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 23, 2016 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 For Board of 18 Equalization Staff: Grant Thompson Tax Counsel IV 19 Legal Department 20 Lou Ambrose Tax Counsel IV 21 Legal Department 22 Jeff Angeja Tax Counsel IV 23 Legal Department 24 25 ---oOo--- 26 27 28 2 1 5901 GREEN VALLEY CIRCLE 2 CULVER CITY, CALIFORNIA 3 FEBRUARY 23, 2016 4 ---oOo--- 5 MR. HORTON: Ms. Richmond. 6 MS. RICHMOND: That concludes our 7 administrative session. 8 Would you like to take those items that 9 have been taken under submission or go into closed 10 session? 11 MR. HORTON: Members? 12 MS. HARKEY: Let's take our items. 13 MR. HORTON: Items under submission? 14 Closed session? 15 Okay. Let's take the items. So let's roll 16 with the items under submission. 17 MR. RUNNER: No problem. 18 MR. HORTON: I think there's a -- 19 MR. RUNNER: I have like three notebooks 20 though. 21 MS. RICHMOND: Okay. Our first item is B1a 22 Curtice R. Booth and Evelyn Booth and B1b Patrick J. 23 O'Grady and Laurel O'Grady. 24 ---oOo--- 25 ITEM B1a 26 CURTICE R. BOOTH and EVELYN BOOTH 27 NO. 824057 28 ITEM B1b 3 1 PATRICK J. O'GRADY and LAUREL O'GRADY 2 NO. 848643 3 ---oOo--- 4 MR. RUNNER: Okay. 5 MR. HORTON: Discussion, Members? 6 Is there a motion? 7 MS. MA: Sustain the FTB. 8 MS. STOWERS: Second. 9 MR. HORTON: Member Ma moves to sustain the 10 FTB, second by Member Stowers. 11 Without objection, Members, such will be 12 the order. 13 ---oOo--- 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 4 1 MR. HORTON: Ms. Richmond. 2 MS. RICHMOND: Next matter is B4 John M. 3 Kling. 4 ---oOo--- 5 ITEM B4 6 JOHN M. KLING 7 NO. 847081 8 ---oOo--- 9 MR. HORTON: Discussion, Members? 10 Hearing none, is there a motion? 11 MS. STOWERS: Move to sustain the Franchise 12 Tax Board. 13 MR. HORTON: Member Stowers moves to 14 sustain the Franchise Tax Board. 15 MS. HARKEY: I would like to -- 16 MR. HORTON: Second by Member Ma. 17 MS. HARKEY: I would like to offer -- 18 MR. HORTON: Discussion, Members? 19 MS. HARKEY: Yes. That we include whatever 20 form of Offers in Compromise they have. 21 MS. STOWERS: I -- I don't know if this 22 Board could direct Offer in Compromise. 23 But just put that fantasy hat on and, FTB, 24 please consider Offer in Compromise. I'm not sure 25 that we can do it here, as the Board, because that's 26 not within our jurisdiction. 27 MS. HARKEY: I just understood that he's 28 insolvent. 5 1 MS. STOWERS: Yeah. 2 MS. HARKEY: He -- he's broke. 3 MS. STOWERS: Yeah. 4 MS. HARKEY: This is from 2004 on, to 2010. 5 We're in '16. 6 MR. THOMPSON: We can make sure that FTB -- 7 MR. HORTON: Member Ma moves to adopt staff 8 recommendation, second by -- 9 Member Stowers moves -- 10 MS. STOWERS: And tell them about Offer in 11 Compromise in the letter? 12 MR. AMBROSE: Right. 13 MS. STOWERS: Okay. 14 MR. HORTON: -- to adopt staff 15 recommendation, second by Member Ma. 16 Member Harkey moves to direct the FTB to 17 advise the taxpayer of the Offer in Compromise and 18 move accordingly. 19 Without objection, Members, such will be 20 the order. 21 ---oOo--- 22 23 24 25 26 27 28 6 1 MS. RICHMOND: Our next matter is Item B5 2 Edward Lavi. 3 ---oOo--- 4 ITEM B5 5 EDWARD LAVI 6 NO. 861784 7 ---oOo--- 8 MR. HORTON: Discussion, Members? 9 Is there a motion? 10 MS. HARKEY: Move to sustain the FTB. 11 MR. HORTON: Member Harkey moves to sustain 12 the FTB. Second by Member Runner. 13 Without objection, Members, such will be 14 the order. 15 MS. HARKEY: Same thing. 16 ---oOo--- 17 18 19 20 21 22 23 24 25 26 27 28 7 1 MR. HORTON: Ms. Richmond. 2 MS. RICHMOND: Our next matter is B10 David 3 Haller and Vanessa Chau Haller. 4 ---oOo--- 5 ITEM B10 6 DAVID HALLER and VANESSA CHAU HALLER 7 NO. 872918 8 ---oOo--- 9 MS. HARKEY: I want to move to grant this 10 appeal. I think I made my case that we have the 11 ability to find that the tax return was filed timely 12 and that would take precedence over any 13 jurisdictional issue if we were to do so. 14 So I would like to move that the tax -- 15 that the tax return was filed timely. There was an 16 error in the receipt of it, but the taxes were paid, 17 and I'd like to grant the appeal. 18 MR. RUNNER: I just have a couple questions 19 on that. 20 MR. HORTON: There's a motion on the floor. 21 Member Runner. 22 MR. RUNNER: Yeah, I just want to -- again, 23 I -- I -- I would like to see us help this taxpayer. 24 My concern is process right now. 25 MR. AMBROSE: Right. 26 MR. RUNNER: On the jurisdiction issue, if 27 we go ahead and do something, how do we compete with 28 the concern that was out there in regards to the 8 1 fact, from both FTB and counsel, that we had -- we 2 have no jurisdiction? You know, you heard Member 3 Harkey's discussion in regards to, well, we don't -- 4 if we go to the underlying issue. 5 MR. AMBROSE: Mm-hmm. 6 MR. RUNNER: Help me understand if we have 7 a path to there. 8 MR. AMBROSE: A path to actually deciding 9 it today? 10 MR. RUNNER: Yes. 11 MR. AMBROSE: Well, it's -- it's our -- 12 it's Appeals' belief, opinion, that you don't, that 13 there is no jurisdiction. 14 MR. RUNNER: So if we do -- so if we did 15 it, so let's say we did it. 16 MR. AMBROSE: Okay. What -- 17 MR. RUNNER: Let's say we found for the 18 taxpayer. 19 MR. AMBROSE: Right. 20 MS. MA: What would you do to us? 21 MR. RUNNER: Yeah. What do they do to us? 22 What do they do to us? 23 MR. AMBROSE: Well, I think FTB -- 24 MR. RUNNER: Are they going to come get me 25 in the middle of the night tonight? 26 MR. AMBROSE: Well, I think what they might 27 do -- and I'd be happy for Mr. Thompson to correct 28 me if I'm wrong -- but I think they could seek a 9 1 petition for a writ of mandate or administrative 2 mandamus in superior court that would then -- which 3 would basically just be a direction asking the Court 4 to direct the Board to -- to, you know, void its 5 opinion or, you know, reverse its action as being, 6 you know, beyond the scope of your jurisdiction. 7 MS. STOWERS: Who could do that? 8 MS. HARKEY: And we would spend more money? 9 MR. AMBROSE: I would think so, yeah. 10 MS. HARKEY: I mean, I think they would 11 spend more money, is what I'm saying. They'd file 12 an action with the court which would cost more 13 money. 14 MR. AMBROSE: Right. 15 MS. HARKEY: I'd -- I'd take that challenge 16 because I think we can do this. 17 MR. AMBROSE: Ms. Harkey, if I might, I 18 spoke with Mr. Scott from the FTB and -- just a 19 moment ago. And what he told me was that if the 20 appellants pay the tax and, you know, file a valid 21 claim for refund, that FTB would review it and, you 22 know, there's a likeli- -- or there is a possibility 23 that they might find that they had filed timely and, 24 you know, grant them the relief that they're 25 seeking. 26 MS. HARKEY: Due to extenuating 27 circumstances, there's a high possibility. 28 MR. AMBROSE: That's -- that's what I was 10 1 told. 2 MS. HARKEY: We wouldn't be back here with 3 another appeal. 4 MR. HORTON: Member -- 5 MR. AMBROSE: That's what I was told. I 6 mean -- 7 MR. RUNNER: Yeah. Again, what I'm 8 concerned about is I want to -- I'm sympathetic to 9 the taxpayer. 10 MR. AMBROSE: Mm-hmm. 11 MR. RUNNER: But at the same time I don't 12 want to do something that then in turn could 13 jeopardize the issue with the taxpayer -- 14 MR. AMBROSE: Mm-hmm. 15 MR. RUNNER: -- by way of giving then a 16 door, an opportunity for FTB. 17 So, let me ask you this, if we did a 18 30/30/30 and let that play out -- 19 MR. HORTON: No. 20 MR. RUNNER: -- that way there can -- there 21 could be that negotiation and that payment and that 22 negotiation, so if we did a 30/30/30 and continue 23 the hearing? That way -- 24 MR. AMBROSE: Well -- 25 MS. HARKEY: I want to withdraw my motion 26 and move to put this over for another month. 27 MR. HORTON: Two months. 28 MS. HARKEY: Two months? 11 1 MR. RUNNER: Continue the hearing? 2 MS. HARKEY: Continue the hearing. 3 MR. HORTON: Members, Member Harkey moves 4 to continue the hearing for two months to allow the 5 Franchise Tax Board and the appellant an opportunity 6 to review the case and make the appropriate -- take 7 the appropriate action. Second by Member Runner. 8 Without objection, Members, such will be 9 the order. 10 MS. HARKEY: Thank you. 11 ---oOo--- 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 12 1 MR. HORTON: Ms. Richmond. 2 MS. RICHMOND: Our next matter is C1 West 3 Coast Storm, Inc. This is a waived appearance. 4 ---oOo--- 5 ITEM C1 6 WEST COAST STORM, INC. 7 NO. 627343, 805282 8 ---oOo--- 9 MS. HARKEY: Move to grant the staff 10 recommendation. 11 MR. RUNNER: Second. 12 MR. HORTON: Member Harkey moves to deny 13 the administrative protest and adopt staff 14 recommendation. Second by Member Runner. 15 Without objection, Members, such will be 16 the order. 17 ---oOo--- 18 19 20 21 22 23 24 25 26 27 28 13 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 23, 2016 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 13 constitute 14 a complete and accurate transcription of the 15 shorthand writing. 16 17 Dated: March 2, 2016 18 19 20 ____________________________ 21 KATHLEEN SKIDGEL, CSR #9039 22 Hearing Reporter 23 24 25 26 27 28 14