1 BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION 2 450 N STREET 3 SACRAMENTO, CALIFORNIA 4 5 6 7 8 REPORTER'S TRANSCRIPT 9 MAY 30, 2012 10 11 12 13 14 15 CUSTOMER SERVICES & ADMINISTRATIVE EFFICIENCY COMMITTEE 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 For the Board Michelle Steel of Equalization: Chair 3 4 Jerome E. Horton Member 5 6 Betty T. Yee Member 7 8 George Runner Member 9 10 Marcy Jo Mandel Appearing for John 11 Chiang, State Controller (per Government Code 12 Section 7.9) 13 Joann Richmond 14 Chief Board Proceedings Division 15 16 ---oOo--- 17 For the Department: Jaime Garza 18 Deputy Director External Affairs Department 19 Kari Hammond 20 Staff Services Manager II Outreach Services Division 21 Susanne Buehler 22 Chief, Tax Policy Division Sales and Use Tax Department 23 Liz Houser 24 Deputy Director Administration Department 25 Regina A. Corso 26 Senior Vice President Harris Interactive Poll 27 28 ---oOo--- 2 1 450 N STREET 2 SACRAMENTO, CALIFORNIA 3 MAY 30, 2012 4 ---oOo--- 5 MR. HORTON: Ms. Richmond, our next item. 6 MS. RICHMOND: Our next item is the Customer 7 Services and Administrative Efficiency Committee. 8 Ms. Steel is the Chair of that committee. 9 Ms. Steel. 10 MS. STEEL: I call the Customer Services and 11 Administrative Efficiency Committee meeting to order. 12 We have three agendas, um -- three items on 13 this agenda. And first item is update on the Electronic 14 Registration, um, we call eReg Marketing and Outreach 15 Plan. 16 And Mr. Jaime Garza, welcome. 17 MR. GARZA: Thank you. Good morning. 18 MS. STEEL: And Kari Hammond, too. 19 MR. GARZA: Thank you. 20 Uh, good morning, Madam Chair and distinguished 21 Board Members. 22 I'm Jaime Garza, the Deputy Director of the 23 External Affairs Department. And joining me this 24 morning is Kari Hammond who is our Manager of the 25 Outreach Services Division. 26 And we're here today to give you a brief 27 overview of the educational campaign for BOE's new 28 Electronic Registration System, or we -- as we like to 3 1 call it, eReg. 2 Ms. Hammond will provide a brief overview right 3 now of our outreach efforts. 4 Ms. Hammond. 5 MS. HAMMOND: Good morning, Chair and Members. 6 Kari Hammond with Outreach Services Division. 7 The purpose of this educational effort is to 8 notify the public of the change in the current BOE 9 process and to encourage, um, compliance when 10 registering for the applicable permits, licenses or 11 accounts, using eReg. 12 The primary audiences for the campaign are new 13 business owners, tax practitioners and nonprofit 14 organizations. 15 Staff will be working with our existing 16 business owners and permit holders to let them know how 17 eReg can help them or how to use the eReg system. 18 We propose the educational campaign will be 19 conducted in three phases. So we're currently in what 20 we call phase one, which is our pre-launch partnering 21 phase. Staff has contacted a number of partner 22 organizations, talked to them about the benefits of 23 eReg, and we're out-reaching with them to help us, um, 24 raise awareness to those key, um, audiences. 25 Staff has reached out, for example, to, um, all 26 of California small business development centers, the 27 local Chambers of Commence state-wide and local 28 governments. 4 1 Phase Two is what we call post launch awareness 2 and compliance. We plan to send out press releases, 3 promote eReg via social marketing, BOE events and 4 speaker bureau, um, engagements. We'll work closely 5 with our partner organizations to educate the public 6 through these type of events, and partnership 7 agreements. 8 The final phase is ongoing compliance. So as 9 we learn more about how eReg is working for our 10 customers, we'll adjust our educational effort to target 11 the compliance challenges. 12 MR. GARZA: And we've also developed a number 13 of educational eReg items. The first are some posters 14 to be displayed in our district offices and to be handed 15 out to partner organizations. Uh, the series of posters 16 portray different tones to, uh, provide flexibility in 17 addressing various audiences. 18 Uh, the second brochure is designed to give our 19 customers a simple clear overview of eReg and raise 20 awareness about the system. 21 And finally, we have developed some inserts 22 that will be mailed and given to our external partners 23 as a way to inform our customers about eReg. 24 This package of materials conveys a consistent 25 look and message that starting or doing business just 26 got easier with eReg, a new streamlined service that 27 offers our customers a convenient, a fast and free way 28 to register online for permits, licenses and accounts. 5 1 This concludes our presentation on eReg, and 2 we're happy to answer any questions. 3 MS. STEEL: Thank you very much. 4 We are moving towards the future. And any 5 comments and questions? 6 Member Yee? 7 MS. YEE: No. Just that it's about time. 8 MS. STEEL: How long it's going to take to take 9 over the paper documents? 10 MS. HAMMOND: Um, I believe that it's one month 11 after the June 18 launch that we will no longer be 12 accepting paper. 13 If you'd like that answer specifically, we can 14 ask Susanne Buehler. 15 MS. STEEL: Right. There's three offices just 16 paperless completely. And could you tell -- I already 17 know the answer, but could you tell the public. 18 There's 15 people got returned. But how they 19 pay the taxes? 20 MS. BUEHLER: I'm sorry. Ask the question 21 again. 22 Susanne Buehler with Sales and Use Tax. 23 MS. STEEL: There are three offices that are 24 totally, um -- they have to file all the taxes in 25 e-file -- I mean, you know, pay taxes electronically. 26 And then they brought the, um, check -- they brought -- 27 what they brought? Cash. And then they were returned. 28 And then, you know, how they paid it? 6 1 MS. BUEHLER: Oh, I think you're referring to 2 the No Cash Pilot -- 3 MS. STEEL: Oh, okay. 4 MS. BUEHLER: -- that we have in some of our 5 district offices. 6 MS. STEEL: We have too many customer services 7 here that we are moving really forward. And I'm so 8 excited that there are so many things are going on. 9 But that was really interesting that we really 10 have to hear about it. 11 MS. BUEHLER: Yes, that will be tomorrow under 12 Mr. McGuire's Deputy Director Report. 13 MS. STEEL: But you can still give it to us 14 because that's the answer. 15 MS. BUEHLER: Certainly. 16 We did start a No Cash Pilot in three offices 17 at the Board of Equalization where we encouraged our 18 taxpayers to please come without cash, pay by check, 19 money order or credit card or online with us. 20 Um, it's been very successful so far. We did 21 have a lot of outreach at the beginning, before we 22 started the No Cash Pilot. And we did have some 23 taxpayers that did come in with the cash despite the 24 posters and the, um, ongoing education that had 25 occurred. And we provided them with information of 26 where they could in turn go and change that cash into a 27 check or money order or their other options of paying by 28 credit card or check while they were in the office. 7 1 Um, almost everyone came back that same day and 2 paid. We had 15 individuals who did not, but all 15 did 3 eventually pay; um, 14 of them within a few days, and 4 the final within a few weeks. So they all did get the 5 hang of it. 6 We've had a lot of positive feedback from both 7 staff and taxpayers. They see it as the next step in 8 the future. Um, it -- it's been an exciting pilot for 9 us. We were, um, a little anxious at the beginning 10 about how it would be received but are pleasantly 11 surprised so far. 12 MS. STEEL: So since, uh, Mr. Garza came to the 13 Board then, you know, we are really moving fast in all 14 the customers services and all the registrations and 15 everything, just moving forward to do without paperwork. 16 So we are doing great job. And I really thank, 17 to the staff, that you guys are doing good job. 18 So, if there's no questions or comments, we're 19 going to move to item two. Uh -- 20 MR. HORTON: Madam Chair, if I may? 21 MS. STEEL: Mr. Horton. 22 MR. HORTON: Yes. Um, just wanted to 23 compliment the Chair as well as to, um -- to, uh, ask 24 that in the process of marketing the eReg or starting a 25 business, that we take the opportunity to address some 26 of the tax gap issues as well. 27 Uh, part of the -- and I believe this process 28 will do that because it accelerates starting a business 8 1 and enhances one's ability to register with the Board of 2 Equalization, uh, simultaneously as they begin to start 3 registration with other entities that are required to 4 start a business. 5 As most of -- as many of us believe is that 6 many business people actually start elsewhere, instead 7 of the Board of Equalization. And so by the time that 8 they register with the Board of Equalization, a few 9 months or a few days could have gone by. And yet the 10 sales activities, uh, will have -- are ongoing and the 11 registration starts six months later, in the case of one 12 particular taxpayer in my district, uh, and the city was 13 a little concerned about the local tax not being 14 accounted for. 15 And so this gives us an opportunity to 16 associate revenue, uh, to this effort and at the same 17 time address some tax gap issues. Just a FYI, if you 18 will. 19 MS. STEEL: Mm-hmm. 20 Anymore comments? 21 We're going to move on to second item. We talk 22 about tax gap here, a presentation of new educational 23 materials to inform the public about the underground 24 economy. 25 Mr. Garza. 26 MR. GARZA: Thank you very much. 27 The next item is the presentation of the 28 educational materials that focus on the underground 9 1 economy which hurts all Californians and deprives our 2 state of billions of dollars in corporate, personal and 3 sales and use taxes each and every year. 4 A number of educational tools have been created 5 to raise awareness about the underground economy and its 6 impact on legitimate California businesses. Our message 7 is to don't buy into California's underground economy. 8 Uh, these materials are available upon request 9 and can be used as Board Members see fit, at seminars, 10 at district offices, at educational events. 11 Uh, we are also making them available, with 12 your approval, uh, on the website, for the public to 13 view and for them to download if they find the 14 information compelling enough that they can use it in -- 15 in their personal lives, as well as news release 16 attachments, press events that focus on tax fraud and 17 tax evasion, and made available to partner organizations 18 such as Chambers of Commerce, local governments, law 19 enforcement and state agencies. 20 The brochure simply describes the illegal 21 activity that feeds the underground economy and how the 22 public can personally make a difference. The series of 23 posters portray different tones to provide flexibility 24 in addressing various audiences. 25 Uh, this concludes our presentation, and I'm 26 happy to answer any questions regarding these 27 educational materials. 28 MS. STEEL: Any comments? Questions? 10 1 MR. RUNNER: I -- I -- in reviewing the 2 materials on the tax -- uh, in regards to the 3 underground economy, I thought it was very cleverly 4 done. I thought the message is very clear, and I think 5 it's, uh -- I think it's important for us to send a good 6 positive direct message to people in regards to the 7 consequence of buying into the -- the underground 8 economy. 9 So, hopefully we can figure out how to get 10 those out there and seen and see behavior change. 11 MS. STEEL: I think we can use, by the staff, 12 the first one, friendly one, first. And then if they 13 don't pay, the tougher and harder one. 14 MR. RUNNER: Like the mugshot one? 15 MS. STEEL: Yeah. 16 MR. RUNNER: You know what I'm talking about? 17 MS. STEEL: Yeah. 18 MS. YEE: That would be good. 19 MR. GARZA: And, again, uh, with due respect, 20 Madam Steel, um, they are for different audiences. 21 That's the flexibility that we're offering there. 22 MS. YEE: Madam Chair. 23 MS. STEEL: Yes, Member Yee. 24 MS. YEE: Um, I wanted to see if, uh -- just so 25 these aren't kind of sitting on a shelf, collecting 26 dust. Are we reaching out to some of our sister 27 agencies -- 28 MR. GARZA: Yes, we have, Ms. Yee. 11 1 MS. YEE: -- that are active in the underground 2 economy. 3 MR. GARZA: We -- in our process, a part of 4 this is looking at, uh, potential stakeholders and 5 partners. We've actually shared this information, uh, 6 with some of our law enforcement folks that we've been 7 reaching out to. For example, the LA County Sheriff's 8 Department -- 9 MS. YEE: Uh-huh. 10 MR. GARZA: -- wanted to see what we were 11 creating. Placer County Sheriff's, Sacramento County 12 Sheriff's. 13 MS. YEE: So we sent them posters? 14 MR. GARZA: Uh, and we did send them PDFs. 15 MS. YEE: Okay. 16 MR. GARZA: It's easier for -- for 17 cost-effectiveness. Uh, and we've also shared them with 18 some of our, uh, other state agencies that are very 19 concerned about the underground economy, such as DMV 20 and, uh, Consumer Affairs and folks like that. 21 And we've made them -- and told them they are 22 more than, uh -- they -- they can use our -- our 23 materials. We're proud of what we're doing at the Board 24 of Equalization. 25 MS. YEE: Okay. Thank you. 26 MS. STEEL: Any more comments? 27 Okay. We're going to move on to third item, a 28 discussion of the Harris Interactive Polls on use tax. 12 1 This is actually very interesting result that, 2 you know, I was looking at it. And under the $8 billion 3 tax gap, I think it's going to help, uh, to know that 4 how public thinks about the use tax that, you know, most 5 people didn't know. And it was interesting to see the 6 results. 7 So, Mr. Garza. 8 MR. GARZA: Thank you again. 9 Our next item is the Harris Interactive Poll. 10 And with me this morning is Liz Houser, our Deputy 11 Director of Administration, uh, Department, and Regina 12 Corso, who is the Senior Vice President at Harris 13 Interactive. 14 Uh, the Board of Equalization contracted with 15 Harris Interactive to complete a broad-based survey 16 regarding Californians' attitudes and perceptions 17 towards use tax. Uh, this survey was conducted at the 18 request of the legislature during the review of our Tax 19 Gap 2 BCP, and approved by BOE's department head 20 committee. 21 Uh, the Harris poll is now complete. The 22 results of the poll are in. It surveyed more than a 23 thousand Californians, and it shows the need for a more 24 extensive outreach campaign to educate taxpayers about 25 use tax and obligations. 26 Here is, uh, just some of the findings to share 27 with you this morning. Seventy-eight percent of 28 Californians did not know or were not aware about use 13 1 tax prior to taking this survey. Of those, more than 2 half, 57 percent, said they would likely pay use tax 3 after learning about this tax. Roughly two-thirds would 4 pay use tax if it funded local schools, public safety, 5 libraries, transportation, among others. And four in 6 five of the Californians surveyed made an out-of-state 7 purchase within the past year, and most of them either 8 through the Internet or mail order. 9 Uh, the Harris poll has provided, uh, some 10 valuable information that we think, uh, can be used to 11 enhance current strategies that will help point us in 12 the direction that we need to go in terms of educational 13 efforts. 14 Uh, the External Affairs Department is 15 collaborating with the Sales and Use Tax as well as 16 Special Tax Department to extensively review the polling 17 data and to develop some focused initiatives that if 18 proven to be effective in increasing compliance, uh, 19 could be used as concrete data if we return before the 20 legislature in the future. 21 Uh, I am going to hand over this presentation 22 now to Regina Corso with Harris Interactive to discuss, 23 uh, a little more about the methodology, as well as 24 findings. 25 Ms. Corso, welcome. 26 MS. CORSO: Thank you very much. 27 Good morning everybody. 28 Um, as Mr. Garza has said, I am here to discuss 14 1 the methodology as well as the high-level findings. 2 Obviously I'll be throwing out some statistics, so 3 please stop me if you'd like me to further explain 4 anything. 5 Um, you know, we were hired to basically take 6 a, um, perception and attitude test towards the use tax 7 among California residents. To do this, what we did was 8 we surveyed over 1,000 California residents in this -- 9 in the month of April. Took us about one week to 10 actually conduct the field, and we worked very closely 11 on the questionnaire design with Jaime's staff and team 12 to develop a questionnaire that all were comfortable 13 with and that was very fair and very balanced. We 14 wanted to make sure we got the answers right. 15 What we did was we did this online and all of 16 the results were weighted to represent the State of 17 California. So when we're talking about the survey, we 18 are talking about what California residents think. And 19 we did find some very interesting things. 20 You know, first, as we saw already, that we do 21 think it is possible, you know, to develop a successful 22 campaign. However, there are some factors that need to 23 be overcome first. And the first is an education 24 factor. 25 One of the key reasons right now, we've 26 discovered, for noncompliance towards the use tax is 27 just an overall lack of awareness that it even exists. 28 Now, as we saw, most people do not know what the use tax 15 1 is. 2 One of the things we asked was importance. How 3 important are taxes to vital services that serve you and 4 your community? You know, 9 in 10 say if, you know, 5 very or somewhat important, property tax, income tax, 6 both state the federal. These are things people know. 7 But when we got to use tax, just 62 percent said it was 8 very or somewhat important. Again, there's a lack of 9 awareness of what this actually means. 10 Now, just 1 in 4 report being extremely or very 11 familiar. I know that's -- with the use tax. It's a 12 very low number. And we also know that most people 13 do -- they're afraid to say that they are not familiar 14 with something. So that number does tend to be slightly 15 exaggerated and we do know that. So the number is very 16 low. 17 We also know that two-thirds of California 18 residents were not aware when you buy merchandise from 19 out-of-state stores, by mail order, over the phone, that 20 if tax isn't collected, they are required by law to 21 actually pay it back to the State of California. Again, 22 an education campaign. 23 Now, when we asked about what would, you know, 24 get you motivated to comply with this law, well, basic 25 understanding that there is a legal requirement to do so 26 is top on the list. 27 Upon learning about the use tax, over half of 28 California residents say they are very or somewhat 16 1 likely to therefore pay the use tax. You know, 76 2 percent said that they would be very or likely -- very 3 or somewhat likely to pay the use tax if they knew it 4 was required by law. And then 71 percent say they would 5 be likely to pay if there would be penalties for not 6 paying. Again, there's lack of education. 7 But one thing to keep in mind is a successful 8 campaign will need to overcome some pretty general 9 opposition to the law and the idea of just paying more 10 taxes in general. Since people don't know it's already 11 a law, once they learn about it, they feel that these 12 are new taxes that are being instituted on them. 13 But, while paying use tax may be the law, there 14 is definitely a conflicting attitude towards it and a 15 general resistance to paying more taxes. Again, they -- 16 right now most California residents say, "We pay 17 enough." 18 Three-quarters, 74 percent, of California 19 residents are opposed to the following statement: 20 If I have to pay sales tax in California on 21 items purchased from an in-state realtor (verbatim) in 22 California, then I should pay sales tax to California on 23 items purchased from an out-of-state realtor (verbatim). 24 So basically they're saying, I'm -- you know, 25 they're paying -- I'm paying -- buying something 26 out-of-state, I shouldn't have to pay taxes here. 27 Three-quarter are opposed to the idea of doing so. 28 Two-thirds say a major reason for their 17 1 opposition to the use tax is because they already pay 2 enough taxes. Now -- and also, they feel -- again, 3 about 69 percent of California residents say, "State 4 government should be doing more with the taxes that are 5 already coming in." 6 One thing that they didn't understand in the 7 survey was that there is a shortfall because people 8 aren't already paying this tax. Nobody understood that 9 in the survey. 10 We also tested various arguments that might be 11 used to support a use tax. And the results are mixed, 12 with less support for higher taxes but more support for 13 free market competition. So that might be one angle to 14 take. 15 However, when trying to probe as to what would 16 get people to really pay a use tax, it was the impact it 17 would have on them personally: Schools, firefighters, 18 police. They understood that the money was going to 19 help their community and then not cause schools to shut 20 down, firefighter stations to close or be laid off, that 21 was a motivating factor to get them to actually use the 22 use tax. 23 Any campaign really, we found, is going to have 24 to address some key elements of the use tax. It's the 25 law; that's one thing nobody's aware of. The purpose of 26 the use tax; that it's essentially a sales tax that you 27 need to pay; that it really does fund these critical 28 government services, and it's an easy tax to pay. 18 1 And we asked how they would like to pay it, you 2 know, and how they would like to learn about it. Tax 3 preparers are one way; they could learn about it from 4 them. They would prefer to collect their receipts and 5 pay, not do an estimate. 6 So we've got various ways that the residents of 7 California would be willing to therefore go forward and 8 say, "Yeah, okay, I need to pay this use tax." But it 9 really comes down to the bottom line is an education 10 campaign. 11 You know, I've done this before. When we see 12 this large of a body that just doesn't have the basic 13 fundamentals of what a concept is, that's the first step 14 of any campaign. Once there's a knowledge base, then 15 other things really do tend to fall in place quite 16 quickly after that. 17 MS. STEEL: Thank you. 18 MR. HORTON: Thank you. 19 MS. STEEL: Any comments, questions? 20 MR. RUNNER: Betty, then I -- I'll go in after 21 that. 22 MS. STEEL: Member Yee. 23 MS. YEE: Yeah. Thank you, Madam Chair. 24 Um, if I could pose the question to you. And 25 thank you for the overview of the findings. 26 MS. CORSO: You're welcome. 27 MS. YEE: You didn't speak, um, to some of the 28 findings that you had relative to the role for 19 1 retailers. Can you speak to that a little bit? 2 MS. CORSO: I'm sorry. Can you explain that 3 just a little bit? 4 MS. YEE: Yeah. I mean, I think there was, um, 5 some suggestion that the role of retailers is also 6 essential to collecting the use tax. 7 MS. CORSO: Yes, it definitely is. 8 Um, what -- people say when we ask them about, 9 you know, this -- did you pay this tax and why not? No 10 one ever collected the tax. And when we asked, Well, 11 would that be something that you would want to see? 12 Yes, they would like to see the out-of-state retailers 13 actually be the ones to collect the tax. That would be 14 the easiest way that they would find to pay it. 15 And I believe it was about two-thirds who said 16 they would prefer to see it collected in that manner. 17 MR. HORTON: Mm. 18 MS. CORSO: So that is something that, you 19 know, would make the residents' life in paying the tax a 20 lot easier. And they wouldn't even notice the burden, 21 is basically what that comes down to -- 22 MS. YEE: Mm-hmm. 23 MS. CORSO: -- because they're paying tax and 24 that's what they're used to doing. 25 MS. YEE: I mean, it sounds like with each of 26 your findings there's something that kind of directly or 27 indirectly conflicts with it. Um, I mean, on this 28 particular situation, even though, um, there -- there -- 20 1 there was some, um, acceptance of, uh, the retailer 2 collecting the tax, you also had 74 percent opposing, 3 uh, the statement that was, uh -- 4 MS. CORSO: Mm-hmm. 5 MS. YEE: -- presented to them, "If I had to 6 pay sales tax in California, on items purchased from 7 in-state -- from an in-state retailer in California, 8 then I should pay sales tax to California on items 9 purchased from an out-of-state retailer," that you had a 10 significant -- 11 MS. CORSO: Mm-hmm. 12 MS. YEE: -- number also opposing that 13 statement. 14 So, I guess my question is, how -- and I'm -- 15 I'm going to back this up a little bit. But -- so 16 education obviously in the first step. 17 MS. CORSO: Mm-hmm. 18 MS. YEE: But is this kind of an all-in kind of 19 outreach campaign? That's the first step, but that's 20 not going to obviously resolve these conflicts. 21 MR. CORSO: It won't resolve the conflicts. 22 What we've learned is that when people are presented 23 with issues such as taxes, having to pay more for 24 anything, that there always is this conflict. They know 25 they should. 26 I mean, everyone knows they should pay a little 27 bit more to buy a green product, for example. They 28 should pay more to help fund schools, to help fund 21 1 firefighters. But do they want to? No. And that's the 2 conflict, I think, that you've recognized here in this 3 survey. 4 MS. YEE: We -- we recognize it almost -- 5 MS. CORSO: All the time, I'm sure. 6 MS. YEE: In every election, yeah. Thank you. 7 MS. CORSO: That's what -- that's what we find. 8 If the retailers are the ones who are collecting it, 9 then they're not even noticing. I think that's what 10 they're saying. It's not something that they have to 11 do. 12 MS. YEE: Mm-hmm. 13 MS. CORSO: They don't have to add something on 14 to their state income tax. They don't have to write a 15 check back to the State of California to, you know, 16 reimburse for the taxes that should be paid. 17 That's why I think they'd like the retailers to 18 do it. So the conflict is, I don't want to pay it. But 19 if I have to pay it, I don't want it to be something 20 that I have to physically do. 21 I pay taxes when I buy something, you know, 95 22 percent say, "Yeah, I pay sales tax." This is something 23 that would be similar where they really wouldn't have to 24 go out of their way to do it. 25 MS. YEE: Mm-hmm. Okay. 26 Um, I want to pose a question to Mr. Garza, and 27 maybe Ms. Houser, if I could. 28 Um, I -- I was a little surprised that this 22 1 survey actually occurred. And I -- I wanted to just 2 kind of back up and see, um, what all ensued after this 3 Board -- I think, Mr. Runner, at your suggestion, your 4 leadership, we had developed, uh, an in-house survey. 5 We had also approved some funding for a more extensive 6 outreach program, uh, which, uh, I know was before the 7 legislature. And, uh, I know we had purchased, uh, I 8 think some, uh, banner adds right before the filing 9 deadline to, um, advertise the use tax on the income tax 10 returns -- um, the use tax line on the income tax 11 returns. 12 I -- I'm just trying to figure out how this 13 kind of fit into everything. And from this, uh, what 14 our next steps might be, given the findings. Uh, 15 because it just seems to me, uh -- and part of this goes 16 to the resources that we've already expended and the 17 resources that we may have available to do -- take on 18 the next steps. 19 MS. HOUSER: I can speak a bit to the, uh, the 20 current -- the survey that was conducted. 21 Uh, Liz Houser, Deputy for Admin. 22 Uh, when we were going through the BCP process, 23 the Tax Gap 2 BCP included a couple of elements; one was 24 a survey, and then there was a extensive -- or small 25 marketing campaign. 26 As we did our pre-briefs with the leg. 27 consultants, uh, several of them -- on the BCP, several 28 of them had said, you know, have you used a polling, uh, 23 1 source, and do have you some data that you could bring 2 to us that -- that would show definitively that, yes, 3 this campaign would be useful? 4 Uh, we indicated we had not. And they'd 5 indicated a strong interest in having that. Then when 6 we had our first budget hearing in mid-March, that was 7 brought up again. 8 Uh, so as we looked at this, we took it back to 9 the department head committee and discussed whether or 10 not we would have the funds available in this fiscal 11 year. We originally thought this survey was going to be 12 quite a bit more expensive than it turned out to be. 13 The amount we had -- 14 MS. YEE: What was the cost? 15 MS. HOUSER: The amount we had budgeted was 16 like 200,000, we thought, in the BCP. 17 MS. YEE: Mm-hmm. 18 MS. HOUSER: And we were able to, uh, use 19 Harris's existing, uh, database of -- of clients, and it 20 was under 40,000. So we were able to, uh, find funds in 21 this fiscal year to be able to complete that survey, to 22 provide the data to the legislature, to hopefully move 23 our BCP forward. 24 Um, when we did present the results, they were 25 very interested in it. They did agree that it -- it 26 seems that a campaign, an outreach advertising campaign, 27 would be valuable. Uh, they felt that 2.5 million was 28 not adequate. The comments they made is if we need to 24 1 do this, you're going to need to put a lot more money 2 into it and this isn't the year to do it, while 3 recognizing that, yes, there was definitely some merit 4 to doing something like this. 5 So I know that Mr. Garza and his team are 6 looking at what we are able to do with some in-house 7 resources, and, um, I think he has some additional to 8 add on that. 9 MS. YEE: Yeah. Okay. 10 MR. GARZA: And, uh, you wanted a little more 11 on -- on our -- on what the External Affairs Department 12 did on a banner program? 13 MS. YEE: Uh, I just made a statement that you 14 spent money on a banner program in February. 15 MR. GARZA: Yes. Yes, ma'am, we did. 16 MS. YEE: Okay. 17 Let me go back to the Harris, um, 18 representative. 19 MS. CORSO: Mm-hmm. 20 MS. YEE: Here's what I'm troubled by. And 21 part of this, I think, our goal was to try to figure 22 out, um, and ascertain what kind of outreach would be 23 effective to increase compliance. I think that was 24 the -- actually it was an unstated goal when I was 25 trying to push for a collective goal at the, uh -- 26 outcome of the, uh, market research. 27 The questions that you posed in this survey are 28 based on individual perceptions, right? 25 1 MS. CORSO: Yes. 2 MS. YEE: Okay. So how do we take into account 3 measuring hard data regarding compliance? And I -- I'm, 4 uh -- I mean, our own data, some of our own data 5 suggests that only about 0.5 percent of Californians pay 6 use tax via the income tax return line. And 37 percent 7 comply via the, uh, retailer's collection of the tax. 8 MS. CORSO: Mm-hmm. 9 MS. YEE: But -- so I'm just trying to -- 10 and -- and this is all trying to get to a point of 11 discussion about what our next steps ought to be that 12 would be effective. 13 I mean I'm just -- I'm having a hard time here 14 because, um, as you just have presented the findings, 15 there's just always something kind of coming in that's 16 in conflict. But you're measuring individual 17 perception, uh, and we are trying to -- I'm trying to 18 figure out how to take that data and really, um, have it 19 be put in a compliance context for how we try to 20 increase our success. 21 MS. CORSO: The -- while we're measuring 22 individuals, what we're doing is, because the fact that 23 this is weighted to represent the entire State of 24 California, it is an aggregate. So all of these are 25 being aggregated together to kind of represent what 26 people in California think about this issue. 27 Um, whether -- you know, we have 16 percent who 28 say that they have paid a use tax in some way, shape or 26 1 form, um, yes, that is different than the numbers that 2 you have just cited. But this is also a -- it is a 3 perception issue. And one -- you know, we're going with 4 about 16 percent remember doing this. You know, so 5 we've got to take that in consideration. 6 We did also ask, How you would you like to hear 7 about a campaign? Where would you like to learn about 8 this? That was something that we did put forward. It 9 was what you might expect. We'd like to see a 10 television campaign. We would like to see, you know, 11 something being done on the Internet. You know, How 12 would you like to communicate? And why would you like 13 to hear this communication? You know, what messages? 14 Well, it helps government services. 15 So we did test kind of the campaign that 16 hopefully will get done, whether this fiscal or next 17 fiscal year. So we did look at perceptions of where the 18 education campaign should come to help guide the next 19 steps as well. 20 MS. YEE: Mm-hmm. Okay. Now, your memo also 21 suggested that, um, we could recover about 76 million of 22 the estimated, what, 1.1 billion that goes uncollected 23 every year. 24 Um, what was the assumption there in terms of 25 what kind of a campaign, how much we would invest to 26 recover the 76 million? I mean, it just seems like such 27 a paltry amount. 28 MS. CORSO: Actually that wasn't our number. 27 1 That was a number that we were presented with. 2 MR. GARZA: That was, uh -- yeah. 3 MS. HOUSER: Research Division. 4 MR. GARZA: That was our Research Division -- 5 MS. YEE: Okay. 6 MR. GARZA: -- who came up with that number -- 7 MS. YEE: All right. 8 MR. GARZA: -- and provided us with -- with 9 taking a look at potential success rates. I'm not an 10 expert at explaining the specifics on how that works. 11 MS. YEE: Okay. 12 Uh, do you know what was assumed there in terms 13 of what kind of a outreach campaign we would need to 14 invest in to recover that? 15 MR. GARZA: I'm sorry. I can check in and get 16 back to you on that, Ms. Yee. 17 MS. YEE: Okay. 18 Uh -- okay. Let me stop there, Madam Chair. 19 I'm -- I'm really having a hard time trying to think 20 about what our next step ought to be given this 21 information. 22 MR. HORTON: Yeah. 23 MS. STEEL: Thank you, Member Yee. 24 It's -- it's really hard to project the numbers 25 because even we said that $8 billion tax gap -- 26 MS. YEE: Mm-hmm. 27 MS. STEEL: What -- you know, it's not really 28 clear that, you know, where -- I mean, they research it, 28 1 but it's really not sure that that's really right number 2 or not. 3 So, you know, these are like all the -- we kind 4 of like assuming that these numbers are right. But, you 5 know, a lot of times a number really fluctuate here. 6 But it was really interesting because use tax 7 part that, you know, I was listening to radio one time, 8 radio talk show host said, actually suggested his 9 listeners to go outside of California and buy 10 merchandise -- 11 MR. RUNNER: Mm-hmm. 12 MS. STEEL: -- then you don't have to pay 13 taxes. So nobody really knows that they really have to 14 pay taxes. 15 And then, you know, I hear you that most of 16 people, that they want to have an easier way. I pay it 17 if it's the law. And then if -- you know, if somebody 18 who charges it at -- when I'm buying it, then I'm 19 willing to pay it. But I don't want to do extra work 20 end of the year that, you know, you have to keep all the 21 receipts and start calculating and put it in the tax 22 return, that's going to be very tough. 23 But, um, I'll go for Member Runner. 24 MR. RUNNER: Um, yeah. Just a couple 25 questions. One in terms of some of the methodology and 26 some of the specifics, some questions. 27 Um, I thought it was interesting in -- in your 28 description of a question, because I thought that one of 29 1 the questions was the issue of who should pay. And -- 2 and Member Yee talked -- you know, was it the retailer 3 versus the -- the -- the purchaser. 4 I -- I thought the question was asked, uh, not 5 quite that clearly. Because, uh, as the question was, I 6 think it was something like, If you were to buy a 7 T-shirt online, who should pay the tax? And then the 8 answer was, The consumer or the retailer. That's 9 different than, Should the retailer collect the tax, 10 right? 11 MS. CORSO: Correct. 12 MR. RUNNER: Okay. So I'm not sure that 13 question makes -- I -- I think there's confusion in that 14 question because it makes it sound like the consumer 15 isn't pay it either, it's just going to be this retailer 16 who just takes it out of their pocket as opposed to -- 17 MS. CORSO: Mm-hmm. 18 MR. RUNNER: -- transferring it there. So I'm 19 not sure that question is all that helpful at that 20 point. 21 Let me just ask, too, is this a survey that you 22 did -- you do in conjunction with -- on -- on the 23 computers or those who you already have a relationship 24 with or clients on a computer survey? 25 MS. CORSO: Yes. This was an online survey. 26 MR. RUNNER: So -- right. Help me -- I'm 27 assuming do you this, but there must be a way then to 28 extrapolate this out so that it does reflect all of 30 1 State of California -- 2 MS. CORSO: Mm-hmm. 3 MR. RUNNER: -- in light of the fact that 4 you're only surveying those who probably are more 5 technologically, um, sophisticated because the survey 6 itself is on the computer. Does that make since? 7 MS. CORSO: I understand what you're saying. 8 MR. RUNNER: Okay. 9 MS. CORSO: Yes. 10 MR. RUNNER: Tell me how you do that. 11 MS. CORSO: Sure. Uh, we actually have been 12 doing this -- Harris Interactive was one of the pioneers 13 of online research. And when we started this back in 14 1999, we realized that at that point I want to say about 15 15 percent to 20 percent of the population was actually 16 regularly online. 17 At that point we knew we had to do a lot more 18 work to make sure that what we were saying -- we were 19 getting from our Internet research was actually 20 projectable to a general population who, 80 percent, 21 were not online. 22 We've done a lot of research and we've 23 developed a proprietary propensity score -- 24 MR. RUNNER: Mm-hmm. 25 MS. CORSO: -- where we actually do telephone 26 research and online research at the same time, asking 27 the exact same questions. And then we do a score which 28 we then input to each of our respondents, to make sure 31 1 that we can project to the general population, whether 2 it's the State of California residents, the national 3 population as a whole, or some other group of 4 individuals. 5 As the years have gone by, we have found that 6 the propensity score that we need to use is getting 7 smaller and smaller, and now in some instances is 8 actually something we don't even need. 9 MR. RUNNER: Okay. 10 MS. CORSO: Mm-hmm. Because more people are 11 online. 12 MR. RUNNER: Okay. So at that point you've 13 compensated for that. 14 MS. CORSO: Yes. 15 MR. RUNNER: Adjusted the numbers accordingly. 16 MS. CORSO: Correct. 17 MR. RUNNER: Good. Okay. 18 Um, let me just ask a couple of questions in 19 regards to some of the -- some -- where I think some of 20 the value in this particular information is, uh, for us 21 to use with existing resources. 22 MS. CORSO: Mm-hmm. 23 MR. RUNNER: One is, I found it interesting -- 24 because, again, we use a tax gap number for the 25 uncollected, um, use tax out there. And, again, I guess 26 this is back to Mr. Garza, and it may be a discussion 27 that you can have with, uh -- with Research and 28 Statistics. 32 1 One of the issues that we've always -- that 2 I've always found interesting is how we come up with 3 that number. Uh, how do we know what the tax gap is? 4 And -- and it's -- I think it's been explained to us in 5 the past here that we start with a national number of -- 6 that has been established by dollars that are, um -- 7 taxes that are -- that are not paid as a result of 8 online purchases. And maybe I should -- it's probably a 9 broader issue than just online. It's probably all, um, 10 use tax, whether it be telephone or -- or -- or mail 11 order or online. 12 And then -- and then our -- our staff has then 13 kind of brought that down and narrowed it down to 14 California then, which has created then our number for a 15 tax gap. 16 So, that being said, my question, I guess, that 17 I'd like to have us go back and look at now, does this 18 help us now start -- rather than with a national number 19 and work our way down, does this help us start with a 20 California number in terms of tax gap? 21 Because one of the issues that was interesting 22 to me is that I think it was 68 percent of those 23 surveyed who bought something, either by telephone, 24 online or, um -- or mail order, was less than $500. Um, 25 you know, that's pretty -- that's a lot of population 26 with a pretty low number. 27 Um, and -- and so I'm really interested to 28 see -- and I'd like to see if our -- our Research and 33 1 Statistics folks then can kind of see if starting with 2 these -- this survey, how this jives with what it is 3 that we've estimated the tax gap to be dealing with the 4 issue of a California num -- unique numbers, and see if 5 that makes any sense. 6 I -- I -- again, I don't know if it does or 7 not. But -- but it seems to me that -- just that number 8 itself struck me as a relatively low number that the 9 average -- because -- because what we do then is we take 10 the estimate, and that's how we build, for instance, 11 the, uh -- the chart in regards to what it is people can 12 estimate. Because we build the chart based upon what we 13 think the uncollected tax is. 14 Uh, and again, we started with the national 15 number and worked our way down. I'm interested to see 16 if our Research and Statistics Department could tell us 17 whether or not this gives us the ability to create a 18 more unique and accurate California number. Um, so it 19 may or may not. That's just kind of my observation. 20 The other issue that seems to me, um, is the 21 cross tabs are going to be extremely helpful. And 22 again, we just got these, um -- and, uh, there's a whole 23 notebook -- I think this is the one -- of cross tabs. 24 Because, again, the cross tabs allow us then to figure 25 out what our targeted message is, to who. 26 Um, for instance, um, you know, the issue of -- 27 one of the issues in the demographics of five percent -- 28 there's only five percent that purchased $2500 and 34 1 above. Well, I guess I'd phrase this as that's more of 2 a -- that's a use tax rich group as opposed to the 3 average, 69 and below, that paid $500 and less. 4 So the question is, how -- who are those 5 people, and how can we target a unique message to that 6 group? Because that group has, what, the highest 7 opportunity for revenue for us to collect. 8 And so the cross tabs, I hope -- in fact, I 9 know they will -- they'll tell us where those people 10 could be located, what their age groups are, those kind 11 of issues so that we can already use our existing 12 dollars that we use. 13 And I think one of the things we need to remind 14 ourselves, it's not like we spend zero right now trying 15 to collect use tax. We spend tens, if not hundreds, 16 maybe even a few million, dollars in our communication 17 about use tax now. 18 I think what I hopefully will -- we will do, 19 and I think this is, Mr. Garza, what I think we're 20 talking about doing, is going back to the Sales and Use 21 Tax Department and talking about then what has our 22 message been to people dealing with use tax in the past 23 and how is it that we might be able to hone that message 24 more specifically given the statistics that we have, so 25 that our return with maybe the exact same amount of 26 money that we're using has then -- has -- has more 27 dollars attached to it. 28 And, to me, I think that's -- now, if we can 35 1 get more money from the -- from the state in regards to 2 a more, uh, ambitious program, that's great. But I 3 think, just on its face, we ought to be able to figure 4 out how to target our message better now. 5 Um, and let me just ask, you know, the Harris 6 folks here. 7 MS. CORSO: Mm-hmm. 8 MR. RUNNER: Other states have done this, I 9 assume, uh, in terms of using you for this purpose. 10 MS. CORSO: Mm-hmm. 11 MR. RUNNER: Given the information that you 12 received here from the State of California, do you -- is 13 there enough -- do you believe there's information in 14 here for us to do a better targeted message? 15 MS. CORSO: I do. And, you know, one of the 16 things that we did find was that it is higher income. 17 College graduates, older individuals. You know, younger 18 individuals are not the ones who are spending a lot of 19 the money; they're definitely in that 69 percent. 20 So there is a targeted audience that I think 21 could be your first pass. And we did look at it by, you 22 know, the various districts in the state. So we could 23 even get it down to that level. I think it was district 24 two -- 25 MR. RUNNER: Mm-hmm. 26 MS. CORSO: That was definitely the one that, 27 you know, I think spiked it. 28 So, yes, there is -- in those tabs that you 36 1 have there are how we've actually pinpointed who we 2 thought some of the key demographics were who we're 3 targeting. 4 MR. RUNNER: Okay. 5 And let me go back then to Mr. Garza, following 6 up on -- on some of the earlier questions. Um, and that 7 is, I -- I -- I would hope, and I think that's what 8 you're saying, is that that is indeed what is going to 9 take place now is you meet together with -- whether it 10 be Research and Statistics, or whether it be, um, Sales 11 and Use Tax, to come up with that more targeted program. 12 MR. GARZA: That is our plan, sir. We're 13 planning already to sit down together to look at those 14 cross tabs and the information, share that information, 15 and figure out exactly what -- how we can reformulate 16 our message, and whether or not the, uh, ways that we've 17 been doing business in terms of notifying our partners 18 and stakeholders should be adjusted. And that's already 19 been in the plans. As a matter of fact, we already have 20 a meeting planned to get together to do that. 21 MR. RUNNER: Good. Thank you. 22 And again, specifically, I'd be really 23 interested if you work specifically with Research and 24 Statistics to see about that -- that gap number and to 25 see if these numbers reflect -- are consistent with what 26 those numbers have been in the past. And if they are, 27 why? If they're not, why not? 28 MR. GARZA: Yes. 37 1 MR. RUNNER: Okay, thanks. 2 MR. GARZA: Yes, sir, I will do that. Thank 3 you. 4 MS. STEEL: Thank you. 5 Member Yee. Sorry -- yeah, Member Yee, go. 6 MS. YEE: Okay. Um, what -- what do you think 7 will be the timing of that, Mr. Garza? Can you kind of 8 put a plan together? 9 MR. GARZA: Yes, ma'am. I'm -- I'm assuming 10 that we could probably get this done within two to three 11 months to have a complete look at it. If -- if the 12 deadline needs to be quicker than that, we can -- we can 13 move that. 14 But it will be first -- once I sit down with 15 the team members and we discuss it and how we do that, 16 that's going to give us a better indication as to how we 17 can formulate after we take a look at those numbers. 18 MS. YEE: Um, I want to inject something in 19 here. 20 MR. GARZA: Sure. 21 MS. YEE: Um, I mean -- and I would agree with 22 Mr. Runner, there -- there are some things in the cross 23 tabs that I think will be instructive. Uh, but what I 24 want to inject in here is also the fact that we have, 25 uh, Assembly Bill 28X that's being held in abeyance 26 right now, uh, that the Governor sign that I think could 27 change the landscape here, where there will be, uh, an 28 obligation for online retailers to collect the tax. 38 1 Um, and so I want to be mindful that we're 2 not -- that we are in fact, uh, reaching out in the most 3 effective way possible. I also want to be mindful of 4 resources, but that is, I think, a significant, uh, 5 piece of how behavior may change or be affected. 6 So, uh -- and perhaps what you could do -- I 7 mean, what I would like to see is a timeline of, uh -- 8 and -- of, uh, suggested next steps, um, targeted 9 outreach, to whom, um, media -- means of that outreach, 10 uh, resources that will be required for that to happen. 11 Uh, just to see how close we bump up against the AB 12 20X -- 28X operative date. Uh, but it seems to me 13 that's a significant piece that could really alter the 14 landscape here. 15 MS. STEEL: Thank you, Member Yee. 16 You know what, uh, let's have a meeting that, 17 you know, we're going to set up the timeline, Mr. Garza, 18 about this. 19 And Chairman Horton. 20 MR. HORTON: Um, I think most of it's been 21 said, but I just wanted to sort of reiterate, uh, 22 Mr. Runner and what Member Yee has said in reference to 23 the cross tab information. 24 Um, I think it's very telling, I mean it sort 25 of sounds on the surface as if though, uh, many of the 26 residents are not necessarily aware of the legislation 27 that passed in, uh, 1935. And part of the challenge 28 there is that it actually passed in 1935 and has been on 39 1 the records, uh, for some time, yet we have not been 2 extremely aggressive, uh, in, uh -- in pursuing the 3 revenue because a number of the complications, including 4 the legal challenge from a Commerce Act perspective and 5 a number of other challenges that the Board has faced 6 financially in being able to assess tax on 32 million 7 consumers, plus consumers in the State of California. 8 So I think it's important that we are cognizant 9 of -- of that, that the challenge that we face in that 10 regard. It seems to me that, as you look at the cross 11 tabs, we also saw that there was some what they referred 12 to as responsibility shifting, and that when you ask a 13 person a question, are you asking me or are you asking 14 me as a responsible person, or are you asking me as a 15 consumer and so forth. 16 If you're asking me as a responsible person, of 17 course I'm going to do the responsible thing. If you're 18 asking me to help schools and public safety, of course I 19 want to do that. Uh, do you want me to pay it now? 20 Well, that might not happen. 21 Uh, and so, uh, let's make sure that we take 22 that in consideration, uh, both from a cost perspective 23 as well as cross-tabbing and looking at the polling. 24 You know, I had some reservations on the 25 polling. I -- I must share with the Members, I had 26 somewhat committed the cardinal sin that says, well, you 27 know, you got 30 years' experience. You know what's 28 going on, and all these experts that we have here, well, 40 1 they know what's going on. But, quite frankly, the 2 information was actually pretty revealing. 3 Um, the indication that there's a more 4 willingness to -- to -- to pay the liability when it's 5 not as -- as obvious, if you will, and that's when the 6 retailer collects it. So a sense of educating the 7 retailer might -- might be easier for us to accomplish, 8 uh, from a financial perspective because there are less 9 retailers than there are consumers. 10 Educating the practitioner, uh, may be more 11 effective because there are less practitioners than 12 there are retailers. And so I'd be very interested in 13 what the -- you believe the effectiveness of educating 14 the different categories of, uh, responsible interested 15 parties in this. And the -- what you believe because 16 there are a couple of questions and it sort of implies 17 that if the out-of-state consumer was to collect it, 18 would you cooperate? And so what you believe would be 19 necessary if in fact the Amazon-dot-coms of the world 20 decide to invest in California's infrastructure, um -- 21 I'll leave that alone. But, um, that there's 22 some information as to what -- what outreach campaign 23 may be helpful given the enactment of, uh, the 24 legislation shared by Member Yee, uh, and the subsequent 25 compliance. Because once the legislation passed, uh, 26 not everyone has said they're going to comply. 27 So, uh, with that, thank you very much. It's 28 been, uh, interesting. 41 1 MS. STEEL: Thank you. 2 Let me remind you 1935 we didn't have 3 computers. So we are moving forward right now, with all 4 of these laws. 5 MR. HORTON: Madam Chair, if I may. 6 MS. STEEL: Really quick. 7 MR. HORTON: Okay. 8 MR. RUNNER: Ooh. 9 MR. HORTON: That's okay. I will comply. 10 Let's -- let's make sure that we -- we share 11 with the public in this process that the Board has done 12 an exceptional job of reaching out and educating since 13 1935, uh, the constituents. 14 It's -- it's not without effort, and it's 15 certainly not without, uh -- uh, maximizing the limited 16 funds that the legislature has allocated for this type 17 of activity. But to the extent that we've had the funds 18 and -- and so forth, I know when -- when I served with 19 the Board of Equalization, some 23 or 24 years, we made 20 a point in every exit conference to talk about the use 21 tax. And that was something that was part of the audit 22 program. 23 So, let's tell the positive as well as the 24 negative in this process. 25 MS. STEEL: Thank you, Ms. Corso, coming out. 26 And thank you, Mr. Garza, and your staff for 27 hard work. 28 And this concludes the business of the Customer 42 1 Services Committee. Thank you. 2 ---oOo--- 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 43 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 May 30, 2012 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 pages 1 13 through 43 constitute a complete and accurate 14 transcription of the shorthand writing. 15 16 Dated: June 13, 2012 17 18 19 ____________________________ 20 KATHLEEN SKIDGEL, CSR #9039 21 Hearing Reporter 22 23 24 25 26 27 28 44