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 12 13 14 15 FINAL ACTION 16 ITEM B1 17 JOSEPH WEST and PATRICIA A. WEST 18 NO. 923264 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 of Equalization: Diane L. Harkey 4 Chairwoman 5 Sen. George Runner (Ret.) Vice Chair 6 Fiona Ma, CPA 7 Member 8 Jerome E. Horton Member 9 Yvette Stowers 10 Appearing for Betty T. Yee, State Controller 11 (per Government Code Section 7.9) 12 Joann Richmond 13 Chief Board Proceedings 14 Division 15 For Board of 16 Equalization Staff: Amy Kelly Acting Chief Counsel 17 Legal Department 18 Jeff Angeja Tax Counsel IV 19 Legal Department 20 ---oOo--- 21 22 23 24 25 26 27 28 2 1 450 N STREET 2 SACRAMENTO, CALIFORNIA 3 JUNE 20, 2017 4 ---oOo--- 5 MS. HARKEY: If you could call that case. 6 It's a B item. Is it B1? 7 MS. RICHMOND: So that was Item B1 Joseph 8 West and Patricia A. West. 9 MS. HARKEY: Okay. I'll move to, uh -- for 10 the staff recommendation. 11 MR. RUNNER: Second. 12 MS. STOWERS: Actually, Madam Chair, there 13 is no staff recommendation. 14 I would amend that motion to sustain the 15 Franchise Tax Board. 16 MS. HARKEY: Oh, sustain -- Okay. I'm 17 sorry. 18 MR. HORTON: Members -- 19 MS. HARKEY: Confusing. 20 MR. HORTON: May I just suggest that we 21 allow Appeals to put it on the record, maybe? 22 MS. STOWERS: They're not here. 23 MR. HORTON: Or has that been done? Did 24 I -- did I miss that? 25 MS. MA: No. 26 MR. ANGEJA: To read the issues? 27 MS. HARKEY: Oh, okay. 28 MR. ANGEJA: I don't have it. 3 1 MS. HARKEY: I'm sorry. 2 MS. RICHMOND: And Appeals are in the other 3 room. I'm sure they're on their way. 4 MS. STOWERS: Okay. We'll just wait. 5 MR. HORTON: Okay. 6 MS. KELLY: Just give me one minute. 7 MS. HARKEY: Let -- let our Chief -- our 8 Acting Chief Counsel put it on the record. I'm 9 sorry. I kind of got carried away. I've been doing 10 that a lot today. 11 MS. STOWERS: Board Proceedings has just 12 advised us that they're on their way? 13 MR. RUNNER: No. 14 MS. HARKEY: The counsel is. But we're 15 gonna -- we're gonna have Ms. Kelly introduce -- 16 MS. KELLY: Madam Chair, the issue in this 17 appeal is whether the proposed assessment, which is 18 based on a federal adjustment, is barred by the 19 statute of limitations. And secondly, whether 20 appellants have demonstrated error in the proposed 21 assessment of additional tax, which was based on a 22 federal adjustment. 23 MS. HARKEY: Thank you. 24 MS. KELLY: And this is for the year 2005. 25 MS. STOWERS: Okay. 26 MS. HARKEY: Okay. So now I need -- 27 scratch the last motion. 28 MS. STOWERS: I have a question first. 4 1 MS. MA: Yeah, I have a question too. 2 MS. HARKEY: Yes. 3 MS. STOWERS: Now that she read what the 4 issue is and they're not here, to Appeals, to Chief 5 Counsel, can we decide it on the record? Would the 6 proper motion be to decide it on the record? 7 MS. KELLY: Yes, that would be fine. 8 MS. STOWERS: Okay. 9 MS. RICHMOND: And also, I've just been 10 informed that it should be sustained with 11 concessions by FTB, which is noted in the hearing 12 summary. 13 MS. HARKEY: Okay. Thank you. 14 MS. KELLY: Oh, that's correct. Let me 15 just read that for the record. That the proposed -- 16 respondent's proposed assessment of additional tax 17 has been reduced to $4,145. 18 MS. HARKEY: I seem to recall that. 19 MS. KELLY: And further, that the 20 accuracy-related penalty will be abated at the 21 conclusion of the appeal. 22 MS. HARKEY: Okay. 23 MS. MA: And Ms. Richmond, the taxpayer was 24 notified they were supposed to be here today? 25 MS. RICHMOND: Yes. Yes, ma'am. 26 MR. RUNNER: This morning, right? 27 MS. MA: This morning. And they never 28 showed up. 5 1 MS. RICHMOND: They never showed up. 2 MS. HARKEY: Probably because there were 3 many concessions made throughout the process. 4 Actually the FTB worked with them. 5 MS. RICHMOND: They even responded to the 6 hearing notice that they would appear. 7 MS. HARKEY: Yeah. 8 MS. MA: Okay. 9 MS. HARKEY: But they have not been here. 10 So I think there were numerous concessions made, a 11 lot of work back and forth, and so we're down to 12 $4,000. 13 So, is there a motion? 14 MS. STOWERS: Move to sustain the Franchise 15 Tax Board based on FTB's noted concession to reduce 16 the tax to 4,145 and to abate the accuracy-related 17 penalty at the conclusion of this hearing. 18 MS. HARKEY: Is there a second? 19 MR. RUNNER: Second. 20 MS. HARKEY: Second by Member Runner. 21 Any objection? 22 MR. HORTON: Madam Chair, if I just may ask 23 legal counsel a question -- 24 MS. HARKEY: Sure. 25 MR. HORTON: -- procedural-wise. It's been 26 introduced, it's on the record. All parties have 27 agreed to the stipulations that they're going to 28 reduce -- at least Franchise Tax -- you're speaking 6 1 on behalf of Franchise Tax Board, the reduction? 2 MS. KELLY: Well, I'm speaking on behalf of 3 the Legal Department, the Appeals Division. And I'm 4 simply explaining the status of the case right now. 5 So as it stands right now FTB has made concessions, 6 but the liability isn't entirely abated. 7 MR. HORTON: There's still liability 8 there. 9 MS. KELLY: Yes. 10 MR. HORTON: I just don't know. I'm 11 thinking maybe FTB should come forward and say 12 that. 13 MS. STOWERS: It's in their -- excuse me. 14 MR. HORTON: I defer to you, Amy. But 15 that's just -- I don't know why I'm thinking that, 16 but something in the rules seems to make me want to 17 have that done. 18 MS. KELLY: There's no need for FTB to 19 reiterate -- 20 MR. HORTON: Okay. 21 MS. KELLY: -- the amounts. 22 MR. HORTON: All right. All right. If you 23 guys are good -- 24 MS. STOWERS: By the way, the FTB 25 concessions are in FTB's opening brief and hearing 26 summary. 27 MS. HARKEY: Right, they are. 28 MS. KELLY: Yes. 7 1 MR. HORTON: Okay. So I'm going to take 2 this as legal counsel putting it on the record on 3 behalf of FTB and the Board of Equalization's appeal 4 unit that FTB has offered such concessions, and that 5 the motion incorporates those concessions. 6 With that in mind, no objection, Members. 7 MS. HARKEY: Okay. We had a motion and we 8 had a second, and no objection. Some verbiage in 9 between. 10 Thank you. 11 ---oOo--- 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 8 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 8 constitute 14 a complete and accurate transcription of the 15 shorthand writing. 16 17 Dated: June 26, 2017 18 19 20 ____________________________ 21 KATHLEEN SKIDGEL, CSR #9039 22 Hearing Reporter 23 24 25 26 27 28 9