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 26, 2013 10 11 ITEM H TAX PROGRAM NONAPPEARANCE MATTERS - ADJUDICATORY 12 H1. LEGAL APPEALS MATTERS 13 CASE HEARD NOT DECIDED 14 1. EAST COAST FOODS, INC. 15 No. 444779(AS) 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 For Board of Equalization Staff: Jeff Angeja 18 Legal Department 19 20 For the Petitioner: Sam L. White Representative 21 22 ---oOo--- 23 24 25 26 27 28 2 1 5901 GREEN VALLEY CIRCLE 2 CULVER CITY, CALIFORNIA 3 FEBRUARY 26, 2013 4 ---oOo--- 5 MS. RICHMOND: Our next item is H1, Legal 6 Appeals Matters. 7 I believe we do have a public speaker for this 8 item. 9 MR. HORTON: As the taxpayer comes, would staff 10 please introduce the issues in this case? Oh. 11 MR. ANGEJA: Nonappearance matter. 12 MR. HORTON: Nonappearance. My apologies. 13 Thank you. 14 Uh, Members, before us we have Mr. Sam White 15 the, um -- well, uh, Capital Group. Uh, Cliffon? Is it 16 an F or a G? 17 MR. WHITE: Clifton. 18 MR. HORTON: Clifton, T? 19 MR. WHITE: Mm-hmm. 20 MR. HORTON: Oh, okay. Capital Group. 21 Welcome, sir. 22 MR. WHITE: Thank you. I'll just take a few 23 minutes. Good afternoon, Mr. Chairman and Members of 24 the Board. 25 I appreciate the opportunity to speak before 26 this item. This is relating to, in their -- the case ID 27 444779. Um, and the issue is fairly straightforward. 28 I appeared before the Board a few months ago 3 1 asking the Department to simply look at documents. We 2 provided the documents to the Department. And the 3 original auditor was one of the auditors that looked at 4 them. Within a day or two, he returned the -- quote, 5 "returned the files," unquote, to Sacramento. 6 I asked, on numerous occasions -- and numerous 7 means 10-plus occasions -- to sit down with me, to 8 understand the -- the -- the bank statements, merchant 9 statements and the spreadsheets. 10 He did not. He -- he told me, quote, "Go to 11 the Board and ask them to tell me." And at that time 12 what I did is I professionally said, you have the 13 documents. Thank you. I'd still like to meet with you. 14 I still -- I reached out last week, also, to 15 two members of the Department, asking, can we just 16 simply meet so you can understand what's in there 17 instead of summarily dismissing what's in there 18 without -- without looking at it? 19 It was obvious from the brief they haven't 20 looked at it yet. And all we're here asking now is, I 21 was asking before, look at the documents. Now I'm 22 simply asking -- unfortunately, I have to be back up 23 here again, asking somebody to meet with the taxpayer 24 before the files go back to Sacramento, which they did. 25 And that's what we're trying to do, to get this 26 thing resolved. Let's walk through them. Let me help 27 you understand. If you don't understand them, let me 28 help you. If you have an issue with cash versus 4 1 accrual, as an example, let me help you understand it. 2 Because it was your auditors that selected the 3 percentages. So in the brief, don't make a comment that 4 the taxpayer did it. 5 Let's -- so, I'm going to step back here. 6 We're asking simply, meet with us. Sit down in a room 7 before you send the file back up there and meet with me. 8 Pick up the phone call -- phone, telephone and call me. 9 Let's meet. You know where my office is. 10 And -- and I appeal to you to have, um, the 11 last piece of it, in -- in my comment here, is I appeal 12 to have somebody other than the original auditor because 13 he's -- there's obviously an issue. And -- and we'd 14 like an independent. He can be in the room, but we'd 15 like somebody else there, also, that we can act 16 professionally and -- and try to get this thing solved. 17 Again face-to-face. You have the documents, 18 now let's go solve it. And let's meet face-to-face 19 before you send the file back up. 20 And that's it. Thank you very much. I 21 appreciate it. 22 MR. HORTON: Thank you. 23 Obviously a question of the Department. 24 MS. YEE: Appeals. 25 MR. HORTON: Appeals? 26 MR. ANGEJA: Mr. Horton? 27 MR. HORTON: I mean the obvious question, the 28 taxpayer's asking whether or not the Department -- or is 5 1 alleging that the Department failed to meet with him on 2 a number of different occasions. Is there an opinion of 3 the Appeals unit? 4 MR. ANGEJA: The hearing summary material -- 5 Jeff Angeja on behalf of Appeals. 6 The hearing summary materials list a 7 chronology. The only thing not includ -- and the 8 chronology indicates multiple efforts by the Department 9 to try to contact taxpayer's rep and meet with the 10 taxpayer's rep. 11 The only thing that's of recent development 12 that's not included on that chronology is that on the 13 14th of November, 2012, taxpayer's representative 14 provided additional information that the Department 15 examined and provided back -- their response back to the 16 taxpayer's representative on the 28th, indicating the 17 position that we've taken in our hearing summary that no 18 adjustments are warranted. And there's been no effort, 19 until last week, to have any contact from taxpayer's 20 representative. 21 MR. HORTON: Okay. Thank you very much. 22 Members? 23 MR. RUNNER: Just to follow-up on -- on that 24 discussion. 25 MR. HORTON: Members, let me caution us not to 26 retry the case. 27 MR. RUNNER: No, no. I have a question for 28 the -- for the -- for Appeals. 6 1 MR. HORTON: Okay. 2 MR. RUNNER: Um, the question to Appeals is, 3 um, is it customary for us, once new documents have been 4 provided, that we just examine those and then give them 5 back? Or wouldn't -- it would seem to me it would be 6 customary to try to have some dialogue. 7 MR. ANGEJA: That is true, and the Board had 8 ordered, in this matter, a re-audit. So evidence is 9 provided to the Department, the Department examines it; 10 and custom and practice would be to try to meet and go 11 over those documents. If the Department isn't 12 understanding something correctly or there's yet 13 additional documents, there would be that dialogue. 14 The record shows that since December 28th the 15 Department's been ready, willing and able to have that 16 and it hasn't occurred. So we've got no basis on which 17 to recommend any further adjustments. 18 MR. RUNNER: So the options that the taxpayer 19 would have would be once this is -- once a decision 20 would be made, that then they could -- and then they 21 feel like issues and there's new information, they could 22 ask for a rehearing. 23 MR. ANGEJA: Petition for rehearing. 24 MR. RUNNER: Okay. 25 MR. ANGEJA: If that were granted, then there 26 would be the opportunity then -- 27 MR. RUNNER: Okay, thank you. Thank you. 28 MR. HORTON: Okay. Further discussion, 7 1 Members? 2 MR. ANGEJA: And if I might remind the Board, 3 this is subject to Section 40, requiring a published 4 decision, once a final decision is rendered. 5 MS. YEE: Right. 6 MS. MANDEL: So -- 7 MR. HORTON: Thank you. 8 Member Mandel. 9 MS. MANDEL: Um -- 10 MR. HORTON: Why don't I do this: Why don't I 11 ask the Appeals unit to -- relative to AB 2323, describe 12 the options to the Members. 13 MR. ANGEJA: We've got them in the hearing 14 summary. One is -- 15 MR. HORTON: Yeah, I know. Yeah, I know 16 they're there. 17 MS. MANDEL: Remind us, for our benefit. 18 MR. ANGEJA: To, uh, follow the usual course 19 where you would render a decision, either today or in 20 this case it would appear that we're doing -- 21 MR. HORTON: Tomorrow. 22 MR. ANGEJA: The matter's taken under 23 consideration, tomorrow. But decide it at the 24 conclusion of a hearing and direct staff to come back 25 with an opinion, uh, unless you wish it to be not yet 26 final or precedential, in which case we still come 27 back with a -- well, I'm confusing -- 28 MR. HORTON: No. 8 1 MR. ANGEJA: We come back with an opinion after 2 the petition for a rehearing process -- 3 MR. HORTON: There you go. 4 MR. ANGEJA: -- would be complete. 5 MS. YEE: Okay. 6 MR. HORTON: Okay. Members, is there a motion? 7 Moved by Member Yee to take the matter under 8 submission. Second by Member Runner. 9 Without objection, Members, such will be the 10 order. 11 Thank you very much for appearing before us. 12 The Board will take your matter under consideration 13 tomorrow, uh, morning sometime, and send you a written 14 report of our decision. Thank you. 15 ---oOo--- 16 17 18 19 20 21 22 23 24 25 26 27 28 9 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 26, 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 9 constitute a complete and accurate 14 transcription of the shorthand writing. 15 16 Dated: May 7, 2013 17 18 19 ____________________________ 20 KATHLEEN SKIDGEL, CSR #9039 21 Hearing Reporter 22 23 24 25 26 27 28 10