 MR. RUNNER: Well, I -- you know, I think the 11 goal is the same whether you're doing an internal survey 12 or you're doing an external survey. You're just trying 13 to figure out what people know and with the external 14 survey you're trying to get enough information that is 15 scientifically gathered so that you can apply it to 16 saying this is how Californians feel. That's the goal. 17 MS. YEE: Well, to what end, though, Mr. 18 Runner? I mean, is this to then assess the 19 effectiveness of our current Use Tax programs? 20 MR. RUNNER: No, the end -- 21 MS. YEE: You have educational -- 22 MR. RUNNER: For me the end result I would 23 assume that we would then do is we would then be 24 determining who are our best targets for education about 25 Use Tax. 26 MS. YEE: Okay. All right. 27 MR. RUNNER: You know, who are those folks 28 who -- who are the softest in regards to wanting to 22 1 change their behavior. Who are the hardest to -- are 2 going to change their behavior. 3 MS. YEE: Okay. 4 MR. RUNNER: And therefore you target them 5 differently at that point. 6 MS. YEE: Okay. So -- 7 MR. RUNNER: It could be -- it could be by 8 region. Because it's going to statewide poll. You're 9 going to go ahead and -- it could be by region you find 10 certain information. It could be -- you know, you -- 11 you could find lots of information. 12 You -- we could find out that -- that, again, 13 the greatest group of people who buy the highest ticket 14 items are the groups 50 to 60. And they have the 15 greatest ability to actually then spend money and do 16 those things. And so there's a different target for 17 that. 18 We just don't know when the -- we don't know 19 the answer to any of that. And I think that's the goal. 20 I think there's -- 21 MS. YEE: So the -- so the -- so the goal is 22 having a more focused educational strategy based on what 23 people know or don't know or -- 24 MR. RUNNER: Information, right. 25 MS. YEE: Okay. 26 MR. RUNNER: Right. That's the goal -- that is 27 the goal. I mean, there's -- and it doesn't get any 28 more complicated than that. 23 1 I mean, I'd like to know, for instance, you 2 know, several questions. Even if you -- what -- what 3 percentage of people out there know about the Use Tax, 4 know they're supposed to pay but refuse to? I'd like to 5 know whether that's 10 percent of the people, 50 percent 6 of the people. I don't -- I don't know. And that would 7 be part of them -- what it is that we need to do. 8 MS. YEE: Okay. And I -- and I think part -- 9 what you're -- I totally concur with you. This is going 10 to be -- I think what I'm troubled by is kind of the 11 point -- we're doing market research. 12 MR. RUNNER: That's correct. A poll -- well, I 13 get a poll -- again, I'm not -- I think we might be -- 14 somehow I think we're getting mixed up -- 15 MS. YEE: Okay. 16 MR. RUNNER: -- with the idea that polling -- 17 MS. YEE: That's a -- 18 MR. RUNNER: -- is only a political issue. No, 19 companies do polling in their market research. 20 MS. YEE: No, but we want more than that. We 21 don't -- we want more than responses, we want a flavor 22 as you've described, you know, kind of going across 23 cross-sections, maybe regionally, whatever it is -- but 24 it's market research. 25 MR. RUNNER: Absolutely. 26 MS. YEE: Okay. So it's -- it's expansive. We 27 want to get a sense of what people's experiences are 28 with respect to their experience shopping on the 24 1 internet, with -- 2 MR. RUNNER: Right. 3 MS. YEE: -- respect to experience on knowledge 4 of the Use Tax. So it's pretty broad. 5 MR. RUNNER: Right. 6 MS. YEE: Okay. 7 MR. RUNNER: And I think our -- and I think 8 our -- our -- our estimates that we got, at least the 9 various, provided for those dollars enough questions and 10 a -- and -- and what they believed in terms of the 11 different pollsters a statistical number that gave it 12 relevance for the information and credibility for the 13 information coming in. 14 So I mean, I think we can -- I think we're 15 going to get good information. 16 MS. YEE: Uh-huh. Okay. Does that help? 17 MS. GORE: Uh-huh. 18 MR. RUNNER: So, let me ask the staff if they 19 think they know what -- so how do you read the 20 instruction? 21 MS. GORE: We will move forward in surveying 22 our partners. 23 MR. RUNNER: Uh-huh. 24 MS. GORE: We will come -- we will analyze the 25 data we get back to the best of our ability and make 26 determinations of what sort of marketing efforts we 27 should move down. 28 Based on the information that we have to date 25 1 just from the handful of people who responded to our 2 survey so -- so far, anecdotally for years we've heard 3 that people say, "My tax preparer told me I didn't have 4 to pay Use Tax." 5 MS. YEE: Uh-huh. 6 MS. GORE: Well, we knew that anecdotally. 7 It's one of the options on the survey that we handed out 8 and now we have the data that shows, yeah, that we're, 9 you know, two of the 19 people who responded to us 10 saying, "My tax preparer specifically told me, no, I 11 don't owe Use Tax." 12 MS. YEE: Right. 13 MS. GORE: So when we have that kind of data 14 then we know indeed that we do need to reach out to the 15 tax preparer community and then we have the data to 16 prove to the taxpayer community that they really should 17 work with us because at least the perception is that 18 they're not giving their clients good information. 19 So we can take information about age. You 20 know, where do 20-year-olds reside. Is that college 21 campuses? And maybe that's where we need to go. 22 MR. RUNNER: Well, we don't -- we don't -- we 23 don't know that from -- from our own polling, from our 24 survey. 25 MS. GORE: Not yet. I mean, that's one of the 26 things we could determine. We do know that there are 27 now a couple of people who have said that that is indeed 28 true. 26 1 MR. RUNNER: No -- no, hold on. Well, again, 2 let's get clear here. I -- I'm not talking about 3 expanding our ability to survey. I'm talking about 4 still building on a professional survey because, again, 5 I -- all due respect for how we but -- but we don't know 6 how to do a -- a stratified market research in terms of 7 making sure that we have age level demographics, you 8 know, all those issues balanced out as we would do a 9 survey. We don't know how to do that. 10 So I think the internal poll is one thing. The 11 internal marketing is one thing. But I think we're 12 still talking about the issue of an external 13 professionally driven poll/market survey, if you will, 14 that has got to be done with a sample that is -- that -- 15 that can be shown that is -- that is -- that is -- that 16 it is statistically reliable. Because I don't want us 17 to make marketing decisions based upon information that 18 isn't statistically reliable. 19 MS. GORE: Certainly we're not professional 20 pollsters but I was not aware that we were given the 21 go-ahead to move forward with a contract. 22 MS. YEE: Can -- can I -- can I try to help? 23 MR. HORTON: Sure. 24 MS. YEE. A couple things with respect to this 25 free survey options. Yes, they are with our partners 26 but one of the bullets seeks to ask our media partners 27 to really step up. They've sure taken a lot of interest 28 in the Use Tax lately. But to actually solicit their 27 1 readers to at least take the survey. 2 So we'll kind of get that, and it's not kind of 3 the more focus type of research that you're looking for, 4 Mr. Runner, but I think that's kind of the first kind of 5 take, is that we ought to kind of just get a general 6 sense from, you know, readers of these various media 7 outlets about the -- get their responses in relationship 8 to that. 9 What actually what I would like to see is -- 10 and, Mr. Runner, you may want to work with the staff on 11 this, but if we are going to embark on doing market 12 research, what -- what's the universe of questions that 13 we may want to explore? Because ultimately if we go 14 down this road we're going to want an outside party to 15 come in and do this. And I think it's a combination of 16 looking at what the survey is not capable of 17 ascertaining and then some of the I guess brush strokes, 18 for lack of a better word but, you know, kind of the 19 contextual kind of things that, Mr. Runner, you're 20 looking for relative to maybe some particular 21 distinctions by generation, by region. But I think the 22 survey questions are kind of a foundational, you know, 23 kind of inquiry to make. 24 And so I'd like to see, you know, the 25 readership from our media partners try to at least be 26 steered towards responding to this survey and then we 27 build from there. 28 That's -- that's kind of the biggest reach to 28 1 the general public among our free options. But if you 2 could come back -- I mean, what I'd like to see is what 3 aren't we -- what aren't we, you know, being -- what 4 aren't we ascertaining with the survey that we want to 5 go more broadly with a professional firm to do? 6 MR. RUNNER: Let me just suggest a solution I 7 think that may get us to the end. 8 MS. YEE: Uh-huh. 9 MR. RUNNER: How -- I think -- I mean we have 10 some obvious interest in this issue. How -- and I think 11 we're both concerned -- or I think there's concern in 12 regards to what the questions would be, how they'd be 13 done. 14 I -- how about if your office and our office, 15 we work together with staff to develop then what we 16 would believe would be a good professional market poll. 17 MS. YEE: I -- I'm not equipped to do that. 18 I'm not an expert. 19 MR. RUNNER: Well -- 20 MS. YEE: What I'm looking for is kind of 21 subject matters. And then really have a professional 22 firm come in and really what the -- 23 MR. RUNNER: Well, I don't -- I don't mean that 24 we would -- I don't mean -- mean we would do -- 25 MS. YEE: Uh-huh. 26 MR. RUNNER: -- the poll. 27 MS. YEE: Uh-huh. 28 MR. RUNNER I mean that we would then work with 29 1 the staff in developing that -- those professional 2 relationships so -- so that we're -- so that everybody 3 is -- so that I think at least we would be able to be -- 4 I think there's a concern that there's discomfort with 5 the kinds of questions that would be asked. 6 MS. YEE: I'm not -- it's -- for me it's not 7 the discomfort of the questions. 8 MR. RUNNER: Oh, okay. 9 MS. YEE: For me it's not knowing enough. 10 MR. HORTON: Members -- 11 MR. RUNNER: Okay. 12 MS. YEE: So -- 13 MR. HORTON: -- why don't we do this. Why 14 don't we deal with the internal poll and give staff 15 direction whether or not to expand the universe of -- 16 that we're seeking information to -- to these other 17 areas that have been artic -- articulated. 18 I think there's an agreement there, right? 19 MR. RUNNER: Well, there is an agreement but I 20 will be one who will never say that we should then be to 21 our -- do our market work on internal polls. 22 MR. HORTON: Okay, that -- 23 MR. RUNNER: You know. 24 MR. HORTON: -- that's an entitlement. 25 MR. RUNNER: Right. 26 MR. HORTON: So, that -- that -- 27 MS. YEE: Say that again; I'm sorry. 28 MR. RUNNER: Well, I wouldn't -- I wouldn't use 30 1 internal gathered poll -- or mar -- surveys -- 2 MS. YEE: It's a survey. It's -- 3 MR. RUNNER: -- to -- to determine then what 4 California thinks. 5 MS. YEE: No, that's not the goal. No. 6 MR. RUNNER: Okay. 7 MS. YEE: No, no, no, no, no. 8 MR. HORTON: That's just an opinion, Members. 9 So -- so we're all in agreement there. And then after 10 we receive this information it seems that we're all in 11 agreement that this information will be foundational and 12 it will be informative for us to determine whether or 13 not -- determine the -- how to begin to work with some 14 professional operation and soliciting information from a 15 particular constituency; assist us in narrowing that 16 inquiry down to some degree. But we have to start with 17 the initial information if we go forth. 18 I'm not prepared to move forward with a poll 19 without having -- without being informed about -- you 20 know, having some insight into what other people besides 21 myself and my colleagues are actually thinking and 22 having the opportunity to get that insight as a result 23 of our internal poll. I think we ought to capitalize on 24 that. 25 And then I'm not adverse to having a 26 professional conduct a poll once we are more informed 27 and educated about what's going on out there, even to 28 the nominal infinitesimal -- to whatever degree that the 31 1 internal poll will provide us some information. It 2 seems to be doing that much. 3 And then I think it's important that we give 4 direction to the ultimate objective and goal because I 5 want to be clear that if we're talking about 6 marketing -- a marketing program that is not very, very 7 focused and the cost is -- that I will want to see a 8 cost benefit analysis, and that's going to be a very 9 difficult thing to do. But certainly would -- would 10 want to see that because I think just the -- the 11 universe is so large you're talking literally about 32 12 million people. And 10 percent of that is 3.2 million. 13 And to effectively communicate to such a large 14 universe could cost us millions of dollars and I -- 15 that -- the determination of whether that's what we 16 should do is -- will be up to this body. 17 But let's take this step by step. 18 MR. RUNNER: Can we get a -- what -- what is -- 19 what do you estimate that calendar to be in regards to 20 the length of time to be doing the -- the internal 21 surveying? 22 MR. HORTON: Sure. Ms. Gore. 23 MS. GORE: Well, it would remain to be seen 24 how -- what kind of response we got. But we could -- we 25 have started distributing them at our seminars. We 26 could do an e-mail in the next week to our partners that 27 we have e-mail addresses for. That would be presuming 28 that we would use the currently drafted survey that was 32 1 attached to the materials that you received. 2 We would analyze that information as it came 3 in, working with the media partners. There are some 4 members of the media who have covered Use Tax. If the 5 nexus issue hasn't done anything else for us it's -- 6 it's increased the information about Use Tax is out 7 there. 8 MS. YEE: Free. 9 MS. GORE: I'm thinking that some of those 10 people who have been following that may be interested in 11 helping us with a survey. I would pursue those first. 12 But how long that takes is undetermined. We 13 could come back at the next meeting and tell you our 14 progress to date and see if anything has come from that. 15 If we had 60 days we'd probably have better information. 16 So if we came back in a couple of months it 17 might be best. 18 MR. HORTON: Okay. Suggestion, why don't you 19 report back to the Board at the next meeting and then 20 we'll make a determination at that point, and at -- in 21 the interim solicit the input from the Members as it 22 relates to the survey and the type of questions as we go 23 forth and the universe, being mindful of the cost of -- 24 of this activity, as well. 25 And so, we look forward to hearing from you 26 next month. 27 MS. GORE: Thank you. 28 ---oOo--- 33 1 REPORTER'S CERTIFICATE. 2 3 State of California ) 4 ) ss 5 County of Sacramento ) 6 7 I, BEVERLY D. TOMS, Hearing Reporter for the 8 California State Board of Equalization certify that on 9 July 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 33 13 pages constitute a complete and accurate transcription 14 of the shorthand writing. 15 16 Dated: August 11, 2011. 17 18 19 ____________________________ 20 BEVERLY D. TOMS 21 Hearing Reporter 22 23 24 25 26 27 28 34