1 BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION 2 450 N STREET 3 SACRAMENTO, CALIFORNIA 4 5 6 7 REPORTER'S TRANSCRIPT 8 AUGUST 30, 2017 9 (Prepared from audio recording) 10 11 12 13 14 SALES AND USE TAX APPEAL HEARING 15 APPEAL OF 16 INCENTIVE DESTINATION PRODUCTIONS, INC. 17 NO. 742443 18 AGAINST PROPOSED ASSESSMENT OF 19 SALES AND USE TAX 20 21 22 23 24 25 26 27 REPORTED BY: Jillian M. Sumner 28 CSR NO. 13619 1 1 P R E S E N T 2 3 For the Board of Equalization: Diane L. Harkey 4 Chair 5 Fiona Ma, CPA Member 6 Jerome E. Horton 7 Member 8 Sen. George Runner (Ret.) Member 9 Yvette Stowers 10 Appearing for Betty T. Yee, State Controller 11 (per Government Code Section 7.9) 12 13 Joann Richmond Chief 14 Board Proceedings Division 15 16 For California Department of Tax and 17 Fee Administration: Kevin Smith 18 Tax Counsel 19 For Appellants: Jesse McClellan 20 Attorney 21 James Dumler Representative 22 23 ---oOo--- 24 25 26 27 28 2 1 450 N STREET 2 SACRAMENTO, CALIFORNIA 3 AUGUST 30, 2017 4 ---oOo--- 5 MS. RICHMOND: Our last hearing is C12, 6 Incentive Destination Productions, Inc., please come 7 forward. 8 MS. HARKEY: Mr. Angeja, please introduce 9 the items for the record. 10 MR. ANGEJA: If you'll indulge me for a 11 second, could Appeals make a revised recommendation 12 based on the Key Events' presidential decision? 13 MS. HARKEY: Right. 14 MR. ANGEJA: We recommend that the liability 15 be re-determined in accordance with that presidential 16 decision, which would eliminate the liability. 17 MS. HARKEY: Okay. Appeals recommended, do 18 we make a motion that way? 19 MR. ANGEJA: I guess that became staff's 20 recommendation. Which is -- yes, you could adopt 21 staff recommendation, which is now this revised 22 recommendation -- staff recommendation. 23 MS. HARKEY: A second? 24 MS. STOWERS: Objection. 25 MS. HARKEY: We have one objection. 26 Call roll, please. 27 MS. RICHMOND: Chairwoman Harkey. 28 MS. HARKEY: Aye. 3 1 MS. RICHMOND: Mr. Runner. 2 MR. RUNNER: Aye. 3 MS. RICHMOND: Mr. Horton. 4 MR. HORTON: Aye. 5 MS. RICHMOND: Ms. Ma. 6 MS. MA: Aye. 7 MS. RICHMOND: Ms. Stowers. 8 MS. STOWERS: No. 9 MS. RICHMOND: Motion carries. 10 MS. HARKEY: Four/one. 11 MR. McCLELLAN: Um -- 12 MS. HARKEY: You won. 13 MR. McCLELLAN: I hate to hold everybody up. 14 I know you were here late -- 15 MS. HARKEY: Then don't. 16 MR. McCLELLAN: -- last night as well. 17 MS. HARKEY: Then don't. 18 MR. McCLELLAN: But there's a claim for 19 refund. And I don't -- I just need to clarify the 20 claim for refund was granted. 21 MR. ANGEJA: There's a result in overpayment 22 of tax. I was unaware there was a claim for refund. 23 We don't have a claim for refund for this one, that 24 was covered in the D&R. 25 MR. McCLELLAN: Well, that still was the 26 other part. And we disagree with the entire D&R. 27 MR. ANGEJA: Then I'll recant my staff's 28 recommendation. I just -- 4 1 MS. HARKEY: So we don't have a claim for 2 refund. 3 MR. ANGEJA: Not a claim for refund. 4 MS. HARKEY: We have a disputed tax of 5 69,776.37 and interest. 6 MR. McCLELLAN: Okay. The decision -- 7 actually, I believe it was a -- at this point, a 8 supplemental decision recommendation did address the 9 audit liability. And the amount that you had just 10 stated sounds -- is consistent. 11 In addition to that, the supplemental D&R 12 addressed the claim for refund for payments that were 13 made under an amnesty filing. And the same thing 14 that happened in Frontage First is they participated 15 in the amnesty program, essentially, on a protest. 16 And there were timely claims filed along with every 17 payment that was made. 18 And the Appeal's Division concluded that the 19 claim should not be granted, I believe it was because 20 they concluded that it was withdrawn. And our 21 position is that it was not withdrawn. That it's 22 tied to the exact same issue, that we're addressing 23 the same exact issue, and that ultimately because 24 they made overpayments, they have a right to get them 25 back under the amnesty program. 26 MR. HORTON: Madam Chair. 27 MS. HARKEY: Yeah. 28 MR. HORTON: Members, if I didn't state, let 5 1 me state again -- my support of the motion is not 2 relative to being presidential, but there's three 3 votes for that. So I'm not -- and my thoughts are 4 more along 6596, that the agency had just given bad 5 advice to everybody. And that bad advice and that 6 activity on the part of the agency has caused the 7 taxpayer to rely on erroneous advice, erroneous 8 direction, and so forth. And that was the basis for 9 my supporting relief. 10 So -- but if it's a claim for refund, 6596 11 doesn't apply. 12 MS. HARKEY: We don't -- we don't have that 13 case in front of us. 14 MR. ANGEJA: The Board lost its -- it went 15 final pursuant to 6933, the 90-day period -- they got 16 a notice. I can't find the exact date right now. 17 But there was a notice of the denial of their refund 18 claim. No action was taken by the taxpayer within 19 the 90-day period. It then goes final. And by 20 statute, the Board loses jurisdiction over that. And 21 it's not in front of you. It can't be granted. 22 MR. McCLELLAN: And that's under dispute. 23 We addressed the claim for refund at the Appeals 24 Conference. We communicated with the Department 25 about it. The Department never claimed that we 26 didn't have a valid claim for refund. The initial 27 appeals -- 28 MR. RUNNER: I guess -- is it before us? 6 1 MS. HARKEY: We don't -- we don't have it 2 before us. 3 Mr. McClellan, we don't have it before us. 4 The only case we have is this one. If there was 5 further dispute, let's -- go out, and I'll let you 6 talk with our Chief Counsel. 7 MR. McCLELLAN: Okay. 8 MS. HARKEY: And we'll try to figure out 9 what happened to this. But we can't -- we can't 10 decide anything for you on this today. 11 We have granted the one before us, which is 12 the Case No. 742443, a disputed tax of 69,776.37 and 13 interest of 48,643.89. And that's what we have 14 before us. 15 So if we could get together with the 16 taxpayer on, you know -- in the -- in the other side 17 of the room somewhere and figure out what happened to 18 this, I would appreciate it. 19 MR. McCLELLAN: While I'm here, would it be 20 possible to establish a right to come back on that? 21 MS. HARKEY: I don't have anything before me 22 to give you a right to come back on. So I can't do 23 that right now. But I do think -- I don't think we 24 need to go back, and we'll address with you. 25 I mean, I know you want to come back. We 26 would love to have you back. We just need something 27 to come back with. 28 MR. McCLELLAN: Okay. 7 1 MS. HARKEY: Okay. 2 MR. McCLELLAN: Thank you very much. 3 MS. HARKEY: Thank you. 4 5 ---oOo--- 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 8 1 2 REPORTER'S CERTIFICATE 3 4 State of California ) 5 ) ss 6 County of Sacramento ) 7 8 I, Jillian Sumner, Hearing Reporter for 9 the California State Board of Equalization certify 10 that I recorded verbatim, in shorthand, to the best 11 of my ability, an audio recording of the 12 August 30, 2017 proceedings in the above-entitled 13 hearing; that I transcribed the shorthand writing 14 into typewriting; and that the preceding pages 1 15 through 8 constitute a complete and accurate 16 transcription of the shorthand writing. 17 18 Dated: June 1, 2018 19 20 21 ____________________________ 22 JILLIAN SUMNER, CSR #13619 23 Hearing Reporter 24 25 26 27 28 9