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 OCTOBER 30, 2013 10 11 SALES AND USE TAX APPEAL HEARING 12 APPEAL OF 13 SONG CHA SANCHEZ 14 NO. 535612, 570144 (AS) 15 AGAINST PROPOSED ASSESSMENT OF 16 SALES AND USE TAX 17 18 19 20 21 22 23 24 25 Reported by: Juli Price Jackson 26 CSR No. 5214 27 28 1 1 P R E S E N T 2 For the Board Jerome E. Horton of Equalization: Chairman 3 4 Michelle Steel Vice-Chairwoman 5 6 Betty T. Yee Member 7 8 George Runner Member 9 10 Marcy Jo Mandel Appearing for John 11 Chiang, State Controller (per 12 Government Code Section 7.9) 13 Joann Richmond 14 Chief Board Proceedings 15 Division 16 For Board of Jeff Angeja 17 Equalization Staff: Tax Counsel IV 18 19 For Department: Lawrence Mendel Tax Counsel III 20 Legal Department 21 Brian MANUEL Supervising Tax 22 Auditor III Sales & Use Tax 23 Division 24 Interpreter: Andrew Roo 25 26 For Claimant: Song Cha Sanchez Taxpayer 27 28 ---oOo--- 2 1 LEGEND 2 ---o0o--- 3 INTERPRETER 4 This is Mr. Roo speaking. 5 6 INTERPRETER -- MS. SANCHEZ 7 This is Mr. Roo translating for 8 Ms. Sanchez. 9 10 MS. SANCHEZ 11 This is Ms. Sanchez speaking in 12 English. 13 14 ---o0o--- 15 16 17 18 19 20 21 22 23 24 25 26 27 28 3 1 5901 GREEN VALLEY CIRCLE 2 CULVER CITY, CALIFORNIA 3 OCTOBER 30, 2013 4 ---oOo--- 5 MR. HORTON: Let us reconvene -- let us 6 reconvene the meeting of the Board of Equalization. 7 Ms. Richmond, what is our next matter? 8 MS. RICHMOND: Our next item is C7, Song 9 Cha Sanchez. Please come forward. 10 We do have an interpreter for this case, a 11 Korean interpreter, and I believe it's full 12 interpretation. 13 MR. HORTON: Okay, thank you very much. 14 I would ask that the interpreter come 15 forward prior to introducing the issues in this 16 case. I would also ask the staff to pause 17 occasionally to insure the most appropriate 18 translation. 19 Mr. Angeja, would you please introduce the 20 issues in this case? 21 MR. ANGEJA: Mr. Chairman and Members, this 22 appeal presents two unresolved issues, which are, 1, 23 whether the taxpayer is liable as a successor for 24 the unpaid tax liabilities of Soybean Chinese 25 restaurant; and 2, whether relief of the collection 26 cost recovery fee is warranted. 27 MR. HORTON: Okay, on your hosayo 28 (phonetic), welcome to the Board of Equalization. 4 1 You now have 15 minutes -- oh, wow, I got 2 gracious here. 3 Welcome to the Board of Equalization You 4 have ten minutes to make your presentation. We 5 would ask that you commence with your introduction 6 for the record. 7 MS. SANCHEZ: Good afternoon. This is Song 8 Cha Sanchez. 9 MR. HORTON: Welcome. 10 INTERPRETER -- MS. SANCHEZ: When I first 11 purchased the business I had no clue that he owed 12 tax liability. 13 And after that -- in 2008 I purchased the 14 business. And two years later she received a letter 15 stating that she owes money to the State. 16 So, in 2010 of February she received a bill 17 or the notice. And next month, in March, she talked 18 to the old owner and they went to the Board 19 office -- the office. 20 MS. SANCHEZ: Yes, office. 21 INTERPRETER -- MS. SANCHEZ: So, what 22 happened was she came to the office with the old 23 owner. And the old owner asked Mr. Levy that since 24 it's not Miss Sanchez's fault, but rather is -- it 25 was because of his liability, he wanted to make a 26 payment. And he wanted to set up some kind of 27 payment plan. 28 And Mr. Levy said if there's no cash right 5 1 now to make that payment in full, Miss Song Cha 2 Sanchez has to make the payment for the liability 3 past due -- not past due, sorry. 4 So, even that after incident they came back 5 about three more times. But every time Mr. Levy 6 said Song Cha Sanchez has to make the payment. 7 Okay. So, after several months passed by 8 and there was a hearing or a meeting here and she 9 was informed that the liability was actually paid by 10 the old owner. 11 MS. SANCHEZ: Yeah, old owner -- 12 INTERPRETER -- MS. SANCHEZ: So, what 13 happened was there was about 70,000 liability and 14 the payment -- the amount of payment the old owner 15 made was about 67,000 is because that the 3,000 16 difference was levied from Miss Sanchez's bank 17 account previously. 18 And she doesn't understand and she also 19 argues that if the previous owner was willing to pay 20 70,000 and -- 70,000 and she -- yeah, she doesn't 21 understand why she has to pay the bank levy. I 22 mean, she already paid -- they already took the 23 money from her bank account and she feels she 24 shouldn't be liable for it. 25 Also she doesn't feel that she's entitled 26 the pay $925 cost collection fee -- collection cost 27 recovery fee. 28 And, yeah, basically, if the old owner was 6 1 supposed to pay 70,000, he should be liable to pay 2 the entire 70,000 not from me. 3 And she has made numerous attempt to talk 4 to us and she talked to Mr. Levy in our office, but 5 every time they repeated the same thing. 6 So, she feels that the -- so, the old owner 7 acknowledged that he -- he is entitled to pay the 8 entire 70,000. But BOE only received 67,000 out of 9 70,000. 10 Okay. So, since he acknowledges that he 11 owes the -- he owes 70,000. So, if BOE were to make 12 a request or the mandate to the old owner to make 13 that -- make the entire payment, I believe that 14 everything should be taken care of. 15 INTERPRETER: Anything else? 16 MR. HORTON: Thank you very much. 17 We'll now go to the Department and they 18 will have ten minutes to make their presentation. 19 We would ask that they commence with their 20 introduction after the translation. 21 MS. DENDORFER: Mr. Chairman and Members of 22 the Board, I'm Erin Dendorfer from the Board's Legal 23 Department, along with Lawrence Mendel and Brian 24 MANUEL, representing staff. 25 We agree with the Appeals Division's 26 recommendation. Taxpayer is liable as a successor 27 for the unpaid liabilities of the predecessor, 28 Soybean Chinese Restaurant, which I will refer to as 7 1 SBCR. 2 Under Section 6811 if any person liable for 3 any amount under the sales and use tax law sells a 4 business or stock of goods, his successor shall 5 withhold from the purchase price an amount 6 sufficient to cover the predecessor's outstanding 7 liabilities until the predecessor produces a receipt 8 from the Board stating that no such liability 9 exists. 10 If the purchaser fails to withhold such an 11 amount, the purchaser becomes personally liable for 12 the amount of the predecessor's liability. 13 In this case, SBCR, the predecessor, had an 14 outstanding liabilities of over $69,000 in tax plus 15 applicable interest and over $6900 in additional 16 penalties based on an audit for the period of 17 July 1, 2005 through July 31 of 2008. 18 These audit liabilities were uncontested 19 and went final May 6th, 2009. 20 SBCR also had a $251.70 late payment 21 penalty from a third quarter 2008 nonremittance 22 return. 23 Taxpayer, the successor, purchased the 24 restaurant from SBCR on August 1st, 2008 for 25 $170,000. Taxpayer instructed escrow to withhold 26 only $17,000 from the purchase price, which was not 27 enough to cover SBCR's outstanding liabilities. 28 In addition, the signed escrow documents 8 1 specifically stated, quote, 2 "Pending the deposit in escrow by 3 seller of releases from the State Board of 4 Equalization, escrow shall withhold $17,000 5 from funds accruing to the seller. 6 "The parties are aware of all 7 ramifications of this instruction and of 8 all things which may occur as a result of 9 escrow holders holding only $17,000 10 for closing seller's set of accounts at 11 close of escrow." End quote. 12 On August 4th, 2008, after the close of 13 escrow, the escrow company requested a clearance 14 from the Board. ACMS records indicate that a timely 15 notice of amounts due and conditional release was 16 faxed to the escrow company on September 29th, 2008, 17 informing taxpayer, the escrow company and the 18 seller that $170,000 was due and that the taxpayer 19 could be liable for this amount as a successor. 20 On April 2nd, 2009 an Amended Conditional 21 Release was issued to all parties, notifying them 22 SBCR had an outstanding liability of over $91,000. 23 Under Section -- 24 INTERPRETER: I'm sorry, she's asking to 25 where -- to -- to the escrow company. 26 MS. DENDORFER: For -- 27 INTERPRETER: Will you repeat? 28 MS. DENDORFER: The last sentence? 9 1 INTERPRETER: Yes. 2 MS. DENDORFER: On April 2nd, 2009 an 3 Amended Conditional Release was issued to all 4 parities notifying them that SBCR had an outstanding 5 liability. 6 INTERPRETER: Okay. 7 MS. DENDORFER: Under Section 6812, if the 8 purchaser fails to withhold, the purchaser becomes 9 liable for the amount to the extent of the purchase 10 price, unless the former owner produces a receipt 11 from the Board showing that the amount has been paid 12 or the Department issues a certificate stating that 13 no amount is due. 14 In this case, taxpayer did not receive a 15 receipt from the predecessor stating that the amount 16 was paid. The Department did not issue a tax 17 clearance certificate and instead informed taxpayer 18 that an amount was due. 19 Because taxpayer failed to withhold from 20 the purchase price an amount sufficient to cover the 21 predecessor's outstanding tax liability and also 22 failed to obtain a receipt from the Board, taxpayer 23 is liable as a successor. 24 With respect to the taxpayer's claim for 25 refund, the Department began collection efforts 26 against the predecessor, SBCR, but these efforts 27 were not sufficient to cover the entire liability. 28 INTERPRETER: Can you repeat that, please? 10 1 MS. DENDORFER: Sure. 2 With respect to taxpayer's claim for 3 refund, the Department began collection efforts 4 against the predecessor, SBCR, but these efforts 5 were not sufficient to cover the entire liability. 6 The Department then issued taxpayer a 7 Notice of Successor Liability on January 5th, 2010, 8 which became final on February 6th, 2010. 9 Between May 2010 and September 2011 the 10 Department levied nearly $2900 from taxpayer's 11 accounts. 12 On October 27th, 2011, the Department 13 issued three people dual determinations under 14 Section 6829, all of which were uncontested and went 15 final. 16 On May 3rd, 2012 a payment was received for 17 over $91,000. 18 INTERPRETER: Which year? 19 MS. DENDORFER: Original? 20 INTERPRETER: The date, yeah, please. 21 MS. DENDORFER: It was May 3rd, 2012. 22 This amount was the total amount of SBCR's 23 outstanding liability and this payment reduced 24 taxpayer's derivative liability to zero. 25 Taxpayer's claiming a refund of the amounts 26 levied from her accounts. Section 6901 explains 27 that the Board may refund any amount, penalty or 28 interest, that has been erroneously or illegally 11 1 collected. 2 In this case the funds levied from 3 taxpayer's account were legally collected because 4 taxpayer was liable as successor and that 5 determination was final. 6 Accordingly, we request that the 7 administrative protest and claim for refund be 8 denied. Thank you. 9 MR. HORTON: On rebuttal please. 10 INTERPRETER -- MS. SANCHEZ: I never 11 received a letter in 2010 -- 12 MS. SANCHEZ: January. 13 INTERPRETER -- MS. SANCHEZ: -- of January, 14 but I did receive a letter in February -- 15 MS. SANCHEZ: February, yeah. 16 INTERPRETER: Which year? 17 MS. SANCHEZ: 2010. 18 INTERPRETER -- MS. SANCHEZ: 2010. 19 MS. SANCHEZ: Yeah. 20 INTERPRETER -- MS. SANCHEZ: I didn't 21 receive any letter in January 2010. 22 And right away with the previous owner, we 23 went to the Board office to meet with Mr. Levy -- 24 Levy. 25 And Mr. Levy insisted that if Mr. -- if 26 they're not going to pay the amount in cash, full, 27 Miss Song Cha Sanchez will be held liable. I kept 28 on contacting the old owner and even the old owner's 12 1 lawyers send the BOE the drafted letter -- and sent 2 the BOE letter saying that Song Cha Sanchez should 3 not be liable and the old owner is liable. 4 And she feels she's not entitled to the 5 levy from the bank account and she -- she's not 6 liable for it. And the old owner is liable. And 7 he's aware of it. So, why -- why can't the Board 8 make a demand to the old owner? 9 Even the old owner would feel questionable 10 that when he, in fact, knows the amount that he owes 11 to the Board, why he's not paying the full amount. 12 She's questioning why the -- when, in fact, it was 13 instructed to withhold 17,000 -- I am sorry, 14 170,000, why they only took 17,000 and why she 15 received the letter that she owes money two years 16 after that period. 17 And 'til now nothing has been settled and 18 having such a hard time. 19 MR. HORTON: Thank you. 20 INTERPRETER: Yeah, she's done. 21 MR. HORTON: Thank you. 22 Discussion, Members? Member Steel. 23 MS. STEEL: You know this is the dual 24 determination. I know successor liability much 25 easier to collect the money, but at the same time 26 that the -- this buyer, this taxpayer, when she got 27 her letter on February, she met the staff and 28 that -- then predecessor already told the staff that 13 1 I am the one liable. 2 And, then, you know, it seems like this 3 taxpayer met for, I don't know how many times, about 4 three times, came with the predecessor and then 5 explained that the predecessor was liable. 6 But at the same time, three months later, 7 we just took the money out from this taxpayer. This 8 is a little -- if I can put it, little lazy to try 9 to just collect the money from the easier sources. 10 But why don't we put those -- I think that's on the 11 record already. 12 And why don't we go through the record and 13 this -- if the predecessor said that he or she, I 14 don't know, that person is going to pay for it, then 15 that has to be on the record and get all the money, 16 why he levying somebody else's money there? 17 I know there's a dual determination went 18 out, but that's not really right. Because when one 19 person said one person is liable, then we really 20 have to go after that person. 21 And then second thing is that when we 22 already levied and then this taxpayer came in and he 23 said he's paid everything, then why don't we just 24 give them the full amount and then return the 25 levying money that she said she was not responsible 26 and then the other person said the other taxpayer 27 was responsible? 28 Why don't we go through the process that, 14 1 you know, it's been already on the record -- should 2 be on the record. So, why don't we do that? That's 3 my first question. 4 When taxpayers coming in and when they said 5 they going to make payment, what's wrong with that? 6 I mean, you have to bring the cash -- that's what I 7 heard from this taxpayer. That doesn't really make 8 any sense at all for me. 9 If taxpayer wants to make payment, 10 something that they owe, then we have to negotiate. 11 That's the common sense. Our job is just collecting 12 the right amount of tax from the right person. 13 So, I just really don't understand that. 14 And, you know, just get the difference. But when 15 you look at the record that you know who's liable 16 and who is not and who's admitting that they are 17 liable and who's not, so I just don't understand why 18 this taxpayer comes here, that she's demanding her 19 money that she didn't owe. 20 MR. MENDEL: I just was wondering about 21 translating what the question -- 22 INTERPRETER: Well, I did to talk to her 23 while she was off. 24 MS. STEEL: I can talk to her in Korean, if 25 you want me to. 26 MR. MENDEL: -- I just -- 27 INTERPRETER: She understood what -- I 28 think she did understand most part -- most part of 15 1 what Ms. Steel was trying to say. 2 MR. HORTON: One second, please. 3 Ask her if she wants that translated or 4 not? 5 No, no, on the record, please. My 6 apologies. 7 INTERPRETER -- MS. SANCHEZ: She understood 8 all of the important part, not everything, but all 9 the important part she understood. 10 MR. HORTON: Okay. Please respond. 11 MR. MANUEL: Ms. Steel, Brian MANUEL for 12 the Department. 13 I understand exactly what you're saying, 14 Ms. Steel. It's the sequence of events that are 15 paramount here. The -- the actions were taken 16 against the predecessor account, levies were sent 17 out, but the notes indicate that no funds attached. 18 During early 2010 the responsible parties 19 and Miss Sanchez came into the office, as she 20 stated. And the notes indicate that there was 21 discussion of payment and a plan for payment, but 22 nothing was paid. That was in May of 2010. 23 The State -- the State, in order to protect 24 its interest, goes ahead and collects against the 25 successor in accordance with policy, given we don't 26 snow at that time -- or didn't know at that time -- 27 whether or not there is any guarantee to collect 28 under a dual determination against the responsible 16 1 parties. 2 And it wasn't until October 2011 that 3 approval was given for issuing a billing against the 4 duals -- the duals against the responsible parties. 5 So, while it's important -- 6 MS. STEEL: So, don't you have any -- sorry 7 about that, I am cutting off, but -- 8 MR. MANUEL: Go ahead. 9 MS. STEEL: -- I want to hear that on the 10 record. 11 This taxpayer just stated that the 12 predecessor said he's going to -- at that 13 meetings -- said that he's liable and he's going to 14 pay for it. 15 But the staff from that, I don't if it's 16 Mr. Levy or not, that person said, no, you have to 17 bring cash, you know, the full amount of cash at 18 this point. 19 So, do you have that on the record? 20 MR. MANUEL: We don't show -- we show in 21 the record here where a discussion is made about 22 payments and the amounts that are due. 23 And since the successor was fully liable 24 for the total amount due at that time, then I can 25 imagine that discussion would point in the 26 successor's direction that she was liable and would 27 have to pay in full. 28 INTERPRETER: She's asking if she can 17 1 speak? 2 MS. STEEL: Sure. 3 INTERPRETER -- MS. SANCHEZ: So, the old 4 owner came 'cause he wanted to make a payment. 5 So, Mr. Levy he said without the cash, 6 pointing fingers at Miss Sanchez, you make the 7 payment. 8 So, they even requested the installment 9 payment. And she said that Mr. Levy, said it has to 10 be cash only. 11 MS. SANCHEZ: Not here on table or you have 12 to pay. 13 MS. STEEL: It's really to sad to hear 14 that, you know, what kind of behavior that we are 15 really -- attitude we are giving to the taxpayers. 16 And what's the solution here? Is that 17 any way possible that we can ask that predecessor 18 that rest of the money, collection fee plus $2800 19 that we levied from this taxpayer, what's the 20 process that -- how we going to help this taxpayers? 21 Let's go a little more constructive. We're 22 not going to just attack each other here. 23 MS. DENDORFER: Unfortunately, in this case 24 the claim for refund statute allows for a refund 25 when an amount has been erroneously or illegally 26 collected. 27 And in this case she was found liable as 28 the successor and that the Notice of Successor 18 1 Liability had gone final. 2 So, the funds that were collected from her 3 account were legally collected on a final liability. 4 INTERPRETER -- MS. SANCHEZ: She wants to 5 make a comment. 6 INTERPRETER: No comment? 7 MS. STEEL: No. You know what, I heard 8 enough. 9 MR. HORTON: Question of the Department -- 10 did the Department at any point -- has the 11 Department made a demand of the predecessor? 12 And do we continue to go after the 13 predecessor? 14 MS. DENDORFER: In 2012 there was a payment 15 made that paid the outstanding liabilities of the 16 predecessor. 17 Prior -- prior to the point where we levied 18 the accounts of the successor in this case, we had 19 Levied the accounts of the predecessor and only -- 20 yeah, of the predecessor and we were only able to 21 recover $17,000 of the outstanding liability, which 22 at that point in time was $69,000. 23 MS. STEEL: That was not the levy, that's 24 from the escrow company. 25 MS. DENDORFER: Right. It was levied. We 26 sent a levy and the only response that we got was 27 from the escrow company. And they then mailed us a 28 check for $17,000. 19 1 MR. HORTON: Remind me again, who paid the 2 bulk of the liability? 3 MS. DENDORFER: The accountant for the 4 predecessor came in and made a payment to cover the 5 predecessor's liabilities. 6 MR. HORTON: And when was that? 7 MS. DENDORFER: That was -- 8 MR. MANUEL: May 2012. 9 MS. DENDORFER: May 3rd, 2012. 10 MS. YEE: 2012. 11 MR. HORTON: And was that pursuant to a 12 demand? 13 MR. MANUEL: That's pursuant to the dual 14 determinations. 15 MR. HORTON: Dual determination. 16 And the dual determination request was for 17 the full amount or the balance? 18 MS. DENDORFER: It was for the entire 19 outstanding liabilities. 20 MS. MANDEL: Outstanding liabilities? 21 MR. HORTON: That doesn't answer my 22 question. 23 Was it for the full amount of the 24 liability -- 25 MS. DENDORFER: Including the 3,000 that -- 26 MR. HORTON: -- as determined by the audit? 27 MS. DENDORFER: -- had already been levied, 28 no, because that amount had -- 20 1 MR. HORTON: I'm sorry -- 2 MS. DENDORFER: -- already been paid. We 3 couldn't -- 4 MR. HORTON: -- we were both talking at the 5 same time. 6 So, let me ask the question, complete it 7 then and respond. Let me make sure we don't need 8 translation here, though, first of all. 9 I'm sorry. 10 INTERPRETER: She says she understands the 11 most part of it. 12 MR. HORTON: Okay. Okay, I'm ready for the 13 answer. 14 MS. DENDORFER: The -- and the question was 15 whether the entire liability -- the entire amount? 16 The entire amount was not paid by the 17 predecessor because it excluded the nearly $3,000 18 that we had already collected from the successor 19 through the levies. 20 MR. HORTON: So, the demand that the Board 21 made was only for the balance of the amount due? 22 MS. DENDORFER: Correct. 23 MR. HORTON: Okay. I can't -- 24 MS. STEEL: Can I just ask one thing 25 that -- you know, while that negotiation is going on 26 that the predecessor wanted to make a payment, 27 the -- the February 19, the letter went out. And 28 this taxpayer and the seller just came in and right 21 1 away they said they going to start making payment. 2 How can we levy from the bank while that 3 they want to negotiate the payment? How that can 4 happen? 5 MR. MANUEL: Well, once the Notice of 6 Successor Liability is issued, it's a -- it's a 7 liability that's due and payable. 8 And, so, concurrently with the actions 9 taken to try to collect against the predecessor, you 10 can also take actions to collect against the 11 successor. 12 MS. STEEL: But they were -- 13 MR. MANUEL: As long as you -- 14 MS. STEEL: -- willing to pay the payments. 15 MR. MANUEL: Well, they indicated -- while 16 it's indicated in the record up until May 2010 there 17 was nothing paid, even though there was indication 18 in the record that that's what they wanted to do. 19 MS. STEEL: Who did -- coming in to 20 negotiate, they came at least three times before 21 May. 22 So, did -- I just can not understand that, 23 you know, when they are willing to make payments for 24 the taxes, how can we levy the bank account? 25 MR. MANUEL: Of the successor? 26 MS. STEEL: Yeah -- no, not just successor 27 or predecessors, both of them came in three times 28 and they want to make payments. 22 1 But still that Department goes out there 2 and levied the accounts. I mean, how can we do 3 that? 4 MR. MANUEL: Well, when there's indication 5 that -- they come in and they say they want to pay, 6 but there is nothing paid -- 7 MS. STEEL: Well, they couldn't pay because 8 they need -- they are demanding that one full 9 payment, that's why they couldn't do it. That's 10 what this taxpayer was saying, that if you don't pay 11 in cash right now, full amount, then, you know, 12 negotiation is done. 13 So, I just -- I can not understand what 14 kind of attitude that actually they are really 15 showing to the taxpayers. 16 And, Mr. Chairman, another thing is that 17 escrow companies, they have a lot of trouble that 18 we've been talking about the last couple of years 19 that they -- it takes 60 days to give the tax 20 clearance certificate to the escrow companies when 21 escrow asks for it. 22 But when it takes longer -- and a lot of 23 times that I see from my district, I don't know 24 about other districts -- that they are always 25 asking -- holding for full amount of sales of the 26 restaurants or whatever those businesses at the same 27 time. 28 Second, when they go out there and the -- 23 1 they're demanding way too much of money. They are 2 not letting escrow company release it. 3 So, I think this is the kind of like normal 4 process, that escrow companies are holding less 5 money than BOE's requesting because that request is 6 always little overdoing it. 7 So, I think we should really have education 8 program for the staff that when they are preparing 9 for clearance, tax clearance certificate, that they 10 have to be reasonable. That's one thing. 11 And then second thing is we really have to 12 have some seminars with escrow companies that they 13 really have to hold onto it. So, I don't want these 14 innocent taxpayers got hit like this. And they have 15 to pay for that -- what they really didn't -- they 16 don't owe. 17 MR. MENDEL: Could just -- the trouble with 18 escrow companies -- 19 MR. HORTON: Sir, there wasn't a question 20 MR. MENDEL: Okay. 21 MR. HORTON: Member Runner. 22 MR. RUNNER: Still -- on the timeline, why 23 would we -- what prohibits us from -- from issuing 24 the dual prior to billing the successor? 25 MR. MANUEL: There are a number of 26 administrative steps that need to be established 27 under the dual process. And it can take -- once you 28 send out the questionnaires and try to secure 24 1 information from customers, landlords, employees -- 2 it can take quite a while. 3 And we're not guaranteed, after sending out 4 those letters, whether or not we're going to secure 5 enough information to -- 6 MR. RUNNER: So, the answer is -- 7 MR. MANUEL: -- issue the dual. 8 MR. RUNNER: -- it can be done, it's just 9 that it extends the timeline for us to then 10 follow up on the successor? 11 There's nothing that prohibits us from 12 doing the dual prior to going to the successor? 13 MR. MANUEL: No, it's just an 14 administrative -- more administrative steps that 15 take a longer period of time. 16 MR. RUNNER: So, just extends out the time? 17 MR. MANUEL: Yes and as long as we've exten 18 -- exhausted remedies against the predecessor to a 19 certain extent, we can -- we are authorized to go 20 after the successor. 21 MR. RUNNER: But -- but nothing would 22 prohibit us from doing the dual prior to that? 23 MR. MANUEL: Nothing except the steps to 24 take and the approval levels to go through and 25 the -- the information to secure to establish the 26 basis for issuing the dual. 27 MR. RUNNER: Right, right. I mean nothing 28 prohibits us from that? 25 1 MR. MANUEL: Mo. 2 MR. RUNNER: 'Cause clearly the dual 3 worked. 4 MR. MANUEL: Yes. 5 MR. RUNNER: Right? The dual worked? 6 MR. MANUEL: Uh-huh, yes. 7 MR. RUNNER: So -- so, nothing would 8 prohibit us from doing the dual before we go to the 9 successor except timeline -- just extends the 10 timeline. 11 'Cause it -- here's -- here's where I'm 12 going with that, I mean -- 13 MR. MANUEL: Oh, well, there is one thing. 14 MR. RUNNER: Yeah. 15 MR. MANUEL: If we extend the time and 16 we're unable to collect against the responsible 17 parties, then that puts the successor at risk for 18 additional interest on the liability. 19 So, it's -- it runs both ways. 20 MR. RUNNER: So, you could -- 21 MR. MANUEL: It could take some time. 22 MR. RUNNER: Could you issue the billing? 23 Could you -- could you issue the billing and just 24 not make it go final? 25 MR. MANUEL: For the dual? 26 MR. RUNNER: No, for the successor? 27 MR. MANUEL: Well, we issued the billing, 28 and as long -- 26 1 MR. RUNNER: -- then it was final? 2 MR. MANUEL: -- as long as it's petitioned. 3 But in this case it wasn't, but you can always -- 4 MR. RUNNER: In theory -- 5 MR. MANUEL: -- always -- 6 MR. RUNNER: -- she would have gotten her 7 mail, which she said she did not get, you could have 8 issued -- you could have issued the billing and she 9 could have protested that and then avoided the dual 10 going final? 11 MR. MANUEL: She -- 12 MS. DENDORFER: Yes. 13 MR. MANUEL: -- she could. 14 MR. RUNNER: Okay. 15 MS. DENDORFER: If a petition for 16 redetermination is filed -- 17 MR. RUNNER: Okay. 18 MS. DENDORFER: -- within the time frame. 19 MR. RUNNER: So -- so, at that point then, 20 if that was the case, if that was the scenario, then 21 you could also then do the dual during that time 22 while you have billed the successor, but then you 23 were also doing the dual on the predecessor? 24 But what made this not happen was because 25 she -- the successor didn't respond to the billing? 26 Is that what I'm understanding? 27 MS. DENDORFER: Yeah, there was not a 28 timely petition for reconsideration. 27 1 MR. RUNNER: Okay, okay. Let me go to that 2 then. 3 Again it's just interesting to me that we 4 had another tool there that -- I mean I know it 5 lengthens it, but it was a tool that worked. 6 Let me ask -- some of the material that I'm 7 reading here says that they -- the successor said 8 that some of the mail was not received. 9 Can you ask about the mail of these 10 letters? In fact, there is a statement from the -- 11 there is a statement from the predecessor -- there's 12 a statement from the predecessor that says that BOE 13 admit letters mailed to me were being returned by 14 post office. 15 INTERPRETER: Can you repeat that, please? 16 MR. RUNNER: I have a letter, it says -- 17 it's like numbered 1 through 15, Request for Refund. 18 Reason for refund request. 19 No. 5 says -- 20 INTERPRETER: Okay. 21 MR. RUNNER: It says -- well, for No. 4 it 22 says, "Because I -- " this is her kind of broken 23 English. 24 MR. MANUEL: Okay. 25 MR. RUNNER: "Because I no get this 26 notice, I lose chance to disagree." 27 That was No. 4. 28 No. 5 says, 28 1 "BOE admit letters mailed to me 2 were being returned by post office. 3 INTERPRETER -- MS. SANCHEZ: Yeah, she says 4 she has retained many stuffs, so, she would like to 5 take a look at them first. 6 MR. RUNNER: This? 7 INTERPRETER: Yeah. 8 MR. RUNNER: I guess I'll just ask if she 9 actually wrote that. 10 MS. STEEL: This is to request a refund. 11 MR. RUNNER: I'm just interested in finding 12 out if, indeed, we hadn't mailed material to her and 13 that it was being returned because we had bad 14 addresses or wrote it for whatever reason. 15 Is that letter from her? 16 MS. STEEL: Yeah, yeah. 17 INTERPRETER -- MS. SANCHEZ: She says she 18 doesn't remember 100 percent. She -- she doesn't 19 remember why she wrote that. 20 She says she didn't write it down, but she 21 does not understand like what she wrote. 22 MR. RUNNER: Okay. Okay, let me go -- let 23 me go a little different direction then. 24 Do we have an indication that the letters 25 that we were sending to the predecessor were not 26 being received? 27 MS. DENDORFER: At the time that the 28 Notices of Successor Liability was mailed, the 29 1 address of record was 11966 Wilshire Boulevard. 2 And the Notice of Successor Liability was 3 mailed and it was not returned undelivered by the 4 post office. 5 MR. RUNNER: I'm sorry, it was not 6 returned? 7 MS. DENDORFER: To us. 8 MR. RUNNER: To us? 9 MS. DENDORFER: It -- it was a successful 10 mailing, we assume, along with the demand payment 11 that was later sent to that same address. 12 But at that point the taxpayer came into 13 the District office and spoke with us. 14 MR. RUNNER: So, we have no record of 15 anything -- of any mail delivery problem? 16 MS. DENDORFER: Not during the time of the 17 Notice of Successor Liability. 18 MR. RUNNER: Was there -- was there another 19 time that we had mail problems? 20 MS. DENDORFER: Subsequently, after she had 21 sold the business there was a change of address that 22 happened and we started receiving mail back from the 23 post office as undeliverable. 24 MR. RUNNER: And when was that? 25 MS. DENDORFER: That was in 2011. 26 MR. RUNNER: Okay. 27 MS. DENDORFER: -- and that was 28 subsequently corrected. 30 1 MR. RUNNER: Okay. So, really have no 2 explanation as to why she may not have received the 3 mail -- 4 MS. DENDORFER: Correct. 5 MR. RUNNER: -- during that period of time. 6 Okay, thank you. 7 MR. HORTON: Member Steel. 8 MS. STEEL: Well, I didn't get really 9 answered -- during the negotiation for the payment, 10 can we take the money out from the taxpayer's bank? 11 MS. DENDORFER: If there's a final 12 liability, we can levy a taxpayer's account to 13 collect the money. 14 MS. STEEL: But they're negotiating, 15 they're not just ignoring it, but they keep coming 16 in to the BOE office. And they said they going to 17 pay for it. 18 And we can just take the money out? 19 MS. DENDORFER: It's in settlement. 20 MR. MENDEL: I believe if there is a 21 payment plan in place, the Department's policy is to 22 just suspend collection as long as the payment plan 23 is in effect. 24 But I believe the ACMS notes don't indicate 25 that anyone negotiated a payment plan or began 26 making any payments until -- 27 MS. STEEL: But you have -- 28 MR. MENDEL: -- collection action was 31 1 instituted two years later. 2 MS. STEEL: -- but you have the record that 3 this taxpayer and predecessor came in for three 4 times there? 5 MR. MANUEL: In May 28th, 2010, there is a 6 note here that says, "Offered to pay 25,000 with 300 7 per month for remaining balance." 8 Then the end of the note says, "Nothing 9 paid." 10 MS. STEEL: It was under the negotiation. 11 MR. MANUEL: I can't speak to the details 12 there. I'm not certain how that went. 13 MR. HORTON: Question of Appeals relative 14 to the cost -- collection of the cost recovery fee. 15 I just, for some reason, can't remember the 16 condition upon which the Board may remove that fee. 17 MR. ANGEJA: Section 6833, subdivision a, 18 it's essentially reasonable cause -- sorry, d-1, 19 "If the Board finds that a person's 20 failure to pay any amount due under 21 this part is due to reasonable cause 22 and circumstances beyond the person's 23 control and occurred notwithstanding, 24 -- wasn't a non-negligent reason for 25 failing to pay." 26 If you find reasonable cause to relieve 27 it, you can. 28 MR. HORTON: Okay. Translate, please. 32 1 MS. STEEL: I can help you. 2 (Whereupon Ms. Steel spoke in Korean 3 language.) 4 MR. HORTON: Okay. Further discussion, 5 Members? 6 Hearing none, is there a motion? 7 MS. YEE: Move to take the matter under 8 submission. 9 MR. HORTON: Member Yee moves to take the 10 matter under submission. Member Steel seconds. 11 Without objection, Members, such will be 12 the order. 13 Thanks. 14 MS. STEEL: I want to say thank you. Your 15 translation was just perfect. 16 Thank you. 17 MR. RUNNER: Remember who's sitting up 18 there listening to you. 19 MR. HORTON: The Board will -- you're not 20 finished yet, though. Don't take the compliment and 21 run. 22 You're not finished. 23 MS. MANDEL: There's more to be 24 translated. 25 MR. HORTON: Translate it. 26 The Board will take your matter under 27 consideration sometime today and send you a written 28 report of our decision. 33 1 Thank you very much for appearing before 2 us. 3 MS. SANCHEZ: Thank you. 4 ---o0o--- 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 34 1 REPORTER'S CERTIFICATE. 2 3 State of California ) 4 ) ss 5 County of Sacramento ) 6 7 I, JULI PRICE JACKSON, Hearing Reporter for 8 the California State Board of Equalization certify 9 that on OCTOBER 30, 2013 I recorded verbatim, in 10 shorthand, to the best of my ability, the 11 proceedings in the above-entitled hearing; that I 12 transcribed the shorthand writing into typewriting; 13 and that the preceding pages 1 through 34 constitute 14 a complete and accurate transcription of the 15 shorthand writing. 16 17 Dated: JANUARY 3, 2014 18 19 20 ____________________________ 21 JULI PRICE JACKSON 22 Hearing Reporter 23 24 25 26 27 28 35