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 JUNE 24, 2015 10 11 SALES AND USE TAX APPEAL HEARING 12 APPEAL OF 13 PCS WIRELESS, INC. 14 NO. 572015 (EA) 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 Jerome E. Horton of Equalization: Chairman 3 Sen. George Runner (Ret.) 4 Vice Chairman 5 Fiona Ma, CPA Member 6 Diane L. Harkey 7 Member 8 Yvette Stowers Appearing for Betty T. 9 Yee, State Controller (per Government Code 10 Section 7.9) 11 Claudia Lopez (Appearing for Joann 12 Richmond) Board Proceedings Division 13 For Board of 14 Equalization Staff: Lisa Burke Business Taxes 15 Specialist III Legal Department 16 17 For the Department: Scott Lambert Business Taxes 18 Specialist III Sales and Use Tax Department 19 Kevin Hanks 20 Chief, Headquarters Operations Division 21 Stephen Smith 22 Tax Counsel IV Legal Department 23 For Petitioner: Andrew B. Mai 24 Taxpayer 25 Hai V. Dang Representative 26 27 ---oOo--- 28 2 1 5901 GREEN VALLEY CIRCLE 2 CULVER CITY, CALIFORNIA 3 JUNE 24, 2015 4 ---oOo--- 5 MR. HORTON: Ms. Lopez, what is our first 6 matter? 7 MS. LOPEZ: Okay. Our first item on 8 today's agenda -- or our second item on today's 9 agenda is the item C, Sales and Use Tax Appeals 10 Hearings. 11 Our first hearing is C1 PCS Wireless, 12 Incorporated. 13 Please come forward. 14 MR. HORTON: Ms. Cumins, welcome to the 15 Board of Equalization. Would you please introduce 16 the issues in this case. 17 MS. BURKE: Good morning, Chairman Horton, 18 Members. I'm Lisa Burke for the Appeals Division. 19 MR. HORTON: Oops. Why do I do that? 20 MS. BURKE: The issues in this case are the 21 amount of unreported taxable sales and the 22 negligence penalty. 23 MR. HORTON: Welcome to the Board of 24 Equalization. Please be advised you will have ten 25 minutes to make your presentation, and we would ask 26 that you commence with your introduction for the 27 record. 28 We will return and allow you five minutes 3 1 on rebuttal after the Department has made their 2 presentation. 3 At your convenience, please. 4 MR. DANG: Good morning, Mr. Runner and 5 Mr. Harkey (verbatim), Mr. Horton, Mrs. Ma and 6 Mrs. Stowers. 7 Okay. First of all, you know, I want to 8 say, you know, the audit -- the audits seem to me 9 it's a incomplete audit, you know. And the auditor 10 only spend less than eight hours. 11 All the -- all the number is very much -- 12 it's either consumption and estimates from the prior 13 year and either from the statistics from the 14 industrial -- industrial average. Yeah. 15 Today I want to request, you know, and we 16 have opportunity to either re-audit this case or 17 have the Settlement Division to handle this case. 18 You know, I'm more than happy, you know, to 19 provide -- to work on the -- the -- the Settlement 20 Division and to provide all the document. 21 And the original auditor mention the 22 balance. They didn't -- they didn't get the bank 23 statement, you know, and we could have all the bank 24 statement for the year 2008 and 2010. 25 Also, I'm more happy, you know, to work 26 with Settlement Division, you know, and the 27 percentage -- the taxable sale, you know. And 28 auditor and the taxable sales 69 percent, and we 4 1 going to provide provider what's the -- what's the 2 actual percentage of the taxable sales. 3 Okay. Yeah, I finished. 4 MR. HORTON: Thank you very much. 5 We'll now go to the Department. The 6 Department has ten minutes to make their 7 presentation. We'd ask that you commence with your 8 introduction for the record. 9 MR. LAMBERT: Good morning, Chairman Horton 10 and Members. My name is Scott Lambert and I'll be 11 representing the Sales and Use Tax Department today. 12 To my right is Kevin Hanks with the Sales and Use 13 Tax Department, and to Mr. Hanks' right is Stephen 14 Smith with the Legal Department. 15 In this particular case the taxpayer 16 operates a cell phone dealership, a T-Mobile dealer. 17 They were found to have been reporting sales that 18 were substantially below what a business of this 19 type would sell. So, therefore, they were requested 20 to prepare amended returns for -- sales and use tax 21 amended returns. The taxpayer did file -- or did 22 submit a couple amended sales and use tax returns 23 for several periods. They were not accepted based 24 on the evidence that we were able to obtain, which 25 was the 2008 federal income tax return. 26 Based on that return, the sales were 27 significantly higher for 2008 than what the taxpayer 28 had reported. In fact, the cost of goods sold were 5 1 significantly higher than the taxable sales that 2 were reported for that period. 3 To -- the calculation of only about 10 4 percent of the cost of goods sold in 2008 was 5 reported as taxable. 6 The taxpayer provided limited records. 7 They've come in over a length of time in terms of 8 the bank statements. We've received some banks 9 statements. We have not received them all. 10 The -- the way the audit was conducted, we 11 had to use the best information available, and that 12 was the income tax return from 2008. So what we did 13 is we looked at other similar businesses to the 14 taxpayers in the area to determine what their 15 taxable -- reported taxable percentage was; and it 16 came around a little over 69 percent. 17 So what we did is we took the 69 percent 18 times the reported taxable sales on the income tax 19 return to come up with the audited taxable sales for 20 2008. We compared that to reported and arrived at a 21 difference for that year. 22 A percentage of error was developed and 23 applied to what was reported for 2009 because a tax 24 return had not been filed at that time. We didn't 25 have any other information to go from. 26 For the year 2010, that was also found to 27 be underreported, but they had reported more taxable 28 sales than they had -- than they had reported in 6 1 2008 and 2009. So instead of applying a percentage 2 of error, which would be to the taxpayer's 3 detriment, instead what we did is we took the 4 audited -- the average audited taxable measure for 5 2008 and 2009 and used that for the year 2010. 6 Now we did try to obtain purchases to look 7 at it from a markup standpoint and we weren't able 8 to do that. One of their largest suppliers did not 9 maintain records that they could provide us as far 10 as the purchases. There was also a question about 11 whether the cash was getting into the bank. The 12 bank depos -- the bank statements that were provided 13 to us showed deposits -- cash deposits of somewhere 14 between one to three a month, which seems low. So, 15 therefore, we had to use -- we had no other 16 alternative but to use the best information that was 17 available to us. 18 In terms of the penalty, a negligence -- 10 19 percent negligence penalty was applied to this 20 particular account. The reason is, in 2008 only 10 21 percent of the cost of goods sold were reported as 22 taxable. The understated taxable sales was 23 1.5 million. The percentage of error overall was 24 403 percent which, on an overall basis, basically 25 means that you reported about 20 percent or so of 26 your sales, 25 percent. 27 They had no -- virtually no books. There 28 were -- there was never any sales invoices that were 7 1 provided to the Department. So in terms of sales, 2 there was no information that was provided, 3 including the income tax returns which we had to 4 obtain ourselves. And the taxpayer couldn't give an 5 explanation for why there was a substantial 6 understatement. 7 Now there is a -- there is an Assembly Bill 8 1021 that I guess is on hold in the Assembly. And 9 it -- it involves smart phones and the taxability of 10 that. It is prospective if it ever did pass and it 11 wouldn't apply in this particular case. 12 And the other thing that I would note from 13 that is that we really don't know what type of 14 phones that were being sold because, again, we do 15 not have the sales invoices for that. 16 So, accordingly, the Department concurs 17 with Appeals Division Decision and Recommendation. 18 MR. HORTON: Thank you. 19 On rebuttal, please. 20 MR. DANG: Okay. First of all, you know, 21 let me talk about 2008 return. 2008 return is -- is 22 not prepared by me. And, you know, 2008 return is 23 submitted in with all -- with no documentation to 24 justify all the number. 25 So when I -- when I took over this case and 26 I did myself and summarized all the information and 27 prepared a return, the amended return, and the 28 amended return I did prepare in 2008 is right here. 8 1 And, also, I look at the -- I look at -- I 2 try -- I know that the taxpayer have a problem to 3 keeping track of the record, you know, and that's 4 why we be having the taxpayer to make a copy for all 5 the bank statements from the bank. 6 And, also, you know, and the taxpayer now 7 also try to gather as much information for the -- 8 for the sales invoice. And so, for this point we 9 just have all the document and the Department 10 required and request at the time of the original 11 audit and we missing. 12 And so we -- we definitely request and 13 hopefully and we can re-audit this case or do -- all 14 go to Settlement Division on the Settlement Division 15 and we -- we more than happy to overly concentrate 16 two category: One is the percentage of taxable 17 sale; second, what's the revenue. The revenue, we 18 can -- we can provide all the depos -- all the bank 19 statements we have, you know. 20 And, also, you know, the Department 21 mentioned about the cash revenue. Okay. And we 22 more than happy to -- to take the percentage of cash 23 revenue on the average industry, you know. And from 24 what the Department be able to -- to gather, the 25 percentage, we more than happy to accept that 26 percentage. 27 Okay. I finish. 28 MR. HORTON: Couple of questions, sir. 9 1 Is it your rebuttal that you're requesting 2 a re-audit based on additional documentation, banks 3 statements, possible sales invoices? 4 MR. DANG: Yeah, we do. 5 MR. HORTON: And you're accepting the 6 purchase segregation based on the industry average? 7 MR. DANG: The segregation, we -- we, you 8 know, and we have to -- the segregation of the 9 Department estimates, the 69 percent for the 10 industrial average, but I believe in -- I recall 11 that this store, the location and also the 12 clientele, and we believe, you know, the 13 percentage -- percentage taxable sales probably a 14 little bit lower than the -- than the one the 15 Department they -- they come up with, the 69 16 percent, you know. 17 And, also, and we can prove it to you and a 18 lot -- a lot of what they call cost of sale. It's 19 not the cost of goods sale. It's a rebate to the 20 customer, you know. And we -- like, for example, 21 the customer come in and they don't take the phone 22 and -- and -- and we give them a rebate $300. You 23 know, so the customer come in. They only sign a 24 contract. They don't have to pay one penny. They 25 also receive $300 and they only make a monthly pay. 26 Those things, and I believe the original 27 auditor and the Department never be able to 28 consider. It's different than the -- than the 10 1 average industry. You know, every industry, they 2 come in, they pay you, they sign the contract. The 3 telephone is $400, the contract is total contract is 4 $600. But in this case, you know, if they sign a 5 contract and they receive $300 from the rebate, you 6 know. And -- and those we consider is the cost of 7 goods sold. 8 MS. HARKEY: Okay. 9 MR. DANG: But those items is not the cost 10 of goods sold at all. 11 MR. HORTON: Oh, okay. 12 Question of the Department -- 13 Well, let me say that part of my concern, 14 sir, is that some of your testimony brings to light 15 additional taxable transactions. 16 But, has the Department had an opportunity 17 to take into consideration the potential adjustments 18 to the audit as it relates to return merchandise 19 credits? 20 MR. LAMBERT: Return -- um, that's not the 21 way that we calculated the -- the audit. 22 It would have been used -- it would have 23 been developed by taking the taxable percentage from 24 other like businesses that would have those type of 25 either sales that were returned, sales that were 26 completely nontaxable was just a contract. So, in 27 effect, we have taken that in -- into account. But 28 I would say not on this specific basis because we 11 1 don't have the specific information to make that 2 adjustment. But the other businesses would have 3 taken that into account and it would be in that 69 4 percent taxable figure. 5 MR. HORTON: Okay. Members, I think we 6 have a couple choices. We can go through the 7 hearing and then ask the Department and the taxpayer 8 to confer on this and then report back to Appeals 9 some direction as a result of that. I just don't 10 want to position the taxpayer to end up with a 11 higher proposal without them being aware of what 12 they're presenting. But, let's discuss it. 13 Discussion, Members? 14 Member Runner. 15 MR. RUNNER: Yeah, I'm unclear in terms of 16 what material that he has that he now has that -- 17 that the Department has not seen. 18 MR. LAMBERT: My understanding is, is we -- 19 MR. HORTON: Maybe -- maybe that's a 20 question of the taxpayer. 21 MR. RUNNER: Well, no, I want to hear -- 22 I've got it to the Department first. I want to see 23 from what they heard. 24 MR. LAMBERT: From my understanding, and -- 25 from my understanding, we knew how many bank 26 accounts that they had and they had not provided us 27 with that documentation. 28 I'll get to your question directly, just in 12 1 a second. 2 We -- we've asked them several times before 3 and it's been postponed twice before -- 4 MR. RUNNER: Right, right. 5 MR. LAMBERT: -- for this. 6 MR. RUNNER: Yes, uh-huh. 7 MR. LAMBERT: And asking -- and we sent 'em 8 specific letters, emails, requesting the 9 documentation. 10 MR. RUNNER: Right, right, right. 11 MR. LAMBERT: So with all that said -- 12 MR. RUNNER: Yeah. 13 MR. LAMBERT: -- I believe their -- what 14 they want to do is provide us with the complete bank 15 accounts. Or they said they had the information to 16 fill in the four bank accounts, because right now we 17 don't have everything. And then I believe -- 18 MR. RUNNER: And the projections were all 19 based upon not having those bank accounts, correct? 20 MR. LAMBERT: Well, the projection was 21 based on the 2008 -- 22 MR. RUNNER: Right. 23 MR. LAMBERT: -- federal income tax 24 return. 25 MR. RUNNER: Right. And then projected 26 under those other years? 27 MR. LAMBERT: And projected to all the 28 years -- 13 1 MR. RUNNER: Okay. 2 MR. LAMBERT: -- in effect. 3 MR. RUNNER: Right, right. 4 MR. LAMBERT: And part of our concern is, 5 is that we didn't -- we couldn't see all the cash 6 going into the account. We thought that they were 7 purchasing either old phones or they were 8 purchasing -- 9 MR. RUNNER: Okay. 10 MR. LAMBERT: -- inventory with cash. 11 MR. RUNNER: Okay. 12 MR. LAMBERT: So we don't have that. And 13 then they say they have the complete 2010 general 14 ledger. 15 MR. RUNNER: Uh-huh. 16 MR. LAMBERT: I believe that's the new 17 information that we -- 18 MR. RUNNER: Okay. 19 MR. LAMBERT: -- we haven't seen. 20 MR. RUNNER: Okay. 21 MR. LAMBERT: All the -- 22 MR. RUNNER: Let me ask the taxpayer. Is 23 that -- is that -- is that all the new material that 24 you believe you have, or do you have other material 25 that is also, you think, helpful? 26 MR. DANG: Uh, no. First of all, you know, 27 again, you know, and we -- we accept, you know, the 28 Department, you know, unclear what's the cash 14 1 revenue. And we accept the Department (inaudible) 2 of the percentage, the industrial cash revenue. We 3 accept that. 4 Also, the bank statement -- 5 MR. RUNNER: No, no. What I'm asking you 6 is if -- about material that they haven't seen 7 yet. 8 MR. DANG: They haven't seen any material. 9 They haven't seen the bank statement. They haven't 10 seen the -- the -- what they -- what they say, the 11 cost of goods sold, we rebate. We rebate to the 12 customer. It's not really cost of goods sold. 13 I don't think the Department saw it because 14 the Department, when it took the audit, the audit, 15 you know, and the Department -- I believe the 16 Department is only rely on the 2008 return. 17 MR. RUNNER: Okay. 18 MR. DANG: And also project -- 19 MR. RUNNER: That's clearly what they've 20 said, too. Okay, hang on. Let me go back to the 21 Department then. 22 If indeed the materials that has been 23 described by the taxpayer is materials that then you 24 have not seen and then he can provide, would that 25 help then create a -- a more complete analysis in 26 regards to what it is that the taxpayer's potential 27 liability would be? 28 MR. LAMBERT: I would say I don't think so, 15 1 but I can't say that with a hundred percent 2 certainty. 3 MR. RUNNER: You don't think the bank 4 accounts that you didn't see would be helpful? 5 MR. LAMBERT: I -- well, it would be 6 helpful for there, but then you'd have to account 7 for the cash that -- that came in -- that was not 8 deposited into the bank account, and -- and that's a 9 concern. 10 If we had all the bank accounts and they 11 were all the deposits, then I would agree with you, 12 that would be the better way to -- to use that data, 13 but I'm not sure that's the case based on the bank 14 accounts that we've seen to date. 15 MR. RUNNER: Okay. When you say seen 16 today, you mean the material that you got today? 17 MR. LAMBERT: No. 18 MR. RUNNER: Oh, you mean in the past? 19 MR. LAMBERT: Yes. 20 MR. RUNNER: Okay. I'm still unclear. 21 Do you -- do you have bank accounts that he 22 just described which would show the deposits and the 23 missing bank accounts that I think I just heard said 24 would be helpful? 25 MR. LAMBERT: I said it may be helpful. 26 MR. RUNNER: Okay. 27 MR. DANG: Okay. First of all, you know, 28 the Department -- 16 1 MR. RUNNER: Just -- just do you have the 2 bank account? 3 MR. DANG: Yeah, we have all the bank 4 accounts. 5 MR. RUNNER: Okay. 6 MR. DANG: We also be able to provide the 7 personal bank account. Okay. Not only the business 8 bank account. To be clear, and the Department only 9 mention about the cash revenue. They cannot provide 10 how much the cash revenue. 11 MR. RUNNER: Okay. 12 MR. DANG: And we also provide the personal 13 bank account. We also accept the Department and 14 tell me and what's the percentage, the cash revenue 15 for the industry. You know, we accept those 16 percentage. 17 MR. RUNNER: Okay. 18 MR. DANG: But, also, let me -- let me -- 19 MR. RUNNER: Hang on. Okay. 20 It seems to me the choices that we have 21 before us are either put this over or else go ahead 22 and let them see what he actually has. So I'm 23 unclear still exactly how helpful it is. 24 MR. HORTON: Member Harkey. 25 MS. HARKEY: Thank you. 26 How -- how long have you been handling this 27 audit? 28 MR. DANG: Okay. I believe the audit, they 17 1 been called for audit sometime 2011, right, and now. 2 You know, I'm -- I wasn't the one handle 3 the original audit. And when it go to appeal, the 4 taxpayer come to me and asked me to retract this 5 audit. And so I've been try to gather together. 6 And at that time, you know, the -- the taxpayer 7 still have a hard time to come up with all the bank 8 statements. 9 So later on I request -- I strongly request 10 the taxpayer go to the bank, request all the bank 11 statements, and make a copy of. All the bank 12 statements is from the bank. 13 MS. HARKEY: Okay. 14 MR. DANG: You know, to make original 15 copies. 16 MS. HARKEY: Okay. 17 MR. DANG: So we have certain time the bank 18 statement is not complete. But at this -- now, we 19 have all the bank statements. 20 MS. HARKEY: Okay. So you -- you've been 21 doing this audit for how long? You were involved 22 from the appeal forward? 23 MR. DANG: We -- we start -- I believe I 24 start on this case 2012 to now, yeah. 25 MS. HARKEY: Okay, 2012 to now. 26 This is the taxpayer here? 27 MR. DANG: Yeah. 28 MS. HARKEY: Right? 18 1 MR. DANG: Andrew -- Andy Mai, yeah. 2 MS. HARKEY: This is Mr. Mai. 3 MR. DANG: Yeah. 4 MS. HARKEY: Okay. You have -- you have 5 bank statements -- 6 MR. DANG: Yeah. 7 MS. HARKEY: -- that the Department has 8 not seen. 9 MR. DANG: I believe so. 10 MS. HARKEY: Okay. You're willing to 11 provide personal bank statements? 12 MR. DANG: We also provide personal bank 13 statements, right. 14 MS. HARKEY: And the Department has not 15 seen personal. 16 MR. DANG: No. 17 MS. HARKEY: You are prepared, first, with 18 some other explanation on cost of goods sold? 19 MR. DANG: Yeah, we did. 20 MS. HARKEY: Okay. So are you prepared to 21 offer these for all years or just one year? 22 MR. DANG: All year, 2008 to 2010. 23 MS. HARKEY: Okay. Do you have any bank 24 statements for 2008? 25 MR. DANG: We have bank statements 2008 and 26 also bank statements up to 2010. 27 MS. HARKEY: You want to do that and come 28 back? 19 1 MR. RUNNER: Your call. 2 MS. HARKEY: Okay. Here's what I'm going 3 to suggest because I think, you know, we based this 4 on, as we've heard, 2008. So I would like to 5 suggest that we allow for either a 30/30/30, which 6 is 30 days for you to give the Department -- or a 7 30/90. I don't care. 8 I just want the Department to have a 9 chance. This is in my district. I want to give you 10 a break if I can. If you've got new information, I 11 want to be able to help you -- 12 MR. DANG: Please. Thank you. 13 MS. HARKEY: -- submit the information. 14 But you understand that not having cash -- I mean 15 not having cash reported and other things is going 16 to be a problem. You could, in essence, even come 17 up with a higher amount owing, depending on what's 18 being shown. But I would like to give you the 19 opportunity to at least, you know, set forth some 20 real data so that the audit could be -- could be 21 completed. 22 So I think I'd like to give you like 30 23 days to gather everything, meet with the Department. 24 Then the Department, for 30 days, can analyze, get 25 back with the -- probably the original auditor, have 26 time to talk to you. And then get back to us and 27 have another hearing if it's not -- if it's not 28 settled out by then. 20 1 MR. DANG: Yeah. Would you allow 90 day 2 instead of a 30-day because we have bank statements 3 for business, but the personal bank statement they 4 might have to request for the -- from the bank. 5 MS. HARKEY: I'm sure they will have to 6 request them from a bank. And I don't know what 7 bank you're with, but I'd suggest you probably need 8 to go in right away. 9 MR. DANG: Right. 10 MS. HARKEY: Sit down, get it done. If you 11 need assistance from somebody that can translate for 12 you -- 13 MR. DANG: Yeah. 14 MS. HARKEY: -- or help, I think, you know, 15 we have that because you are in Garden Grove and I 16 know we have a lot of -- of -- is it Vietnamese? 17 MR. DANG: Yeah. 18 MS. HARKEY: Yeah, we have a lot of 19 Vietnamese people. I can even refer you to an 20 office -- 21 MR. DANG: Okay. 22 MS. HARKEY: -- of one of the 23 representatives, the Assembly or Legislators, and be 24 sure you have somebody that can go in and help you 25 order. 26 MR. DANG: Okay. 27 MS. HARKEY: But we'd like 30 days -- 28 MR. DANG: Okay. 21 1 MS. HARKEY: -- I want -- just give 2 everything you have because this has been going on 3 for a long while -- 4 MR. DANG: Right. 5 MS. HARKEY: -- for a long while. And so 6 you just need to tend to it right away. 7 MR. DANG: Okay. Yeah. I -- yeah. 8 MS. HARKEY: And so I'm going to -- I'm 9 going to offer that, but you can -- I haven't -- we 10 don't have a vote on that yet. So that's kind of 11 what I'd like to see happen. 12 MR. DANG: Okay. 13 MR. HORTON: Member Ma. 14 MS. MA: Yeah, I -- I would support that, 15 Member Harkey. But I just have a couple questions 16 for the Department, just general questions. 17 When you talk about auditing based on 18 audits of similar businesses, are these similar 19 businesses in the area or similar businesses in 20 California? 21 MR. LAMBERT: In the area. In that, um -- 22 the district office that conducted the audit. 23 MS. MA: Okay. So similar businesses in -- 24 that -- 25 MR. LAMBERT: Irvine area. 26 MS. MA: -- in the Irvine area, okay. 27 MR. LAMBERT: Yes. 28 MS. MA: And then do the auditors take into 22 1 account that 2008 was a recession, 2009 is a 2 recession? And when you said, well, 2010 was 3 significantly higher, well, that kind of would stand 4 to reason. And I'm just wondering as, you know, 5 you're projecting and looking at numbers, you know, 6 2010 would be higher. And to go back and 7 extrapolate kind of doesn't make sense in my mind. 8 MR. LAMBERT: Okay. What we did is, is we 9 took a look at what was reported in taxable sales 10 for 2008 and came up with a percentage of error and 11 then applied that to the 2009 what was reported. 12 And it was fairly similar between the 13 two -- the two periods; eight and nine were fairly 14 similar. And then we used the average sales from 15 eight and nine to use that for 2010, and we gave 16 them credit for them reporting the higher amount. 17 But we used the average taxable sales from eight and 18 nine to develop 2010. 19 So in that case if -- when the economy was 20 improving, it would be to their benefit to do 21 that. 22 MS. MA: Okay. 23 MR. HORTON: Okay. I'm going to take that 24 as a motion for a 30/30/30 from Member Harkey. 25 Second by Member Ma. 26 Without objection -- 27 MR. RUNNER: Just -- just for clarity, that 28 was to continue the hearing. 23 1 MS. HARKEY: Yeah, we'll continue the 2 hearing. 3 MR. HORTON: And -- okay. 4 MS. HARKEY: After, you know, 30 days, 30 5 days -- 6 MR. HORTON: Strike that. 7 MS. HARKEY: -- and then bring it back -- 8 bring it back to us to continue the hearing if you 9 haven't reached an agreement, obviously. 10 MR. LAMBERT: He had mentioned the 90 days; 11 I just wanted to point that out. 12 MS. HARKEY: Yeah. 13 MR. LAMBERT: I thought he needed the extra 14 time, so -- 15 MS. HARKEY: I'm -- I'm a bit concerned 16 with allowing still more extra time, and I'll be 17 very honest. I think you need to get to the bank. 18 You had no books, no sales invoices, no tax returns 19 and no explanation. So that's four strikes. 20 MR. DANG: Okay. I -- 21 MS. HARKEY: So I want to see you correct 22 those as soon as possible. And I think with all 23 this time and coming to the appeal certainly 30 days 24 ought to be enough to -- 25 MR. DANG: Yeah. 26 MS. HARKEY: -- exhume whatever it is that 27 you have left to -- to display. And I'd like to 28 give you that opportunity. 24 1 I think that the auditors will be more than 2 happy to work with you. And if you need any 3 translation services, you let me know because we 4 have representatives in the field -- 5 MR. DANG: Yeah. 6 MS. HARKEY: -- that can help you go to the 7 bank -- 8 MR. DANG: Sure, yeah. 9 MS. HARKEY: -- get you what need. But if 10 you've got invoices, tax returns, and other data, 11 you need to get all of that together within 30 12 days. 13 MR. DANG: Okay. 14 MR. HORTON: During the, uh -- 15 Ms. Lopez, continued to our next hearing. 16 During the continuation, to the Department, 17 let's make sure that we advise the taxpayer of offer 18 in compromise, settlements, you know, what that 19 process is. 20 Also, relative to the income tax returns of 21 2008, potential possibility of amending those 22 returns to reflect whatever the actual data might be 23 in this process, as most consultation as we can 24 possibly provide. 25 Thank you, sir. Your hearing is continued 26 until July, and we'll notify you of the actual date. 27 Thank you for appearing before us today. It was 28 much appreciated. 25 1 Ms. Lopez, do you have a date? 2 MR. DANG: Thank you very much, for 3 opportunity and we try as much as we can to complete 4 it in 30 days. 5 MS. HARKEY: Thank you. 6 MR. DANG: Thank you very much. 7 MR. MAI: Thank you. 8 ---oOo--- 9 10 11 12 13 14 15 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 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 26 constitute 14 a complete and accurate transcription of the 15 shorthand writing. 16 17 Dated: July 2, 2015 18 19 20 ____________________________ 21 KATHLEEN SKIDGEL 22 Hearing Reporter 23 24 25 26 27 28 27