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 24, 2015 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 Sen. George Runner (Ret.) Vice Chairman 6 7 Fiona Ma, CPA Member 8 9 Diane L. Harkey Member 10 11 Yvette Stowers Appearing for Betty T. 12 Yee, State Controller (per Government Code 13 Section 7.9) 14 Joann Richmond 15 Chief Board Proceedings 16 Division 17 ---oOo--- 18 For Staff: Randy Ferris 19 Chief Counsel Legal Department 20 Grant Thompson 21 Tax Counsel IV Legal Department 22 23 ---oOo--- 24 25 26 27 28 2 1 5901 GREEN VALLEY CIRCLE 2 CULVER CITY, CALIFORNIA 3 FEBRUARY 24, 2015 4 ---oOo--- 5 MR. HORTON: Ms. Richmond. 6 MS. RICHMOND: That concludes our 7 administrative session. Would you like to take 8 those items that have been taken under submission or 9 would you like to go into closed session? 10 MR. HORTON: Members, just to allow us time 11 to sort of organize ourself, why don't we go into 12 closed session. 13 Or I know Member Ma, as a former Assembly 14 Member, is ready to go to work. 15 MS. HARKEY: I'd rather vote -- 16 MR. HORTON: Oh, the two Assembly 17 Members. 18 MS. HARKEY: -- so I can take my time. I'm 19 tired from all this sitting. 20 MR. HORTON: Okay. All right. Let's do 21 it. 22 MS. RICHMOND: The Members will now go into 23 closed session -- 24 MR. HORTON: No. No, no, no. 25 MR. RUNNER: No, no. 26 MS. RICHMOND: The Members will now take up 27 the final actions. 28 MR. HORTON: These Members want to -- these 3 1 Members want to vote. 2 MS. RICHMOND: Our first item -- 3 MR. HORTON: You know, when I, uh -- when I 4 first came I had the same, you know, inclination. 5 I'm like, what is this -- 6 MS. HARKEY: It's 7:00 o'clock. 7 MR. HORTON: -- "take these matters under 8 submission? You know, let's just rock and roll." 9 But I have a better appreciation for it these 10 days. 11 Ms. Richmond. 12 MS. RICHMOND: Our first item that was 13 taken under submission is Item B1 Myles D. Hubers 14 and Michelle R. Hubers. 15 ---oOo--- 16 B1 MYLES D. HUBERS and MICHELLE R. HUBERS 17 NO. 534595 18 ---oOo--- 19 MS. HARKEY: Move to grant the petition, 20 abating the interest penalty. 21 MS. MA: Second. 22 MR. HORTON: Member Ma moves to grant the 23 petition, abating the interest penalty -- 24 MS. HARKEY: Harkey. 25 MR. HORTON: Member Harkey -- my 26 apologies -- second by Member Ma. 27 Is there objection? 28 No objection noted. 4 1 Such will be the order. 2 ---oOo--- 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 5 1 MS. RICHMOND: Our next item is B3 Larry G. 2 Dighera. 3 ---oOo--- 4 B3 LARRY G. DIGHERA 5 NO. 515547 6 ---oOo--- 7 MS. HARKEY: Move to grant the petition. 8 MS. MA: Second. 9 MS. STOWERS: Objection. 10 MR. HORTON: Member Ma moves to -- oh, man. 11 Member Harkey moves to grant the petition. 12 Second by Member Ma. 13 Objection noted. 14 Ms. Richmond, please call the roll. 15 MS. RICHMOND: Mr. Horton. 16 MR. HORTON: No. 17 MS. RICHMOND: Ms. Harkey. 18 MS. HARKEY: Aye. 19 MS. RICHMOND: Mr. Runner. 20 MR. RUNNER: Aye. 21 MS. RICHMOND: Ms. Ma. 22 MS. MA: Aye. 23 MS. RICHMOND: Ms. Stowers. 24 MS. STOWERS: No. 25 MS. RICHMOND: Motion carries. 26 ---oOo--- 27 28 6 1 MR. HORTON: Ms. Richmond. 2 MS. RICHMOND: Our next item is B4 Unified 3 Precious Metals, Inc. 4 ---oOo--- 5 B4 UNIFIED PRECIOUS METALS, INC. 6 NO. 606172 7 ---oOo--- 8 MS. HARKEY: Move to grant the petition. 9 MR. HORTON: Member Harkey moves to grant 10 the petition. 11 MR. RUNNER: Second. 12 MR. HORTON: Second by Member Runner. 13 MS. STOWERS: Objection. 14 MR. HORTON: Objection noted. 15 Ms. Richmond, please call the roll. 16 MS. RICHMOND: Mr. Horton. 17 MR. HORTON: No. 18 MS. RICHMOND: Ms. Harkey. 19 MS. HARKEY: Aye. 20 MS. RICHMOND: Mr. Runner. 21 MR. RUNNER: Aye. 22 MS. RICHMOND: Ms. Ma. 23 MS. MA: No. 24 MS. RICHMOND: Ms. Stowers. 25 MS. STOWERS: No. 26 MS. RICHMOND: Motion fails. 27 MR. HORTON: Ms. Richmond? 28 MR. FERRIS: We need a new motion. 7 1 MS. RICHMOND: Motion fails. 2 MR. HORTON: Oh. Yeah. Thank you. Thank 3 you. 4 MR. RUNNER: There's something missing 5 here. 6 MR. HORTON: Yeah, quality control. 7 MS. HARKEY: Right. 8 MR. HORTON: Is there a subsequent motion, 9 Members? 10 MS. STOWERS: Chairman, move to grant 11 the -- 12 Ooh, back up. Sorry. Move to sustain the 13 Franchise Tax Board. 14 MS. MA: Second. 15 MR. HORTON: Member Stowers moves to 16 sustain the Franchise Tax Board. Second by Member 17 Ma. 18 Objection, Members? 19 MS. HARKEY: I guess if I've supported the 20 first, I can't not object to the second. 21 MR. HORTON: Well, you can. 22 MS. HARKEY: No. 23 MR. HORTON: Just like -- 24 MS. HARKEY: I -- 25 MR. HORTON: Just like the Assembly. 26 MS. HARKEY: I'm -- I'm -- I stay the 27 course here. 28 MR. HORTON: Okay. Objection noted. 8 1 Ms. Richmond, please call the roll. 2 MS. RICHMOND: Mr. Horton. 3 MR. HORTON: Aye. 4 MS. RICHMOND: Ms. Harkey. 5 MS. HARKEY: No. 6 MS. RICHMOND: Mr. Runner. 7 MR. RUNNER: No. 8 MS. RICHMOND: Ms. Ma. 9 MS. MA: Aye. 10 MS. RICHMOND: Ms. Stowers. 11 MS. STOWERS: Aye. 12 MS. RICHMOND: Motion carries. 13 ---oOo--- 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 9 1 MS. RICHMOND: Our next item is B6 2 Millennium Dental Technologies, Inc. 3 ---oOo--- 4 B6 MILLENNIUM DENTAL TECHNOLOGIES, INC. 5 NO. 747501 6 ---oOo--- 7 MR. HORTON: Discussion, Members? 8 MS. HARKEY: Move to sustain Franchise Tax 9 Board. 10 MS. MA: Second. 11 MR. HORTON: Member Harkey moves to sustain 12 the Franchise Tax Board. Second by Member Ma. 13 Without objection, Members, such will be 14 the order. 15 ---oOo--- 16 17 18 19 20 21 22 23 24 25 26 27 28 10 1 MR. HORTON: Ms. Richmond. 2 MS. RICHMOND: Our next item is B7 Garrett 3 J. Zelen. 4 ---oOo--- 5 B7 GARRETT J. ZELEN 6 NO. 800216 7 ---oOo--- 8 MS. HARKEY: Move to sustain Franchise Tax 9 Board. 10 MR. HORTON: Member Harkey moves to sustain 11 Franchise Tax Board. Second by -- 12 MS. MA: Second. 13 MR. HORTON: -- Member Ma. 14 Without objection, Members, such will be 15 the order. 16 ---oOo--- 17 18 19 20 21 22 23 24 25 26 27 28 11 1 MS. RICHMOND: Our next item is B8 Steven 2 B. Avery. 3 ---oOo--- 4 B8 STEVEN B. AVERY 5 NO. 785074 6 ---oOo--- 7 MS. HARKEY: Move to grant the petition. 8 MR. HORTON: Member Harkey moves to grant 9 the petition. Second by Member Runner. 10 Objection, Members? 11 MS. STOWERS: Objection. 12 MR. HORTON: Objection noted. 13 Ms. Richmond, please call the roll. 14 MS. RICHMOND: Mr. Horton. 15 MR. HORTON: No. 16 MS. RICHMOND: Ms. Harkey. 17 MS. HARKEY: Aye. 18 MS. RICHMOND: Mr. Runner. 19 MR. RUNNER: Aye. 20 MS. RICHMOND: Ms. Ma. 21 MS. MA: Aye. 22 MS. RICHMOND: Ms. Stowers. 23 MS. STOWERS: No. 24 MS. RICHMOND: Motion carries. 25 ---oOo--- 26 27 28 12 1 MR. HORTON: Ms. Richmond. 2 MS. RICHMOND: Our next item is B9 J.L.E. 3 Enterprises, Inc. 4 ---oOo--- 5 J.L.E. ENTERPRISES, INC. 6 NO. 796714 7 ---oOo--- 8 MS. HARKEY: Oh, dear. 9 MR. RUNNER: What was the -- this was an 10 issue in regards to he wanted some months of relief. 11 And I'm trying to figure out exactly what he -- 12 there was the six months to which he felt he wasn't 13 obligated, which was, what, the March to 14 September -- or October, right? 15 MS. MA: The extension dates. 16 MR. RUNNER: Two extension dates. 17 But then the other issue that came up was 18 the length of time to which the FTB had contacted 19 him afterwards. 20 I'd make a motion to go ahead and grant him 21 four months of relief -- 22 MR. HORTON: We -- we might want to go to 23 Appeals to sort of grant -- to shape your motion, 24 unless you'd rather not. 25 MR. RUNNER: What's appropriate? 26 I mean we can go ahead -- we could -- I 27 mean at this point we can decide the months of 28 relief that are required -- or that we can -- we can 13 1 deal with based upon what we would believe FTB's 2 responsibility was in terms of delaying the -- the, 3 uh -- 4 MR. HORTON: This is a -- 5 MR. RUNNER: -- claim. 6 MR. HORTON: Well -- 7 MR. RUNNER: Right? Go ahead. Go ahead. 8 Go ahead here. 9 MR. THOMPSON: I just was -- the inquiry, 10 of course, is whether he had reasonable cause for 11 late filing. 12 MR. RUNNER: Right. 13 MR. THOMPSON: And I was trying to grab the 14 file. And you may be ahead of me, but my 15 recollection was that the FTB's delay was after he 16 late-filed the return. So there wouldn't be a cause 17 for late filing. 18 MR. RUNNER: But his notification on it 19 was -- was -- remind me here, those of you -- his 20 notification though was after the 12 months had 21 lapsed. 22 Wasn't his -- wasn't his concern the fact 23 that there should have been -- right, right. I mean 24 he missed his -- he didn't make his payment. He got 25 the extension. Then he missed the extension. And 26 then -- and then a series of months then lapsed 27 afterwards, before he was notified. 28 MS. STOWERS: It was my understanding -- 14 1 MR. RUNNER: Is that right? 2 MS. STOWERS: -- he was concerned that 3 after he wrote the Franchise Tax Board asking for 4 the penalty to be abated, it took the Franchise Tax 5 Board four months -- 6 MR. RUNNER: Four months to get back to 7 him. 8 MS. STOWERS: -- to respond. The penalty 9 had already been imposed. But he was just concerned 10 why could FTB take four months, but yet he's 11 penalized for filing his tax return late. 12 MR. RUNNER: Right. 13 MR. HORTON: Let's me see if I can be -- 14 MS. STOWERS: But since -- in my opinion, 15 if we were dealing with interest abatement for the 16 Franchise Tax Board delaying performing their 17 duties, we could look at it -- we may have authority 18 to abate some of the interest, but that's not the 19 issue. We're looking at a penalty and whether or 20 not he was late and did he demonstrate reasonable 21 cause for filing the return late. Notwithstanding 22 it took FTB four months to basically deny his claim 23 for refund which is within their reasonable 24 processing times. It's deemed denied after six and 25 it could basically take 24 months, as we all know, 26 to have a claim for refund processed and denied if 27 we listen to some of the current -- 28 MR. RUNNER: Mm-hmm. 15 1 MS. STOWERS: -- concerns that our tax 2 representatives are talking about. 3 So a four-month response is pretty 4 efficient. 5 MR. RUNNER: Only in government. 6 MS. HARKEY: Do we have a motion on the 7 floor? 8 MR. RUNNER: No, we haven't. We don't have 9 one yet. 10 MS. HARKEY: I'm going to move to sustain 11 the FTB. 12 MS. STOWERS: Second. 13 MR. HORTON: Member Harkey moves to sustain 14 the FTB. Second by Member Stowers. 15 Objection, Members? 16 Such will be the order. 17 ---oOo--- 18 19 20 21 22 23 24 25 26 27 28 16 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 February 24, 2015 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 16 constitute 14 a complete and accurate transcription of the 15 shorthand writing. 16 17 Dated: March 4, 2015 18 19 ____________________________ 20 KATHLEEN SKIDGEL, CSR #9039 21 Hearing Reporter 22 23 24 25 26 27 28 17