1 BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION 2 450 N STREET 3 SACRAMENTO, CALIFORNIA 4 5 6 7 8 9 REPORTER'S TRANSCRIPT 10 OCTOBER 27, 2015 11 12 13 14 15 16 BUSINESS TAXES COMMITTEE 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 P R E S E N T 4 5 For the Board of Equalization: Diane L. Harkey 6 Chair 7 Jerome E. Horton Member 8 Sen. George Runner (Ret.) 9 Member 10 Fiona Ma, CPA Member 11 Yvette Stowers 12 Appearing for Betty T. Yee, State Controller 13 (per Government Code Section 7.9) 14 15 Joann Richmond Chief 16 Board Proceedings Division 17 18 For the Department: Susanne Buehler Chief 19 Tax Policy Division Sales and Use Tax 20 Department 21 Pamela Mash Tax Counsel 22 Legal Department 23 ---oOo--- 24 25 26 27 28 2 1 450 N STREET 2 SACRAMENTO, CALIFORNIA 3 OCTOBER 27, 2015 4 ---oOo--- 5 MR. HORTON: Ms. Richmond, what is our next 6 item? 7 MS. RICHMOND: Good morning, Mr. Chairman 8 and Members. Our first item on this morning's 9 agenda is the Business Taxes Committee. Ms. Harkey 10 is the Chair of that committee. 11 Ms. Harkey. 12 MS. HARKEY: Woops. Thank you. 13 Our first item -- I believe we have two. 14 Excuse me. 15 Okay. Our first item is Proposed 16 Amendments to Sales and Use Tax Regulation 1668, 17 Sales for Resale. 18 I think this is long past due and it was -- 19 it's -- it's with regard to convicted sellers or 20 purchasers of counterfeit goods. 21 Thank you. Would you like to start, Ms. 22 Buehler? 23 MS. BUEHLER: Certainly. Good morning. I 24 am Susanne Buehler with the Sales and Use Tax 25 Department. 26 We have two agenda items for your 27 consideration today. With me is Miss Pam Mash from 28 our Legal Department. We will take each agenda 3 1 items and their respective action item separately 2 before moving to the next. 3 For agenda item one, staff requests your 4 approval and authorization to publish proposed 5 amendments to Sales and Use Tax Regulation 1668, 6 Sales for Resale. 7 You received a revised copy of the proposed 8 regulation yesterday that corrected minor 9 grammatical errors. 10 The proposed amendments are the result of 11 the passage of Board-sponsored Assembly Bill 2681 12 and state that sales or purchases of counterfeit 13 goods by a convicted seller or purchaser are subject 14 to tax, regardless of whether it was their intention 15 to resell them. 16 We'd be happy to answer any questions you 17 may have. 18 MS. HARKEY: Any questions, Members? 19 MR. RUNNER: Move adoption. 20 MS. STOWERS: Second. 21 MR. HORTON: Second. 22 MS. HARKEY: I have a motion and a second. 23 MR. HORTON: Quick comment, Madam Chair, if 24 I may. 25 Just wanted to commend staff and Madam 26 Chair for bringing this forward. I think it's 27 fundamentally important for the Board to be in 28 position to be able to participate in retrieving 4 1 sales tax and potential funds when there's a 2 criminal investigation that results in prosecution 3 and so forth. 4 Without this measure, the items could be 5 very well treated as an exempt sale and, therefore, 6 the Board of Equalization would not be able to 7 protect the interest of the State of California. 8 To that end, thank you, Madam Chair and 9 staff, for your efforts in that regard. 10 MS. BUEHLER: Thank you. 11 MS. HARKEY: I'd just like to add, not 12 only the State of California, but all those 13 legitimately out trying to earn a living in 14 California. So thank you very much for this. 15 The next item is proposed amendments to 16 Sales and Use Tax Regulation 1698 and proposed 17 amendments to Special Taxes Regulation 4901. 18 Ms. Buehler. 19 MS. BUEHLER: Before I start that, did we 20 have a vote on the first item? 21 MS. HARKEY: Oh, excuse me. We had a 22 motion from Senator Runner and a second from Ms. Ma. 23 Any objection? 24 Okay. 25 MS. BUEHLER: Thank you. 26 MS. HARKEY: Thank you. 27 MS. BUEHLER: For agenda item two, staff 28 requests your approval and authorization to publish 5 1 proposed amendments to Sales and Use Tax Regulation 2 1698, Records, and Special Taxes and Fees Regulation 3 4901, Records. 4 The proposed amendments include and define 5 electronic cash registers, computerized point of 6 sale systems and electronic records. 7 We'd be happy to answer any questions you 8 may have on this topic. 9 MS. HARKEY: Any questions from the Board? 10 MR. HORTON: Move approval and authorize 11 staff to propose -- publish both proposed amendments 12 to clarify. 13 MS. HARKEY: Thank you. I have a motion to 14 approve. 15 I have a second? 16 MS. STOWERS: Second. 17 MS. HARKEY: Second by Ms. Stowers. 18 Any objection? 19 So be it. Thank you. 20 MS. BUEHLER: Thank you. 21 MS. HARKEY: This ends the Business Taxes 22 Committee. 23 ---oOo--- 24 25 26 27 28 6 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 October 27, 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 6 constitute 14 a complete and accurate transcription of the 15 shorthand writing. 16 17 Dated: October 30, 2015 18 19 20 ____________________________ 21 KATHLEEN SKIDGEL, CSR #9039 22 Hearing Reporter 23 24 25 26 27 28 7