1 BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION 2 450 N STREET 3 SACRAMENTO, CALIFORNIA 4 5 6 7 8 REPORTER'S TRANSCRIPT 9 JANUARY 15, 2013 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 Joann Richmond 15 Chief Board Proceedings Division 16 17 18 For Staff: Jeff Angeja Tax Counsel IV 19 20 ---oOo--- 21 22 23 24 25 26 27 28 2 1 450 N STREET 2 SACRAMENTO, CALIFORNIA 3 JANUARY 15, 2013 4 ---oOo--- 5 MR. HORTON: Members, let us reconvene the 6 meeting of the Board of Equalization. 7 Ms. Richmond, our first item under 8 consideration? 9 MS. RICHMOND: Our first item that was taken 10 under submission is B1, Lawrence A. Gruber. This is a 11 waived appearance. 12 ---oOo--- 13 B1 LAWRENCE A. GRUBER 14 NO. 598287 15 ---oOo--- 16 MR. HORTON: Members? 17 MS. YEE: Move to sustain the Franchise Tax 18 Board. 19 MR. HORTON: Moved by Member Yee to sustain the 20 Franchise Tax Board. Second by Member Mandel. 21 Objection, Members? 22 None noted. Such will be the order. 23 ---oOo--- 24 25 26 27 28 3 1 MR. HORTON: Ms. Richmond. 2 MS. RICHMOND: Our next item is C1a, Varuj, 3 LLC; C1b Kassian, Inc.; and C1c, Bistango-Irvine. 4 ---oOo--- 5 C1a VARUJ, LLC 6 NO. 538547 (EA) 7 C1b KASSIAN, INC. 8 NO. 538549 (EA) 9 C1c BISTANGO-IRVINE 10 NO. 538551 (EA) 11 ---oOo--- 12 MR. HORTON: Members? 13 MS. MANDEL: Move the staff recommendation. 14 MS. YEE: Second. 15 MR. HORTON: Moved by Member Mandel the staff 16 recommendation. Second by Member -- 17 MS. STEEL: No. 18 MR. HORTON: -- Yee. 19 MS. STEEL: -- I have different petition. 20 MR. HORTON: Oh. 21 MS. STEEL: This is the one that taxpayers -- 22 MR. HORTON: Discussion, Members. 23 MS. STEEL: This is the one that taxpayers 24 filed the tax return even with or without that he paid 25 taxes as much as he can. And he paid everything 26 up-to-date, and he set up the payment plan with the 27 district office directly. And everything was done. And 28 this is too harsh to put penalty on this taxpayer. 4 1 MR. HORTON: Mr. Runner. 2 MR. RUNNER: The, um -- I mean this -- 3 obviously, you know, part of the process we can't have 4 individuals deciding to finance their -- their -- their 5 businesses with sales -- with other people's money when 6 they're using it, collecting the sales tax. 7 Um, at the same time, you know, if indeed the 8 ability to keep a business open helps people stay 9 employed, and in this particular case we had successful 10 resolution once we found that sweet spot to which they 11 could afford. Um, I was just concerned that we started 12 maybe with a number that just was never going to work 13 for them, and eventually we got there. And when we did, 14 we got there. It worked. 15 Um, you know, I would -- you know, I'm just 16 wondering if there's a way for us at least to remove the 17 finality penalty on that one, to at least give some 18 break for what it is that they were doing. 19 This was paid off relatively quickly for a 20 large, very large amount of money, um, in regards to 21 their -- their process. 22 You know, and so that's, I think, my 23 observation is that we can find something to give back, 24 uh, in terms of one of those penalties, uh, for a 25 business that stayed in business through rough economy, 26 kept their people employed, and paid their interest for 27 the money that they ended up using. And they're going 28 to pay lots of penalty there, but at least see if we can 5 1 move then on that finality penalty. 2 MR. HORTON: I'll take that as a question of 3 law for the, uh, Appeals unit. 4 MR. ANGEJA: That would be for the finder of 5 fact. If you find reasonable cause to relieve, you 6 can. 7 MR. HORTON: Okay. 8 MR. RUNNER: Okay. 9 MR. HORTON: Further discussion, Members? 10 Hearing none. 11 There's a motion to adopt staff recommendation, 12 Member Yee, second by Member Mandel. 13 Objection noted. 14 Ms. Richmond, please call the roll. 15 MS. RICHMOND: Mr. Horton. 16 MR. HORTON: Aye. 17 MS. RICHMOND: Ms. Steel. 18 MS. STEEL: No. 19 MS. RICHMOND: Mr. Runner. 20 MR. RUNNER: No. 21 MS. RICHMOND: Ms Yee. 22 MS. YEE: Aye. 23 MS. RICHMOND: Ms. Mandel. 24 MS. MANDEL: Aye. 25 MS. RICHMOND: Motion carries. 26 ---oOo--- 27 28 6 1 MS. RICHMOND: Our next item is H1, Legal 2 Appeals Matters; H1.1 Ralph Louis Tocci. 3 ---oOo--- 4 H1.1 RALPH LOUIS TOCCI 5 NO. 460529, 468214 (CH) 6 ---oOo--- 7 MS. MANDEL: Um -- 8 MR. HORTON: Ms. Mandel. 9 MS. MANDEL: Yeah, I'll -- I'll move the staff 10 recommendation. 11 MR. HORTON: Member Mandel moves staff 12 recommendation. 13 MS. YEE: Second. 14 MR. HORTON: Second by Member Yee. 15 MS. STEEL: Objection. 16 MR. HORTON: Objection noted. 17 Ms. Richmond, please call the roll. 18 MS. RICHMOND: Mr. Horton. 19 MR. HORTON: Aye. 20 MS. RICHMOND: Ms. Steel. 21 MS. STEEL: No. 22 MS. RICHMOND: Mr. Runner. 23 MR. RUNNER: No. 24 MS. RICHMOND: Ms. Yee. 25 MS. YEE: Aye. 26 MS. RICHMOND: Ms. Mandel. 27 MS. MANDEL: Aye. 28 MS. RICHMOND: Motion carries. 7 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 January 15, 2013 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 7 constitute a complete and accurate 14 transcription of the shorthand writing. 15 16 Dated: January 17, 2013 17 18 19 ____________________________ 20 KATHLEEN SKIDGEL, CSR #9039 21 Hearing Reporter 22 23 24 25 26 27 28 8