1 BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION 2 450 N STREET 3 SACRAMENTO, CALIFORNIA 4 5 6 7 8 REPORTER'S TRANSCRIPT 9 JUNE 20, 2017 10 11 SALES AND USE TAX APPEAL HEARING 12 APPEAL OF 13 RAY KLAMMER 14 NOS. 798813, 905104 15 AGAINST PROPOSED ASSESSMENT OF 16 SALES AND USE TAX 17 18 19 20 21 22 23 24 25 26 Reported by: Kathleen Skidgel 27 CSR No. 9039 28 1 1 P R E S E N T 2 For the Board of Equalization: Diane L. Harkey 3 Chairwoman 4 Sen. George Runner (Ret.) Vice Chair 5 Fiona Ma, CPA 6 Member 7 Jerome E. Horton Member 8 Yvette Stowers 9 Appearing for Betty T. Yee, State Controller 10 (per Government Code Section 7.9) 11 Joann Richmond 12 Chief Board Proceedings 13 Division 14 For Board of Equalization Staff: Jeff Angeja 15 Tax Counsel IV Legal Department 16 17 For the Department: Scott Claremon Tax Counsel III 18 Legal Department 19 Robert Tucker CEA 20 Legal Department 21 Andrei Shkidt Supervising Tax 22 Auditor III Business Tax & Fee 23 Department 24 For Petitioner: Ray Klammer Taxpayer 25 26 ---oOo--- 27 28 2 1 450 N STREET 2 SACRAMENTO, CALIFORNIA 3 JUNE 20, 2017 4 ---oOo--- 5 MS. HARKEY: Ms. Richmond, introduce the 6 next item. 7 MS. RICHMOND: Our next item is C4, Ray 8 Klammer. 9 Please come forward. 10 MS. HARKEY: Okay. Mr. Angeja, would you 11 please introduce the items. 12 MR. ANGEJA: Madam Chair and Members, the 13 appeal before you presents one unresolved issue 14 which is whether claimant is entitled to a refund. 15 MS. HARKEY: Thank you very much. 16 Mr. Klammer, welcome to the State Board of 17 Equalization. 18 MR. KLAMMER: Thank you. 19 MS. HARKEY: Please introduce yourself for 20 the record. You have ten minutes. And we will 21 refer to the Department who will also have ten 22 minutes. And then you'll be able to rebut for 23 another five. 24 MR. KLAMMER: My name is Ray Klammer. I'm 25 the owner of the business in question, Boxed CPU. 26 Is it my time to talk right now, already? 27 MS. HARKEY: Yes. Thank you. 28 MR. KLAMMER: Okay. I am here today to -- 3 1 for an issue that -- I think it is about me getting 2 a refund for my accountant fees. And in this brief 3 from Mr. Saxton, it doesn't really state the 4 history, what was going on there. I mean even this 5 Board has been involved about five years ago in this 6 issue already. 7 I cannot give you one reason specifically 8 why I am asking for the attorney fees back, but I 9 need to get into the history of this. I need to 10 basically tell an entire story going ten years 11 back. 12 MS. HARKEY: Now is your turn. 13 MR. KLAMMER: Okay. 14 About ten years ago I used to have a 15 business called Boxed CPU, LLC. And my business 16 partner and I, we made good money, but he turned out 17 to be a little bit crooked. So on the -- on my 18 attorney's advice, I had to turn him in unless I 19 wanted to go to jail with him. 20 So I turned him in. We went to court. The 21 business was dissolved by a judge, and my business 22 partner went to jail. I didn't. And what happened 23 during the closing of the business, which I was in 24 charge of by order of the judge, is that I 25 encountered that we overpaid sales tax by a 26 tremendous amount of money, just didn't match 27 anything in the books that we took any sales tax 28 that we paid out. And we then asked the Board to 4 1 have an audit done on us so we can see how much 2 there is in overpayment. 3 And we had an audit done, and I think you 4 have all their findings. 5 MS. HARKEY: Right. Well, you just tell 6 your story. 7 MR. KLAMMER: Okay. On the findings, there 8 was a credit issue that we were allowed a sales tax 9 credit towards future purchases -- long word -- of 10 $37,818, I believe. 11 Within the next -- 12 I think I need to go back. I apologize. 13 There's one major thing happening here. 14 Before the audit and during the audit we 15 were told we would have to go to Dell and get our 16 paid sales tax back from Dell directly. That's on 17 the record everywhere. 18 And then when it was time for me to receive 19 the refund check, it took a while. And I inquired 20 why they wouldn't do it, why am I not receiving the 21 refund? And I was told that the -- that the auditor 22 had to go -- or had to come to this Board here 23 today, at that time, to get this approved. While it 24 was here in front of you, you decide -- you, the 25 Board, decided that it should be converted into a 26 sales tax credit. Even so, just the statutes all 27 say that I have to go to Dell. You decide here at 28 this Board meeting that I shall have a sales tax 5 1 credit towards future taxable sales. 2 Sorry. 3 So now I'm -- after the audit, I was 4 holding this credit in my hand and nobody would tell 5 me how to apply it. I basically had a sales tax 6 credit; I couldn't use it. Nobody at the Board of 7 Equalization that I had to speak to, San Francisco, 8 knew how to apply it. 9 So it was -- it was just tossed back and 10 forth, from one Board of Equalization, BOE employee 11 to the other. I never received an answer. I have 12 everything on record, on paper, how many times I 13 have tried to get an answer of how to incorporate 14 our sales tax credit. 15 That kept going for the next six, seven 16 years. I have written several letters to the Board 17 of Equalization saying I'm no longer paying my 18 sales -- I'm no longer filing my sales tax records. 19 I'm no longer filing my sales tax. And until 20 somebody tells me how to incorporate the sales tax 21 credit into my sales tax ref- -- 22 I'm sorry. I'm getting really -- 23 MS. HARKEY: Did you bring in these? Let 24 me just help you. Did you bring these? 25 MR. KLAMMER: I have it in front of me. 26 MS. HARKEY: Well, do you want to explain 27 what they are for us, since we're seeing these right 28 now? What -- what -- this might help you focus your 6 1 comments. 2 MR. KLAMMER: Okay. First of all, if you 3 go on this paper here, I have to start with the 4 money fact. Basically it states that I personally 5 swore I never owed any money to the Board of 6 Equalization at any given time, none, because of the 7 sales tax credit. 8 MS. HARKEY: Is this 6,214 the sales tax 9 credit? 10 MR. KLAMMER: No. That's actually an 11 overpayment. That includes two layers of 6,000 or 12 $7,000. 13 Each budget here that I have lists all our 14 sales. Lists all of our records, the quarterly 15 filings, line by line. I verified these figures 16 with the BOE about four weeks ago as being correct 17 figures. If you go from left to right, it shows our 18 gross sales, our deductions, just like on the actual 19 form. 20 If -- I can only summarize it. I'm not in 21 any condition to get into that in detail. 22 If you take the figures that I've been owed 23 by the Board of Equalization that Mr. Saxton agreed 24 to, which is the figure starting in July of 2012, 25 which is 35,818 as a sales tax credit. And then we 26 have a levy of 40,000 -- of $3,347 and another levy 27 of $3,664. 28 And you take in consideration that most 7 1 month I actually owed very little on tax because 2 most of my taxes were paid to Dell when I purchased 3 the products. So I had a deduction for those items. 4 But if you -- if you combine the figures that I have 5 actually paid, that I actually owe, I'm being owed 6 $6,214. 7 MS. HARKEY: Okay. I see that this -- this 8 kind of goes along. You're saying that these 9 are the amounts. 10 MR. KLAMMER: The column M is a running 11 total of amounts that I have paid to the Board of 12 Equalization. Column L is my liability to the Board 13 of Equalization. For example, in fourth quarter 14 '12, in column L, $427, I owe $427 to the BOE. 15 Then we have first quarter '13, column L, 16 150.41. What that means is that I have paid more 17 sales tax to Dell than I took in that month. So 18 that puts me in the minus. 19 MS. HARKEY: Okay. 20 MR. KLAMMER: And so -- and so all the way 21 down there. 22 MS. HARKEY: So I see -- 23 MR. KLAMMER: I mean I'm not very good 24 verbally, but I'm very good with numbers. Sorry. 25 And when I go down this spreadsheet -- which I 26 prepared myself, I do understand it fully -- at the 27 end of the day, the Board owes me money. 28 Now the Board has made a decision -- not 8 1 the -- Mr. Saxton has made a finding that supposedly 2 when the LLC changed over to the sole 3 proprietorship, that any leftover deduction credit 4 that was established no longer exists. 5 MS. HARKEY: Okay. 6 MR. KLAMMER: I, one hundred percent, 7 disagree. 8 So, but even -- even so, this decision was 9 made by Mr. Saxton in 2016. In 2016 until he made 10 the decision that there should be no sales tax 11 credit because there was a changeover on LLC, the 12 Board -- the BOE, in San Francisco, and I, we were 13 still working on getting the credit back. I mean my 14 accountant was actively involved with Dr. -- 15 Mr. Alex Begijanian in how to implement our credit 16 into the sales tax returns, and he did it. 17 My accountant was told how to do it, he did 18 it, six returns. And Mr. Begijanian told him 19 exactly how to do it. I was right there with him. 20 And after we sent Mr. Begijanian the sales tax 21 returns, two days later he told us he cannot accept 22 them, his supervisor would not let him. And when we 23 ask him why, he sent my accountant a note saying, 24 "Get it in writing." That was his answer. 25 But we never were told how to file it in a 26 different way, and my accountant and him really got 27 into it in writing and in verbally conversation. 28 That is the time when Mr. Begijanian caused 9 1 all the damage to me financially in regards to 2 accountant fees. He's also the person who put a 3 levy on me, even though I was actively working with 4 a gentleman named Mr. Gricius in the BOE, trying to 5 find out how much credit to have left over from this 6 initial $35,000 that Mr. Saxton mentioned. 7 MS. RICHMOND: Time's expired. 8 MR. KLAMMER: Okay. 9 MS. HARKEY: Okay, thank you. 10 To the Department, please introduce 11 yourself for the record. You have ten minutes. 12 MR. CLAREMON: Good afternoon, Chairwoman 13 Harkey, Members of the Board. I'm Scott Claremon 14 from the Legal Department. With me are Robert 15 Tucker and Andrei Shkidt, also representing staff. 16 Claimant is a sole proprietor in the 17 business of selling and repairing electronics and 18 has held a seller's permit since July 1st, 2012. 19 As claimant has explained, he was 20 previously a member of Yu & Klammer, LLC, which 21 operated a prior business under a different permit 22 which was closed out, effective June 30, 2012. 23 From a Field Billing Order in 2008, that 24 prior business did have some carryover tax-paid 25 purchases deductions equaling approximately 37,000, 26 to which approximately 35,000 were uncredited at the 27 time that business was closed -- or unused at the 28 time the business was closed. But as it was 10 1 explained in the D&R, since that is a deduction that 2 can only be taken against the extent of the tax 3 liability, it wasn't something that survived the end 4 of that business. It's not something that can be 5 taken by a different taxpayer. And so we do agree 6 with that conclusion from the Decision and 7 Recommendation. 8 The issue now before the Board solely 9 relates to the liabilities of the current business. 10 Specifically, on August 22nd, 2013 staff issued 11 claimant an NOD based on a compliance assessment for 12 the third quarter of 2012 through the second quarter 13 of 2013, and the Department levied approximately 14 $3300 from claimant's bank account to apply to those 15 liabilities. 16 Claimant eventually filed returns for those 17 periods, as well as nonremittance returns showing 18 liabilities for subsequent periods; and the levy was 19 reapplied to the periods in which claimant reported 20 a liability, periods between the quarter -- fourth 21 quarter 2012 through the second quarter of 2015. 22 So, in sum, the payments at issue have been 23 applied to self-assessed liabilities reported by 24 claimant on his nonremittance returns. As stated in 25 the D&R, claimant has not set forth any basis for 26 disputing the liabilities for these quarters in 27 which the claim for refund amounts were applied. 28 We do note we did receive claimant's 11 1 submission. And in verifying some of the numbers on 2 it, we do note that in two of the quarters for the 3 claim for refund he did show a small credit. We 4 checked and we couldn't see that that credit was 5 applied prior to the levy funds being reapplied. 6 And that's -- those credits you can see on column -- 7 are correctly reported on column J for 3Q12 and 1Q13 8 of his submission, totaling approximately $4200 in 9 measure. 10 So if he hasn't claimed those already in 11 subsequent periods, that would be something that he 12 may be entitled to a refund of based on the credits 13 that he did report in the refund period. 14 Other than that, there's no provision of 15 the sales and use tax law that would entitle 16 claimant to recover from the BOE costs associated 17 with reporting tax and filing returns, much less 18 when those costs were incurred by the LLC, a 19 different taxpayer. And there's no other basis upon 20 which the issue of the LLC's tax-paid purchases 21 resold deductions would have a bearing on claimant's 22 claim for refund. 23 For all these reasons, with the small 24 exception that I just mentioned, we concur with the 25 recommendation of the Appeals Division that the 26 claim for refund be denied. 27 MS. HARKEY: Thank you. 28 You have five minutes, sir, if you'd like 12 1 to -- 2 MR. KLAMMER: It makes no difference what I 3 say. I don't know what to say. 4 I mean if you have questions, please, I'd 5 be happy to answer them. But I don't have the time 6 to tell this entire -- it's not a story about, you 7 know, like violin or whatever. It's really the 8 facts. 9 I mean, I have been levied twice for no 10 reason whatsoever. And I state one more time, as 11 far as -- I have the paperwork in front of me from 12 the BOE. I do not owe any money. So how can -- I 13 mean how can the Board of Equalization come in and 14 levy me for something I -- I don't even owe money. 15 You have -- I mean the Board has written me a letter 16 I have a credit of that money. 17 When I -- July 2012, we asked for 18 Mrs. Kovalic to change over from the LLC to the sole 19 proprietorship. I was already a sole proprietor for 20 two years before that, but I was told not to change 21 my sole proprietorship status so the, uh -- the 22 credit will stay with me. 23 So when Mrs. Kovalic -- so the credit can 24 stay on, because if I don't -- 25 I'm so sorry. I apologize. This is a 26 condition. 27 MS. HARKEY: I know. 28 MR. KLAMMER: You know, I can't -- 13 1 MS. HARKEY: I understand. Just -- 2 MR. KLAMMER: It's not my area. 3 The reason actually -- I need to correct 4 this -- the reason why I stayed with the LLC for so 5 long was because I was first told, "Mr. Klammer, you 6 cannot close your account as long as you have a 7 sales tax credit. The second you no longer file 8 sales tax, uh -- sales tax returns, the account will 9 automatically close." And then the amount would, of 10 course, go lost. I understand that fact. 11 So you will see in my history if you have 12 them, I filed, for like three years I filed zero 13 sales tax returns every single quarter to keep that 14 sales tax return available to me. 15 Then Mrs. Kovalic -- Kovalic sees that I am 16 actually a sole proprietor, but yet I am still 17 filing as an LLC, even though the LLC no longer 18 existed for two years. The LLC was shut down 19 already. So she understood the legality about it 20 that, you know, how you -- 21 I mean it's an obvious issue here. And I 22 don't want to get into that right now. But when I 23 changed the LLC to sole proprietorship, I really 24 believed that even if you find any reason to take 25 away that $35,000 credit from me, on July 12th the 26 assumption was still there for everybody at the BOE, 27 including myself, that it still existed all the way 28 through 2016. 14 1 Hence, if it's still there and it existed, 2 why was I levied? It should have paid for all the 3 taxes occurred for the next, you know, three or four 4 years and there should have been no fines and no -- 5 no anything. 6 And I also have here a form to request a -- 7 I'm sorry. It's a request for relief from penalty 8 and collection costs for all -- because I was given 9 wrongful information by the Board of Equalization as 10 how to file my sales tax returns. And that's 11 actually acknowledged by Mr. Saxton, the attorney on 12 your side, that I was given wrong information. 13 "While we agree that the Department gave 14 claimant incorrect and confusing guidance regarding 15 the tax-paid purchases resold deduction . . ." 16 MS. MA: What page is that? What page are 17 you reading from? 18 MR. KLAMMER: It's the second page of -- 19 MS. HARKEY: In the D&R? 20 MR. KLAMMER: -- Appeals Division Board 21 Hearing Summary. 22 MS. STOWERS: Page 2? 23 MR. KLAMMER: It's also mentioned twice in 24 the -- 25 MR. CLAREMON: It's the first sentence of 26 the last paragraph of the summary. 27 MR. TUCKER: Yeah, page 10. 28 MS. STOWERS: Madam Chair? 15 1 MS. HARKEY: Um, yes. I'm sorry. Sure. 2 MS. STOWERS: I have a couple questions to 3 the Department. 4 In your -- in your testimony you indicated 5 that based on his submission there are some credits 6 available? 7 MR. CLAREMON: When we were reviewing the 8 submission against the actual returns from that 9 period, it did appear that two of them showed on -- 10 not on the total, but they showed where he was 11 claiming a deduction that exceeded the -- the tax 12 liability for those two quarters. 13 And so what we did was we moved the levied 14 amounts from those quarters to, um -- to other 15 periods where he was showing a liability. Just as 16 we did in the initial Field Billing Order from 2008 17 for the LLC, what we should have done is applied 18 those small deductions to the -- to -- to his 19 liabilities and then applied the levied amounts to 20 subsequent periods, because he did file a claim for 21 refund for those -- for those levied -- for the -- 22 for those periods. 23 MS. STOWERS: So is there something -- in 24 simple terms for me, is there something on the books 25 that he's entitled to but he has to do something in 26 order to receive it? 27 MR. CLAREMON: I think with regard to that, 28 those periods, since they are within the claim for 16 1 refund that he filed, I don't think there's anything 2 else he would have to do. 3 A caution, like any claim for refund, the 4 refund that's granted, it would have -- it could be 5 offset against other liabilities. 6 MS. STOWERS: So since he has a claim for 7 refund already filed, you can look to the submission 8 and say maybe not the entire 3,200. But whatever it 9 is that's on the books, he is entitled to. 10 MR. CLAREMON: Yeah, we -- the measure was 11 4191 between those two quarters, and we estimate 12 that to be $366 in tax. 13 MS. STOWERS: So there's $366. 14 MR. CLAREMON: Yes. 15 MS. STOWERS: Okay. Then my next question 16 is, to Appeals Division, is there anything in the 17 law that will allow this Board to cancel the 18 penalties based on bad information provided by the 19 Board; which then, if we cancel the penalty, that 20 penalty can be part of his refund? 21 MR. ANGEJA: As applied here, no, because 22 6596 would allow the Board to relieve tax, 23 penalties, or interest on the basis of erroneous 24 advice. But the penalties at issue here were for 25 his own self-reported tax, which I believe were 26 nonremittance and that's what the levy got applied 27 to. 28 So the penalty he would be looking to 17 1 relieve is not the penalty as to which erroneous 2 advice was given. The alleged erroneous advice is 3 from all the way back in 2008 and following up to 4 2012 regarding the tax-paid purchases resold 5 deduction. The penalties to which the levy got 6 applied were 2013 or -- I believe it's 2013 7 nonremittance returns, so that's apples and oranges 8 in terms of the advice. 9 So no, on these facts. 10 MS. STOWERS: Okay. Thank you. 11 MS. HARKEY: Any other questions, Members? 12 Okay. So I just have -- so as I understand 13 this, there actually is a $35,000 credit that was 14 not used due to the change in the structure? 15 MR. CLAREMON: Yeah, there was a -- the 16 Field Billing Order of 2008 indicated that there was 17 an unused deduction of 37 -- $35,818 that the LLC 18 could apply to subsequent periods. But because the 19 LLC closed without applying it, it can't be used by 20 a different taxpayer. 21 We also note that in looking at the records 22 the LLC also has existing liabilities right now. So 23 I don't know -- even if it were a case where it 24 could be applied, I don't know if it would get 25 beyond those liabilities after being applied -- 26 MS. HARKEY: Do you know what the existing 27 liabilities are, may I ask, I mean since we're 28 talking about a $35,000 credit to an LLC? 18 1 MR. CLAREMON: Well, it's 35 in measure. 2 MS. HARKEY: Thirty-five -- thirty-five in 3 measure, 35,000 in measure? 4 MR. SHKIDT: The current balance for the 5 LLC predecessor is $6,069.24. And if we were -- if 6 it was possible to apply those tax-paid purchase 7 resold carryover deductions throughout the balance 8 of the period of the predecessor, it would reduce 9 that tax amount to about $461.67. 10 MS. HARKEY: Okay. 11 MR. SHKIDT: And there's some interest and 12 penalty, but there would still be a balance. 13 MS. HARKEY: Well, can -- can we -- can 14 we -- I mean why -- I guess, you know, I'm not -- 15 I'm not a tax attorney. But it would seem to me 16 that if we had a credit that we could apply, why 17 wouldn't we apply it? Yes, Mr. -- 18 MR. TUCKER: Ms. Harkey, the problem is 19 that it's not a credit, but it's a deduction. And a 20 deduction has to be taken against the sales in that 21 quarter. 22 If it were a credit, we would be able to. 23 But this is a tax-paid purchases resold deduction 24 and that's the complication that we're faced with. 25 MS. HARKEY: Okay. Then, Mr. Tucker, 26 explain to me why he owes tax on that same quarter 27 on that LLC; what's that from? It'd be sales and 28 use tax, would it not? 19 1 MR. CLAREMON: Yeah, those were subsequent 2 periods in which he filed returns, nonremittance 3 returns showing a liability. 4 MS. HARKEY: So you can't go backwards and 5 use that? 6 MR. TUCKER: What should have happened is 7 he should have gone back to his retailer and he 8 should have gone back to -- 9 MS. HARKEY: I know. 10 MR. TUCKER: -- in this case it was Dell. 11 MS. HARKEY: I know. I know. But we have 12 it still sitting there. It just seems -- it just 13 seems odd that we can't facilitate it in some way to 14 relieve this longstanding issue. 15 Yes, sir. I'm sorry. 16 MR. KLAMMER: Can I -- just one paragraph 17 of a letter I wrote to BOE, Mrs. Helen Jodoin. 18 I said: 19 "Helen, I repeat, I am unable to file, 20 not failing to file, my sales tax returns. 21 Why? I have to hold off with filing my 22 sales tax returns until someone at the BOE 23 finds an appropriate form that will allow 24 me to file the Boxed CPU sales tax returns 25 properly." 26 Nobody -- I mean, I have letters and 27 letters, "Please tell me how to do it." 28 I have threatened not to file until 20 1 somebody tells me how I can take that six -- that 2 $35,000 and incorporate it into my sales tax 3 returns. Nobody would tell me. 4 I just, "Get it in writing." Four weeks 5 ago I asked them how to do it. I asked them, "How 6 do you incorporate a sales tax credit into a sales 7 tax return?" I got a five-page letter back from 8 them stating me the law, but nobody will tell you 9 how to incorporate it. 10 They don't -- there's no -- there seems to 11 be no example there for anybody at the BOE to tell 12 me how to do that. 13 MS. HARKEY: Yeah, I know. 14 MR. KLAMMER: Hence, I didn't file the 15 sales tax returns. Looking back now, probably a 16 stupid idea. But, you know, that's the reason I 17 didn't file them, because nobody would tell me how 18 to file them, how to incorporate the sales tax 19 credit. And if the sales tax credit really -- 20 MS. HARKEY: Okay, I -- 21 MR. KLAMMER: I don't know how to go -- I 22 mean, I don't see it from a legal aspect, I see from 23 the personal aspect of it. I'm very sorry. I 24 cannot help -- 25 MS. HARKEY: I understand. 26 MR. KLAMMER: -- on the legal area. 27 MS. HARKEY: It is a legal argument. 28 Mr. Tucker, I'm just going to ask you. 21 1 I -- I don't -- I personally don't see any way to 2 refund. But I would like to ask, is there some 3 methodology for -- because I imagine we're still 4 probably pursuing the LLC. Are we or are we not? 5 MR. SHKIDT: It hasn't -- the liability 6 hasn't been written off, so -- 7 MS. HARKEY: Okay. The liability's been 8 written off. So it sounds like it -- 9 MR. SHKIDT: No, it hasn't. 10 MS. MA: Has not. 11 MS. HARKEY: It has not been written off. 12 MR. TUCKER: Right. 13 MS. HARKEY: Is there any way -- and 14 it's -- is there any way that we can go back and 15 reconcile that somehow? I don't think we can grant 16 this appeal, but I would like to ensure that if 17 there's a credit or -- or not a credit, but a 18 write-off that could be used towards some other LLC 19 debt, that we actually implement that. 20 MR. TUCKER: I'm checking with Mr. Shkidt. 21 He has spoken to the other people in the 22 department and they believe they could apply this 23 somehow to the existing liability in the LLC, to 24 reduce it. 25 And I think, as Mr. Klammer pointed out, it 26 would be a nominal amount at that point. 27 MS. HARKEY: That would still -- that 28 would, I think, grant at least some -- some -- shall 22 1 we say some justice and some relief here. Because I 2 think there's been a lot of confusion in the file. 3 I can tell by what I'm looking at, there's a lot of 4 confusion in the file. And maybe a taxpayer that 5 really didn't have a good understanding of the law 6 and an audit department, or whatever, that was a 7 little less than helpful probably; because, who 8 knows, they're probably switching in and out too. 9 You know. It's -- it's a difficult situation. 10 So, um, if nobody has a -- another 11 suggestion, I would like to -- 12 Any other suggestions? 13 I would like to make a motion that we move 14 to adopt staff recommendation on this appeal, with 15 the caveat that the Department please offset 16 whatever they can as far as liability against the 17 LLC that is still remaining and get back with the 18 taxpayer and reconcile what we can. 19 MR. HORTON: Second. 20 MS. HARKEY: Okay. Motion and a second. 21 Any objection? 22 MR. KLAMMER: Yes. 23 MR. ANGEJA: Just -- just for 24 clarification. 25 MR. KLAMMER: You're double-dipping. 26 MS. HARKEY: No. Excuse me. 27 MS. STOWERS: Department said something 28 about $366 as a possible refund. 23 1 MR. ANGEJA: That's my question. 2 MS. HARKEY: What -- what -- what have we 3 got here? What did you say? 4 MS. STOWERS: There was some -- some 5 deductions and credits available to the petitioner 6 here. And as a result a refund of $366 if certain 7 forms were filed. I would like for the Department 8 to go ahead -- 9 MS. HARKEY: You want to amend my motion? 10 MS. STOWERS: Amend your motion to run 11 through the calculation for the taxpayer so that 12 that refund of 366 is provided. 13 MS. HARKEY: Okay. And also then to offset 14 any LLC. 15 MR. HORTON: It might be one and the same, 16 Madam Chair. 17 I second that motion, too. 18 MS. HARKEY: Okay. 19 MR. ANGEJA: But for clarification perhaps, 20 you said there was additional liabilities against 21 which that might need to be offset. 22 MS. HARKEY: Right. 23 MR. TUCKER: Pardon me. That was -- for 24 the purposes of clarification, I believe that was 25 for the sole proprietorship, which is separate and 26 distinct -- separate and distinct from the LLC. 27 MS. HARKEY: Right. 28 MR. TUCKER: So they would be able to run 24 1 that calculation and determine how much of that 2 would be able to be refunded. 3 MS. HARKEY: Okay. And I just want to be 4 sure I'm clear. The LLC is what had the carryover 5 whatever. And so we're going to look at the LLC 6 liability and we're going to offset whatever we can 7 and reduce that liability. 8 MR. TUCKER: Correct. 9 MS. HARKEY: Separate and aside from what 10 we're doing on this case, we are moving to adopt 11 staff recommendation with the adjustment made for -- 12 MS. STOWERS: For the individual refund of 13 366. 14 MR. TUCKER: Yes. 15 MS. HARKEY: For the individual refund of 16 366. 17 And I had a second. 18 MR. RUNNER: Mm-hmm. 19 MS. HARKEY: Good. I have a second. 20 Any objection? 21 No. Such will be the order. 22 MR. KLAMMER: So what -- sorry, you lost me 23 a long time ago. 24 MS. HARKEY: Well, we're doing the best we 25 can for you, given the circumstances. 26 MR. KLAMMER: You understand you're 27 deciding against each other? 28 MS. HARKEY: I -- we -- 25 1 MR. KLAMMER: Mr. Saxton clearly stated in 2 his finding that the LLC's no longer on the books. 3 MS. HARKEY: I'm sorry. 4 MR. KLAMMER: He cannot charge it. 5 MS. HARKEY: We tried -- you've got -- 6 MR. KLAMMER: Yeah, I mean -- 7 MS. HARKEY: Okay. As I understand, you 8 have an LLC liability that's still outstanding. You 9 do not want to be pursued for all of that, too. So 10 we're trying to at least offset that and give you 11 what we can on this. 12 MR. KLAMMER: Okay. 13 MS. HARKEY: Okay. And we apologize. 14 We're sorry. Lot of misunderstanding. Thank you. 15 ---oOo--- 16 17 18 19 20 21 22 23 24 25 26 27 28 26 1 REPORTER'S CERTIFICATE 2 3 State of California ) 4 ) ss 5 County of Sacramento ) 6 7 I, Kathleen Skidgel, Hearing Reporter for 8 the California State Board of Equalization certify 9 that on June 20, 2017 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 26 constitute 14 a complete and accurate transcription of the 15 shorthand writing. 16 17 Dated: July 12, 2017 18 19 20 ____________________________ 21 KATHLEEN SKIDGEL, CSR #9039 22 Hearing Reporter 23 24 25 26 27 28 27