1 BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION 2 5901 GREEN VALLEY CIRCLE 3 CULVER CITY, CALIFORNIA 4 5 6 7 8 REPORTER'S TRANSCRIPT 9 FEBRUARY 1, 2012 10 11 12 13 14 15 FINAL ACTIONS 16 17 18 19 20 21 22 23 24 25 26 27 REPORTED BY: Kathleen Skidgel 28 CSR NO. 9039 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 12 Chiang, State Controller (per Government Code 13 Section 7.9) 14 Diane G. Olson 15 Chief Board Proceedings Division 16 17 For Board Staff: David Levine Tax Counsel IV 18 19 ---oOo--- 20 21 22 23 24 25 26 27 28 2 1 5901 GREEN VALLEY CIRCLE 2 CULVER CITY, CALIFORNIA 3 FEBRUARY 1, 2012 4 ---oOo--- 5 MR. HORTON: Welcome back. Let us reconvene 6 the meeting of the Board of Equalization. 7 Ms. Olson, our next item. 8 MS. OLSON: Our first item is C18, John A. 9 Bart. This was a waived appearance. 10 ---oOo--- 11 C18 JOHN A. BART 12 NO. 462215 13 ---oOo--- 14 MR. HORTON: Uh, Members? 15 MS. YEE: Move to adopt the staff 16 recommendation. 17 MR. HORTON: Moved by Member Yee to adopt staff 18 recommendation. Second by Member Mandel. 19 MS. MANDEL: Yeah, and I just have a question 20 for staff to clarify -- make sure they clarify when they 21 go over it in the end; which is, that they were not sure 22 all their payments were correctly credited, and they 23 specified something that they thought showed up as 99 24 cents that should have been $2,085.99, and I don't know 25 if there were others. 26 So, just go over all the payments carefully. 27 MR. LEVINE: Okay. 28 MR. RUNNER: My understanding on this is that 3 1 he -- they really want to work with staff in Offers in 2 Compromise. 3 MS. MANDEL: Yeah, that was mine, too. 4 MS. YEE: Okay. 5 MR. HORTON: Okay. So noted. 6 Objection? 7 Hearing none, such will be the order. 8 ---oOo--- 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 4 1 MR. HORTON: Ms. Olson. 2 MS. OLSON: Our next item is C19, America Wood 3 Finishes, Incorporated. 4 ---oOo--- 5 C19 AMERICA WOOD FINISHES, INC. 6 NO. 460325 7 ---oOo--- 8 MR. HORTON: Members? 9 MS. YEE: I'm going to move the staff 10 recommendation. 11 MR. HORTON: Member Yee moves staff 12 recommendation. 13 Is there a second? 14 MS. MANDEL: I'll second it. 15 MR. HORTON: Second by Member Mandel. 16 Objection? 17 Hearing none, such will be the order. Thank 18 you very much. 19 MS. STEEL: Can we decide like we can maybe 20 half of negligence penalty? Do we have half of 21 negligence penalty? I'm just asking. 22 MR. LEVINE: I'm sorry. 23 MR. HORTON: What was the question? 24 MS. STEEL: It has to be zero or -- it's 25 nothing or everything? 26 MR. LEVINE: This is the negligence penalty? 27 MS. STEEL: Yeah. 28 MR. LEVINE: Yeah, the statute says that it's 5 1 on the whole determination. If any part is negligent, 2 it's on everything. So, it's all or none. 3 MS. STEEL: Yeah. It was a first. 4 MR. RUNNER: And it's the total percentage. So 5 you can't -- you can't lower the amount or anything. 6 It's the -- or the factor. 7 MR. LEVINE: You can -- yeah, you can lower it 8 to zero. 9 MR. RUNNER: Zero. Got it. Got it, got it. 10 ---oOo--- 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 6 1 MR. HORTON: Ms. Olson. 2 MS. OLSON: Our next item is C20a, Timothy O. 3 Finnerty and C20b, Timothy O. Finnerty and 21 Century 4 Oil-Front Company. 5 This was a waived appearance. 6 ---oOo--- 7 C20a TIMOTHY O. FINNERTY 8 NO. 417833 9 C20b TIMOTHY O. FINNERTY and 10 21st CENTURY OIL-FRONT COMPANTY 11 NO. 417777 12 ---oOo--- 13 MR. RUNNER: Um, I'm sorry. Which one -- let's 14 see. 15 MS. STEEL: 20. 16 MS. OLSON: 20. 17 MS. YEE: 20 a and b. 18 MR. HORTON: 20 a and b, Timothy Finnerty. 19 MS. OLSON: Finnerty. 20 MR. RUNNER: Yeah. 21 MR. HORTON: There you go. 22 MR. RUNNER: 20 a and b were waived penalty -- 23 were waived. 24 MR. HORTON: Mr. Levine, I had a little concern 25 about this one. Um, when Mr. Finnerty sort of took 26 over, July 2004, uh, becoming the responsible person, he 27 set forth a payment, $77,000, which was allocated to a 28 subsequent period. 7 1 Um, and now he's responsible for the period in 2 which he took over, when in fact he is the reason we 3 received the payment, seems to be. I don't know if 4 that's the case. 5 Your thoughts on that? 6 MR. LEVINE: I think the -- he had the power to 7 direct payment, if he had wanted to, when he made the 8 payment, but he didn't. And then we apply it in 9 accordance with the rules in the CPPM, which, if it had 10 not been applied in accordance with the CPPM, then 11 there'd be a problem. But it was, and it's also 12 consistent with the nature of what we understand the 13 case was. 14 He came in, he's trying to keep the business 15 going, and he was paying the debts of the business. So 16 it's consistent with what happened. It's only after the 17 fact when he realized what was happening that -- that 18 maybe he would have wanted to do things differently, 19 but -- 20 MR. HORTON: After he realized that he would be 21 on the hook; is that, uh -- 22 MR. LEVINE: That's correct. 23 MR. RUNNER: Can I ask a question? 24 MR. LEVINE: Or maybe when the business went 25 down and it wasn't going to be salvaged. 26 MR. HORTON: Okay. 27 Mr. Runner. 28 MR. RUNNER: Yeah, let me ask about that. Can 8 1 you -- that being the case, even if that was the case, 2 does the taxpayer not have the ability to direct even if 3 he changes his mind? 4 MR. LEVINE: He can direct when the payment is 5 made. Once it applied, it's applied. He doesn't get to 6 go back and say, you know, I should have done it the 7 third quarter and then maybe -- 8 MR. RUNNER: I didn't realize. What if it was 9 an issue that -- that he meant for it to be paid on the 10 current? 11 MR. LEVINE: If he directed it -- 12 MR. RUNNER: Does it have -- it has to be 13 directed? 14 MR. LEVINE: Yes. Otherwise, that's -- the 15 Civil Code is that the creditor decides where money goes 16 if the debtor doesn't specify. 17 MR. RUNNER: Reminds me a little bit of our 18 battle that we're having with FTB in regards to use tax, 19 you know, and they're keeping our money even though -- 20 even though on the use tax form it's -- 21 MR. LEVINE: That's a little weird, but it's 22 different. 23 You know, it actually is our CPM -- PPM rules 24 are taxpayer-friendly. The goal is to minimize 25 liability. That's why we apply it to tax first. Even 26 if they don't -- they would have to tell us to apply to 27 interest first like a normal lender would. 28 So we're trying to eliminate their interest by 9 1 paying off tax. And I believe it's oldest first, again, 2 similar reasoning. But that's how -- why the guidelines 3 were designed. 4 MR. RUNNER: So is the assumption that he knew 5 when he came in and made that payment that he was making 6 the payment to the -- to the -- what was owed, to the -- 7 MR. LEVINE: I don't know what the facts are. 8 I think he would have understood that. But that doesn't 9 determine -- 10 MR. RUNNER: Why would we not assume that -- 11 well, I guess -- it's not -- so our assumption is -- 12 Because the payment was for the amount of 13 payment due for that quarter, right? I mean, this is -- 14 MR. LEVINE: I don't -- 15 MR. RUNNER: This is an amount of money that 16 was -- is -- is -- is an amount specific, right? It 17 was -- 18 MR. LEVINE: I don't recall that those were the 19 facts. I'm sorry. I haven't -- 20 MR. RUNNER: I guess I'm -- I'm -- I'm trying 21 to remember myself. It seemed to me I thought I 22 understood that the amount was the amount that was the 23 current due that he paid. Which would indicate to me if 24 that's the case, that he meant it to go to the current 25 payment, not to the past. Even if he didn't say so. He 26 said so by the amount that he paid. 27 MR. LEVINE: If he sent it in with the return, 28 which I don't think was the case, then that, to me, 10 1 would be a given that it -- if it's the amount of the 2 return and it's filed with the return, and I don't think 3 there'd be any doubt about that. 4 MR. RUNNER: But even if -- okay, yeah. 5 MR. HORTON: I presume, Mr. Levine, that the 6 taxpayer has to take an affirmative action. That they 7 have to -- 8 MR. LEVINE: To get it out of the CPP -- to get 9 it out of our payment rules, they have to tell us how to 10 apply it. If they pay a check with a return for the 11 amount of the return, at least I think that's telling us 12 how to apply it. But that's not what I understand 13 happened here. And -- 14 MR. HORTON: Here's the other question. The 15 total payment was around 126,000. We allocated 77,000 16 to previous periods, presuming that the balance we put 17 elsewhere. Um, and that seems to be an action taken by 18 the Board. Or is there -- or was there, um -- or did 19 the taxpayer direct the Board to make the payment of 20 77,000 to the prior years and the balance to the current 21 years, I guess? 22 MR. LEVINE: No, I don't think they -- I don't 23 think the taxpayer directed. If the taxpayer directed, 24 we would just be holding that up and saying this is what 25 you told us to do; we did it. 26 So I don't think they directed this payment the 27 way it was applied. I believe it was applied just in 28 accordance with the CPPM. 11 1 MR. RUNNER: I'm at least getting some feedback 2 for the fact that the taxpayer does have the right to 3 redirect after, even -- even to redirect after it's 4 applied. 5 MR. LEVINE: I disagree with that. 6 MS. YEE: Doesn't make sense. 7 MR. LEVINE: I've never seen that. I've never 8 seen that. That means that then why can't they keep 9 redirecting it as if things change? 10 MR. RUNNER: Yeah. 11 MR. LEVINE: They redirect because they think 12 it's a certain way, and then maybe they win something 13 before the Appeals Division and they say, oh, well, 14 then -- 15 MR. HORTON: I mean, once the State has the 16 control over it, it's the State's property. You know, 17 so, um -- 18 MR. RUNNER: Well, okay. We're getting -- in 19 our conversations, we're hearing that the taxpayer 20 actually called the BOE to find out what he owed during 21 the period of time in which he had control. So I guess 22 we're -- I -- 23 MR. LEVINE: If he would have come and argued, 24 then we would have -- 25 MR. RUNNER: Yeah, I know. 26 MR. LEVINE: The Department would have -- 27 MR. RUNNER: I hear you. 28 MR. LEVINE: -- known the facts better than I 12 1 do. 2 MR. RUNNER: I -- I -- I hear you. We're all 3 hearing them, and he's not here in front of us so that 4 makes this case very difficult. I -- I agree. 5 MR. HORTON: That's the real challenge here. I 6 think more along the -- from a prospective review 7 point -- I don't even know if there's anything we can 8 do. Our hands are tied when the taxpayer's not here to 9 provide insight into his thought process. 10 So, is there a motion? 11 MS. YEE: Move to adopt the staff 12 recommendation. 13 MR. HORTON: Moved by Member Yee to adopt staff 14 recommendation. Second by Member Steel. 15 Without objection, such will be the order. 16 ---oOo--- 17 18 19 20 21 22 23 24 25 26 27 28 13 1 MS. OLSON: Our next item is C21, William Blaine Riggly 2 (verbatim) -- Riggle, excuse me. 3 ---oOo--- 4 C21 WILLIAM BLAINE RIGGLE 5 NO. 417558 6 ---oOo--- 7 MR. HORTON: Members? 8 MS. STEEL: Um, I want to grant petition for 9 periods of, uh, from July 1st, 2001 to August 31st, 10 2004. 11 I wish I could have asked taxpayer how much he 12 had, um, power to move things around after Mr. Zures' 13 death. 14 So I want to just grant the petition on the 15 first case of 417558. 16 MS. YEE: Okay. 17 MR. HORTON: Discussion, Members? 18 MR. RUNNER: So let me understand, the -- 19 MR. HORTON: Is there a second? 20 MS. YEE: I'll second the motion. 21 MR. HORTON: Second by Member Yee. 22 Is there a question? 23 MR. RUNNER: Yeah, just to clarify the amounts 24 then. Then -- then the liability that he's being held 25 for is the 28,641? 26 MS. STEEL: Yes. Yes, and then OIC. 27 MS. MANDEL: I'm confused. 28 MR. HORTON: Uh, Ms. Mandel. 14 1 MS. MANDEL: Um, I see there's two liability 2 periods but there -- the date -- there's overlapping on 3 the dates. 4 So what was the dates that you said, Ms. Steel? 5 MS. STEEL: I want to do before the Mr. Zures, 6 uh -- 7 MS. MANDEL: Before he passed? 8 MS. STEEL: Yes. 9 MR. RUNNER: Didn't he die in May? 10 MS. YEE: May of '04. 11 MS. STEEL: So then that's going to be May of 12 '04. 13 MR. RUNNER: So it's going to be less than the 14 28. 15 MS. YEE: It's not the entire period. 16 MR. RUNNER: So it's -- 17 MS. STEEL: So my motion -- 18 MR. HORTON: Okay. We're all clear? 19 MS. STEEL: Yeah. 20 MR. HORTON: Okay. 21 MS. STEEL: Before May, when he died exactly. 22 MS. MANDEL: Okay. So -- 23 MS. STEEL: May 25th. So before the May 25th, 24 we grant the petition. After the May 25th, uh, he's 25 liable. But we are referring him to OIC for rest of the 26 money. 27 MR. LEVINE: Just for clarification, on the 28 May -- May would have been in the second quarter of 2004 15 1 which would have been due July 31, 2004. 2 MR. RUNNER: Right. 3 MR. LEVINE: Did you want to split it, or did 4 you want to do all of that quarter or none of it? 5 MS. STEEL: Just from July -- May 25th/26th 6 through July 31st. So July 31st is the last day of -- 7 for second -- 8 MR. RUNNERR: Quarter. 9 MS. STEEL: -- liability period, right? 10 MR. LEVINE: It's the day the return for the 11 second quarter 2004 would have been due. And if he died 12 in May of 2004, that was in the middle of the second 13 quarter. 14 MS. STEEL: Right. So you want -- you want to 15 clear out the second, totally second quarter? 16 MR. LEVINE: I just want to make sure I 17 understand, uh -- 18 MS. YEE: Yeah, I mean, to the extent that 19 Mr. Riggle was involved in filing the return. 20 MS. STEEL: For the second -- 21 MS. YEE: Quarter. 22 MS. STEEL: -- quarter. So -- 23 MR. HORTON: So that takes us from July 2001 to 24 March 31st, 2004. 25 MS. STEEL: 2004, and then April -- 26 MR. HORTON: Such that he passed in -- 27 MS. YEE: April to June. 28 MR. HORTON: -- May, but that return was due 16 1 in -- 2 MS. YEE: July. 3 MR. HORTON: -- July. And so, therefore, he 4 was in charge. 5 MS. STEEL: So, when was the due for second 6 quarter? 7 MS. YEE: End of July. 8 MR. LEVINE: Second quarter is due on July 31. 9 It ends on June 30th and is due a month later. 10 MS. STEEL: So -- 11 MR. HORTON: Mr. Levine, based on your 12 understanding of the timelines and the desire of the 13 Board, what is the dates that you recommend? 14 MR. LEVINE: If it's based on the decedent 15 having had control -- 16 MR. HORTON: Subsequent. 17 MR. LEVINE: -- and relinquishing it when he 18 died, then I guess you'd cut it off after the first 19 quarter. 20 MR. HORTON: The date that is? 21 MR. LEVINE: Would be what you stated, through 22 March 31, 2004. 23 MS. MANDEL: Can I ask a -- a -- just a 24 technical question on that? 25 MR. HORTON: Sure. 26 MS. MANDEL: I don't remember on this 27 particular business. Is this the kind of business that 28 would have had a, um, prepayment, monthly prepayment or 17 1 something? So that, like in April or May, he would 2 have -- there would have been a prepayment that might 3 generate -- I don't know if there was underlying 4 penalties on prepayments or stuff like that. 5 MR. LEVINE: It looks like -- I don't know, but 6 it's big enough that, yes, I would think so. 7 MS. MANDEL: Okay. So in that, you know, 8 circumstance that the Board is talking about, when he 9 would have had to -- when the company would have had to 10 be making the prepayments, and Mr. Zures would have 11 still been in control. 12 So, it -- I don't know if there's -- I don't 13 remember if there's underlying prepayment penalties and 14 things like that, but I would think that based on what 15 the Board's saying that they'd want those to go -- that 16 kind of stuff to go away. 17 MR. LEVINE: There's prepayment penalties, but 18 it looked -- for -- 19 MS. MANDEL: Focus on things that would be 20 in -- with respect to that second quarter of '04. 21 MR. LEVINE: Yes. 22 MS. YEE: Second quarter of '04. 23 MR. LEVINE: I don't see -- 24 MS. MANDEL: Or perhaps we should just say in 25 the motion and anything like that you have to get rid of 26 too. 27 MR. LEVINE: I don't see anything. 28 MR. HORTON: There you go. That makes a good 18 1 motion. 2 MR. LEVINE: So get rid of anything that would 3 have been due, including penalties for, through the date 4 of death. 5 MS. MANDEL: Yeah. 6 MR. HORTON: Okay. We'll accept that as a 7 friendly amendment to Ms. Steel's motion. Second by 8 Mr. Runner. 9 Further discussion, Members? 10 MS. STEEL: That was Ms. Yee. 11 MR. HORTON: Hearing none -- 12 Ms. Yee? My apologies. 13 MS. STEEL: Second. 14 MR. HORTON: Second by Member Yee. 15 MS. STEEL: That's fine. 16 MR. HORTON: Without objection, such will be 17 the order. 18 ---oOo--- 19 20 21 22 23 24 25 26 27 28 19 1 MR. HORTON: Ms. Olson. 2 MS. OLSON: Our next item is C22, Massoud 3 Khazaie. 4 ---oOo--- 5 C22 MASSOUD KHAZAIE 6 NO. 459689 7 ---oOo--- 8 MR. HORTON: Members? 9 MR. RUNNER: Let's see. I have 30/30/30 here. 10 What was he needing to bring or what -- 11 MS. YEE: Which one is this, C22? 12 MR. RUNNER: Was there a, uh -- I should have 13 put down a better note. 14 MS. MANDEL: You might have been wondering 15 about the original of the document that he said he had 16 drafted at the -- this is the guy who said he went into 17 the Board and they -- somebody wrote up a sample return 18 for him. 19 MS. YEE: Right. 20 MS. MANDEL: And he said he did everything by 21 the sample return. 22 MR. RUNNER: And there was a piece of document 23 that he was missing or something could provide, wasn't 24 there? Didn't he -- let's see, because we did this 25 right at the end. And he -- I can't recall now. 26 MS. STEEL: No, he's the one actually went in 27 beforehand. And then BOE advised him and then filled 28 out some of the forms. But he couldn't provide that, 20 1 so -- 2 MR. RUNNER: Okay. 3 MS. YEE: I'm going to make a motion, 4 Mr. Chairman. 5 MR. HORTON: Okay. 6 MS. YEE: I'm going to move to adopt the staff 7 recommendation. 8 MR. HORTON: Move to adopt staff 9 recommendation. Uh, second by Member Mandel. 10 I think, uh, we, uh, concluded near the end, 11 through series of questions to the taxpayer, that all 12 documents were presented and available for 13 consideration. 14 Objection, Members? 15 Hearing none, such will be the order. 16 ---oOo--- 17 18 19 20 21 22 23 24 25 26 27 28 21 1 MS. OLSON: Our next item is C24, Kimberly Shena Grigsby. 2 3 ---oOo--- 4 C24 KIMBERLY SHENA GRIGSBY 5 NO. 442731 6 ---oOo--- 7 MR. HORTON: Is there a motion, Members? 8 MS. STEEL: You know what. 9 MR. HORTON: Discussion. 10 MS. STEEL: Um, I want to grant the petition. 11 It took two-and-a-half years and didn't have a clue that 12 this taxpayer didn't know. I know it's not going to go 13 that far, but I want to help this taxpayer. 14 But if my motion doesn't go through, at least 15 my second motion is remove the interest. Am I going too 16 far? 17 MR. RUNNER: I'll second the first motion -- 18 MS. STEEL: Okay, thank you. 19 MR. RUNNER: -- just on the basis that for us 20 to be chasing after this -- this -- this poor lady and 21 for clearly what should have been a mistake on the part 22 of the DMV, at least -- and we chased her down for that 23 $900 worth of interest, just in good faith, I would hope 24 we could give her a break. 25 So I'd second that. 26 MS. YEE: Objection. 27 MR. HORTON: Um, yeah. Um, I'm trying to 28 figure out a way to frame, uh, maybe on the basis 22 1 that -- Mr. Levine, any thoughts on how the taxpayer 2 would -- 3 MR. LEVINE: Would prevail completely? 4 MR. HORTON: Yes. 5 MR. LEVINE: If it's going to go that way, I 6 would suggest just make the motion and just do it. 7 MR. RUNNER: Do it. 8 MR. HORTON: Okay. 9 MR. LEVINE: Without explanation. 10 MS. STEEL: Okay. 11 MR. RUNNER: Leave no trail. 12 MS. YEE: The motion is to grant the entire -- 13 MS. STEEL: Petition. Yeah. 14 MS. YEE: -- petition. Yeah, objection. 15 MR. HORTON: Objection, noted. 16 Ms. Olson, call the roll. 17 MS. OLSON: Mr. Horton. 18 MR. HORTON: No. 19 MS. OLSON: Ms. Steel. 20 MS. STEEL: Aye. 21 MS. OLSON: Mr. Runner. 22 MR. RUNNER: Aye. 23 MS. OLSON: Ms. Yee. 24 MS. YEE: No. 25 MS. OLSON: Ms. Mandel. 26 MS. MANDEL: No. 27 MS. OLSON: Motion fails. 28 MR. HORTON: Subsequent motion? 23 1 MS. STEEL: I already made a second motion. 2 MR. HORTON: So moved by -- by Member Steel. 3 MR. RUNNER: Second. 4 MR. HORTON: Second by Mr. Runner. 5 MS. STEEL: And OIC. 6 MR. HORTON: Including discussion with Offer in 7 Compromise and indicating the Board's desire to be 8 extremely lenient considering the circumstances in which 9 the liability occurred. 10 So moved. 11 Without objection, such will be the order. 12 ---oOo--- 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 24 1 MR. HORTON: Ms. Olson. 2 MS. OLSON: Our next item is C24, Tho Phuoc 3 Pham. 4 MS. YEE: It's 28. 5 MS. STEEL: 27. 6 MS. YEE: It's 27. 7 MR. HORTON: Seven. 8 MS. OLSON: I'm sorry, 27. It even says "27." 9 MS. STEEL: Doesn't work. 10 MS. OLSON: Yeah. 11 ---oOo--- 12 C27 THO PHUOC PHAM 13 NO. 509278 14 ---oOo--- 15 MR. HORTON: Members? 16 MS. YEE: I'm going to move the staff 17 recommendation. 18 MR. HORTON: Ms. Yee moves the staff 19 recommendation. Second by Member Mandel. 20 Objection? 21 Hearing none, such will be the order. 22 ---oOo--- 23 24 25 26 27 28 25 1 MS. OLSON: Our next item is C29, Marcelo Co. 2 ---oOo--- 3 C29 MARCELO CO 4 NO. 485816 5 ---oOo--- 6 MR. HORTON: Marcelo Co. 7 Members? 8 MS. YEE: Move to adopt staff recommendation. 9 MR. HORTON: Ms. Yee moves to adopt staff 10 recommendation. Second by Member Steel. 11 Objection? 12 Hearing none, such will be the order. 13 ---oOo--- 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 26 1 MS. OLSON: Our next item is C31, Thomas L. White. 2 ---oOo--- 3 C31 THOMAS L. WHITE 4 NO. 476399 5 ---oOo--- 6 MR. HORTON: Uh, members? 7 MS. YEE: Move to adopt the staff 8 recommendation. 9 MR. HORTON: Ms. Yee moves to adopt staff 10 recommendation. Second by Member Steel. 11 Without objection, such will be the order. 12 ---oOo--- 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 27 1 MS. OLSON: The next item is D1, Eric Anthony Guidice. 2 ---oOo--- 3 D1 ERIC ANTHONY GUIDICE 4 NO. 380212 5 ---oOo--- 6 MS. MANDEL: I think I had a question for 7 Mr. Levine on Guidice about the box of cigars; did I, 8 Mr. Levine? 9 MR. LEVINE: Yes. Um, after discussing with 10 the Department, the Department agrees that -- we don't 11 have a number, but the taxpayer -- the Department agrees 12 that since General was a licensed distributor and we 13 know there were some exchanges, any exchanges in this -- 14 or transfers in this state delivered by the, um, 15 representatives would -- before petitioner was licensed, 16 that would be the distribution as Mr. Han stated at the 17 end of his presentation and wouldn't be taxable. 18 So I'd ask that you give the Department time to 19 either get information from him or pick a number, best 20 estimate of the amount of exchanges in this state, and 21 that would be a concession by the Department. 22 MS. STEEL: Can we just do by the date? 23 Because he got the license on September of 2002. So 24 before 2002, he's not -- 25 MR. LEVINE: But we don't know how many were -- 26 were transferred in the state. 27 MS. STEEL: Oh, I see. 28 MR. LEVINE: The Department's not conceding the 28 1 stuff that was shipped from outside. That would still 2 be -- it's equivalent, it's the use tax concept. 3 General, as they were licensed, it had -- it 4 was required to collect the tax and remit it to the 5 Board. But we know that our guy didn't pay it, and 6 there's no evidence and it's not likely that General 7 paid it. So our taxpayer remains liable for that. 8 MR. RUNNER: But we can't come up with that 9 number. 10 MS. STEEL: We -- yeah. It's -- it's going to 11 be just -- 12 MR. RUNNER: Right? I mean how do we come up 13 with a number? 14 MR. LEVINE: They may have some information or 15 find out how -- what general percentage is exchanged. 16 MS. STEEL: How about what, as I suggested -- 17 MR. LEVINE: Or pick a number. 18 MS. STEEL: -- just divide by the date. 19 MR. RUNNER: Oh, oh, I see. We instruct you to 20 find the number. I understand. 21 MS. STEEL: Okay. 22 MR. HORTON: So I believe the motion is to 23 prorate it based on the dates, and develop a percentage, 24 apply that percentage to the amount in question. 25 MS. STEEL: Right. 26 MR. LEVINE: Well, again, the Department's 27 concession, and what Appeals recommends, relates to only 28 the sales by General, and I don't know how much that 29 1 was. Only the sales by General and only the portion of 2 those sales that were delivered in California, which 3 would include exchanges. Maybe entirely. It sounds 4 like those were the deliveries in this state, when they 5 were exchanged. But whatever was exchanged or 6 transferred in this state. 7 And I don't have a number. We could -- I'm not 8 sure how much of this is for General, which would be the 9 only portion that is eligible. And I don't know how 10 much of that was before our taxpayer was licensed, which 11 again, is all would be eligible under that concession. 12 MS. STEEL: Mr. Levine, you just keep 13 giving -- 14 MR. HORTON: If we were -- Mr. Levine, if we 15 were to do a reaudit, could this conceivably be back on 16 the Board's agenda in February? 17 MR. LEVINE: February? 18 MR. HORTON: I mean, considering we're just 19 trying to come up with a number. 20 MR. LEVINE: I don't even know if it could -- 21 I'd ask for maybe at least until March because 22 February we're -- for example, we've already done almost 23 all the summaries. 24 MR. HORTON: Okay. Members? 25 MS. STEEL: So we're going to just pick the 26 numbers? 27 MR. RUNNER: Well, I'm fine with going with -- 28 MS. STEEL: Yeah, just -- 30 1 MR. RUNNER: -- the language of the discussion 2 that Mr. Levine came with on the basis of the motion. I 3 just -- 4 MR. HORTON: Ms. Mandel, thoughts? 5 MS. MANDEL: Um, if -- if staff's willing to 6 make a concession or Mr. Levine's figured out a way to 7 shorthand that concession, that's -- I'm always 8 interested in that. 9 MR. RUNNER: I'm struggling with what the 10 motion is. 11 MS. MANDEL: With how to make the motion? 12 MR. RUNNER: Yeah, with what the language of 13 our motion is. 14 MR. LEVINE: Well, if you make it, um -- 15 MR. HORTON: The language is clearly the amount 16 is where we are. 17 MR. LEVINE: Just give us time, 60 days, 30 18 days. 19 MS. MANDEL: You just need enough time. It's 20 just the February meeting's coming up too fast. 21 MR. LEVINE: And then we'll bring it back and 22 explain the reasoning. 23 MS. YEE: March. 24 MR. RUNNER: Okay. That's fine. 25 MR. HORTON: Um, so is there a motion, Members? 26 MS. MANDEL: Can I move what he said? 27 MR. HORTON: So moved. Second by Member Steel. 28 Without objection, such will be the order. 31 1 MR. RUNNER: This is reporting real 2 carefully. 3 MS. OLSON: That's right. We just supply the 4 tape. 5 ---oOo--- 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 MS. OLSON: Our next item is D2 Malvinder Sonny Matharu. 2 3 ---oOo--- 4 D2 MALVINDER SONNY MATHARU 5 NO. 515190 6 ---oOo--- 7 MR. RUNNER: I'd move a 30/30/30 on this. 8 MS. STEEL: Second. 9 MR. HORTON: Mr. Runner moves a 30/30/30. 10 Second by Member Steel. 11 Without objection, such will be the order. 12 MS. YEE: Mr. Chairman. 13 MR. HORTON: Yes. 14 MS. YEE: Um, we didn't do this for the motions 15 today, but I wanted to see if I could capture, um, 16 referral to Offers in Compromise, um, particularly for 17 those liabilities that were, uh, attributed -- or that 18 are attributable to terminated businesses at the very 19 least. 20 MS. STEEL: Mm-hmm, yes. 21 MR. HORTON: In fact, we should probably just 22 establish that as a policy. 23 Okay. So noted. 24 MS. OLSON: That concludes our business. 25 MR. HORTON: Thank you, Members. We will 26 reconvene tomorrow morning as scheduled. 27 ---oOo--- 28 33 1 REPORTER'S CERTIFICATE 2 3 State of California ) 4 ) ss 5 County of Sacramento ) 6 7 I, KATHLEEN SKIDGEL, Hearing Reporter for the 8 California State Board of Equalization certify that on 9 February 1, 2012 I recorded verbatim, in shorthand, to 10 the best of my ability, the proceedings in the 11 above-entitled hearing; that I transcribed the shorthand 12 writing into typewriting; and that the preceding pages 1 13 through 33 constitute a complete and accurate 14 transcription of the shorthand writing. 15 16 Dated: February 9, 2012 17 18 19 ____________________________ 20 KATHLEEN SKIDGEL, CSR #9039 21 Hearing Reporter 22 23 24 25 26 27 28 34