1 BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION 2 5901 GREEN VALLEY CIRCLE 3 CULVER CITY, CALIFORNIA 4 5 6 7 8 9 REPORTER'S TRANSCRIPT 10 NOVEMBER 16, 2017 11 (Prepared from audio recording) 12 13 14 15 SPECIAL TAX APPEAL HEARING 16 APPEAL OF 17 ACCESS SAN DIEGO, LLC 18 NO. 624311 19 AGAINST PROPOSED ASSESSMENT OF 20 SALES AND USE TAX 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 For the Board of Equalization: Diane L. Harkey 3 Chair 4 Fiona Ma, CPA Member 5 Jerome E. Horton 6 Member 7 Sen. George Runner (Ret.) Member 8 Yvette Stowers 9 Appearing for Betty T. Yee, State Controller 10 (per Government Code Section 7.9) 11 Joann Richmond 12 Chief Board Proceedings 13 Division 14 For California Department of Tax and 15 Fee Administration: Kevin Smith 16 Tax Counsel 17 Steven Smith Tax Counsel 18 Kevin Hanks 19 Tax Counsel 20 For Taxpayer: 21 Jesse McClellan Representative 22 Priscilla Burpee 23 Representative 24 Chris Lee Taxpayer 25 26 27 ---oOo--- 28 2 1 5901 GREEN VALLEY CIRCLE 2 CULVER CITY, CALIFORNIA 3 NOVEMBER, 16, 2017 4 ---oOo--- 5 MS. RICHMOND: Our next item is C11, Access 6 San Diego, LLC. 7 MS. HARKEY: Thank you. 8 Mr. Angeja. 9 MR. ANGEJA: Madam Chair and Members, the 10 appeal before you involves one unresolved issue. 11 Which is whether additional adjustments to the 12 measure of unreported taxable sales are warranted. 13 MS. HARKEY: Madam Chair, if I may, just a 14 point of clarification. 15 First, I'm just curious why the Department 16 only walked up to the table after it was called. 17 Is that a -- a new procedure? 18 MR. SMITH: Well, we normally do. 19 MR. HORTON: No, normally you're actually 20 sitting there. But anyway -- 21 MS. HARKEY: Leave them alone. 22 MR. HORTON: No, I'm just curious. No big 23 deal. 24 MS. MA: Nothing changed. 25 MS. HARKEY: They changed -- 26 MR. SMITH: We changed people. 27 MR. HORTON: Oh, okay. All right. All 28 right. 3 1 MR. HANKS: Pinch hitters. 2 MR. HORTON: I'm sure there was a reason. 3 Question of Appeals, I just want a point of 4 clarification. 5 The Board has already ruled on this same 6 case, same issues. I -- I don't know why it's before 7 us, or why it should be before us. 8 It would seem to me that the -- the agency 9 will just simply follow the position of the Board 10 that the Board has previously taken. 11 MR. ANGEJA: I agree with you. And there 12 was a memorandum decision adopted Tuesday. I 13 requested that this matter be deferred so that 14 Appeals could issue an SD&R to apply that decision to 15 this case, and my request was rejected. So here we 16 are. 17 MR. RUNNER: What does that mean? 18 MR. ANGEJA: I asked for it to be deferred, 19 and it was kept on calendar. My request to defer it 20 was denied. 21 MS. HARKEY: That -- this -- this is what 22 we're getting. 23 MR. HORTON: What would have accomplished 24 with the deferment? 25 MR. ANGEJA: We would issue an SD&R 26 following the Memorandum Opinion that this Board 27 adopted Tuesday, and this wouldn't need to happen 28 today. 4 1 MR. HORTON: And so the case wouldn't be 2 before us, the taxpayer would have basically won the 3 case? 4 MR. ANGEJA: Yes. 5 MR. HORTON: And they wouldn't have to pay 6 the extra expense of coming before us. We wouldn't 7 have all this going on. 8 MS. HARKEY: We have to hear it in order for 9 the Board to close it down, though. And the taxpayer 10 wants to hear it, so let's just -- let's just go 11 through our quick little -- 12 MR. HORTON: All right. 13 MS. HARKEY: -- dance and get this done. 14 And what are the issues of this appeal, 15 Mr. Angeja? Are there any? 16 MR. ANGEJA: I already read them. 17 MS. HARKEY: Oh, I'm sorry. You did. 18 MR. ANGEJA: The -- whether additional 19 adjustments to the measure of unreported taxable 20 sales are warranted. 21 MS. HARKEY: Okay. 22 So you have ten minutes, if you must, to 23 present your case. The Department will have ten 24 minutes. You will have five minutes on rebuttal, and 25 then we'll come back to the Board. 26 So please introduce yourself for the 27 record. 28 MR. McCLELLAN: Thank you, Madam Chairwoman. 5 1 My name is Jesse McClellan with McClellan 2 Davis. I'm joined today by Chris Lee, President of 3 Access San Diego, LLC, and also Priscilla Burpee, who 4 managed the audit, and as an accountant and a 5 business consultant. We'd be happy to keep this as 6 short as we possibly can. 7 As you may imagine, with all of the changes 8 and the turmoil that exists, and the issues 9 surrounding the Key Events opinion and so forth, my 10 client, Access, wanted to present this matter before 11 you as a Board at this hearing. And while I have a 12 presentation prepared, it doesn't sound like anyone 13 is needing to hear that. 14 MS. HARKEY: You -- go ahead and have your 15 full hearing just in case something happens. Just 16 present. 17 MR. McCLELLAN: Okay. Um -- 18 MS. HARKEY: I mean -- 19 MR. HORTON: Yeah, that's right. 20 MS. HARKEY: It's okay. Let him have his 21 hearing. I mean, we -- 22 MR. HORTON: It's got to be on record as 23 hearing. 24 MR. McCLELLAN: Yes. 25 With that said, Access San Diego operates a 26 Destination Management Company, otherwise known as a 27 DMC. In summary, it's a service-based business that 28 specializes in creating -- planning and coordinating 6 1 activities and events for corporate clients. 2 At the August 30th, 2017 Board hearing, this 3 Board heard the petition of Key Events and voted to 4 grant the petition. And by majority vote, voted to 5 issue a presidential opinion. 6 On Tuesday of this week, as you're aware, 7 that Memorandum Opinion was adopted. And it 8 establishes that DMCs are consumers and not retailers 9 of items that transfer during the course of their 10 services. 11 Ultimately, I represented Key Events, and I 12 also have worked with Access for quite awhile. I can 13 attest that for all intensive purposes, the 14 businesses are the same. 15 We would like to thank this Board for 16 providing some much-needed guidance. These 17 businesses quite literally promote California. They 18 bring businesses to California. They generate a lot 19 of revenue for California. And they've -- they've 20 been through this -- this fight for quite some time. 21 Pursuant to Revenue and Taxation Code 22 Section 40, the Memorandum Opinion of Key Events is 23 treated as presidential. Because Access also 24 operates a DMC that is consistent with Key Events, we 25 would ask that this Board make a motion to grant the 26 petition on the basis that Access falls within the 27 Memorandum Opinion. 28 Thank you for your time. 7 1 And I would like to turn it over to 2 Priscilla Burpee. She has some comments. And then 3 Mr. Lee has some brief comments as well. 4 Thank you. 5 MS. BURPEE: Good afternoon, Madam Chair and 6 Members of the Board. 7 I am Priscilla Burpee, and I have been 8 working with Destination Management Companies and 9 their California sales tax issues since the matter 10 first arose in 2004. 11 Key Events Incorporated is among the DMCs 12 with whom I have consulted. I testified at their 13 August 30th hearing along with Mr. McClellan. I join 14 him in thanking you on behalf of Key Events and all 15 California DMCs for affirming that DMCs are service 16 providers and consumers of property transferred in 17 conjunction with their services. 18 I managed the Access San Diego, LLC sales 19 tax audit for the years 2001 through 2009, for which 20 we are before you here today. 21 Access San Diego, LLC is a Destination 22 Management Company. And its operations are 23 essentially the same as those of Key Events, and was 24 first for whom you made the same determination in 25 2013. 26 In the course of working with over a dozen 27 different DMCs around the state of California, I have 28 found that their core business model is essentially 8 1 the same. It's a very small, tightly knit industry 2 of fewer than 25 different businesses, mostly small, 3 woman-owned businesses. 4 Pursuant to the Key Events Memorandum 5 Opinion, I request that you grant the petition of 6 Access San Diego, LLC. Providing this guidance and 7 relief to the California DMCs will allow them once 8 again to fully focus on promoting our wonderful 9 California destinations, and bring business travel 10 revenue and its collateral spending to this great 11 state. 12 Thank you all again for your decision for 13 Destination Management Companies. 14 Chris. 15 MR. LEE: Hello, Honorable Chairwoman and 16 Board Members. 17 My name is Chris Lee. I'm the President and 18 owner of Access San Diego, Access Destination 19 Services. 20 My family has been in the destination 21 management business in California since 1969. In 22 fact, my father is credited with coining the phrase 23 Destination Management Company. 24 For almost 50 years DMCs have been 25 considered service providers and promoters of 26 California for tourism, meetings and conventions. As 27 such, we've not collected or remitted sales tax or 28 been informed or required to do so. 9 1 There was a reclassification -- recent 2 reclassification of DMCs as resellers. I believe 3 that matter is now put to rest with your -- your 4 opinion on Tuesday. I thank you for that very much. 5 We're a small industry as Priscilla said. 6 We all know each other. We work very hard to promote 7 California. So I'd like to thank you for upholding 8 not only the letter of the law, but the spirit of the 9 law of the state of California. And I respectfully 10 request, again, that you grant our petition under the 11 presidential opinion. 12 Thank you very much. 13 MS. HARKEY: Thank you. 14 Department. 15 MR. SMITH: Thank you. 16 MS. HARKEY: Please introduce yourself for 17 the record. You have ten minutes. 18 MR. SMITH: Thank you. 19 Good afternoon, Chairwoman Harkey and 20 Members of the Board. 21 I'm Kevin Smith from the California 22 Department of Tax and Fee Administration, Legal 23 Division. With me today are -- also from CDTFA are 24 Steven Smith and Kevin Hanks. 25 Our position remains that DMCs are retailers 26 and liable for the tax. But we understand the 27 Board's recent memo opinion is presidential to this 28 appeal, and that the Board has decided this issue. 10 1 Thank you. 2 MS. HARKEY: Boy. 3 Any rebuttal? 4 MR. McCLELLAN: No, thank you. 5 MS. HARKEY: Okay. Okay. 6 MR. HORTON: Madam Chair, if I may. 7 So the Department has no disagreement with 8 this case? 9 MS. HARKEY: They have -- probably do have 10 disagreement with the case. 11 MR. HORTON: Well, I mean, they -- I mean -- 12 MR. SMITH: We do have a disagreement. 13 MR. HORTON: Based on the Memorandum of 14 Opinion issued by the Board, the Department is 15 basically following appropriate protocol and 16 procedures, right? 17 MR. SMITH: So, as I said, we still disagree 18 with the finding of the presidential opinion. But we 19 understand that that's your opinion, so that's what 20 we have to follow. 21 MR. HORTON: All right. 22 Then, Appeals, why is this before us? 23 MS. HARKEY: Because it has -- it has to -- 24 it has to -- we have to hear it in order to close it 25 down for it to be final, I guess. 26 MR. ANGEJA: No, an SD&R would do the same. 27 We're bound by the Board's presidential decision as 28 with all the remaining presidential. We would issue 11 1 an SD&R consistent with that. So I -- I have no 2 idea. 3 MS. HARKEY: It's not his job. He -- he 4 asked. 5 MS. STOWERS: Madam Chair. 6 MS. HARKEY: Yeah. 7 MS. STOWERS: So the decision is final, 8 right? The presidential decision Key Events, it's 9 final? 10 MR. ANGEJA: A final decision hasn't been 11 rendered, but that was the Board's decision in this 12 matter. It's not tentative as it was back in August 13 until yesterday. It's now something we can follow. 14 Prior -- prior -- yesterday -- Tuesday. 15 Prior to Tuesday, we did not have official 16 authority from this Board on which to rely. With 17 Tuesday's adoption of that opinion, Appeals now has 18 authority from the Board that it can rely on and must 19 follow. 20 So we are. We will. We've got pending 21 cases right now that we will be issuing SD&Rs for, 22 consistent with the Key Events Memorandum Opinion. 23 Which is why I had requested to do that in this 24 matter. We would have issued an SD&R. 25 MR. HORTON: Were you allowed to do it in 26 the other matters? 27 MR. ANGEJA: There's three, I believe, or 28 four for December that are in the same boat as this. 12 1 I requested -- one e-mail, all four cases, and it was 2 denied. 3 MR. HORTON: Who -- denied by who? 4 MS. STOWERS: So there's no way that the 5 adopted opinion could be -- well, you're telling me 6 that Appeals have to follow it? 7 MR. ANGEJA: Yes. 8 MS. STOWERS: Does the Office of Tax Appeals 9 have to follow it? 10 MR. ANGEJA: I can't speak to that. 11 MS. STOWERS: Okay. 12 MR. RUNNER: Can I ask a procedural -- 13 denied by who? 14 MR. ANGEJA: My requests go to the Chief of 15 Board Proceedings; she sends her requests to the 16 Chairwoman. 17 MS. HARKEY: To the Chairwoman? I didn't 18 deny. Who -- 19 MR. ANGEJA: Russell. 20 MS. HARKEY: Russell denied what? 21 MR. ANGEJA: My request to defer these 22 cases. 23 MS. HARKEY: Russell, come in here. 24 What's the -- what's this story? 25 MR. RUNNER: That's okay. Russell doesn't 26 need to be in here. 27 MS. HARKEY: I need -- I need -- 28 MR. RUNNER: Chair -- 13 1 MS. HARKEY: I need to talk -- let me talk 2 to the Chief Counsel here. Find out what's going on. 3 Cause I -- I don't like being mushroomed. 4 What's -- what's up? 5 MR. NANJO: Chairwoman Harkey, Board 6 Members, so what happened was -- that is correct. A 7 request was received by Board Proceeding, copied to 8 me. And I think it went to the Chair as well. 9 Correct. And the request was exactly as stated by 10 Appeals. 11 We got word that the -- with all due 12 respect, from your office saying that they wanted to 13 have this matter remain on calendar just in case. 14 We didn't have -- again, my position is it's 15 not necessary. I agree with Mr. Angeja. But I 16 consented to leave it on calendar just in case the 17 decision wasn't appealed on Tuesday -- or wasn't 18 adopted on Tuesday, or there was an issue. 19 MS. HARKEY: Okay. So just for this case. 20 Now, what about the other three that are on for 21 December? What will happen there? 22 MR. NANJO: My -- my -- my belief is, as 23 stated by Mr. Angeja, that those matters can be 24 dropped at this point. Because Appeals is now 25 bound -- they will do their decision pursuant to that 26 adopted presidential decision. 27 MS. HARKEY: Okay. And things won't -- I 28 will not be pulling them. 14 1 MR. NANJO: Okay. 2 MR. HORTON: Madam Chair. 3 MS. HARKEY: Is that correct? 4 MR. NANJO: That -- that is your option. 5 MS. HARKEY: I mean, I will -- I will -- I 6 mean, I will not -- I will not be hearing them. I 7 will not be able to say they -- I mean, I guess we 8 did this one just in case. But the future SD&Rs, you 9 made a request -- 10 MR. ANGEJA: I requested this and the ones 11 for December to be deferred -- 12 MS. HARKEY: Okay. 13 MR. ANGEJA: -- so we could -- 14 MS. HARKEY: And were all of them denied? 15 MR. ANGEJA: All were denied. 16 MS. HARKEY: Well, then let's be sure -- can 17 we do that at this hearing? If the Department 18 challenges -- 19 MR. HORTON: Madam Chair, I believe we could 20 do it with this one. I mean, I believe that the 21 Department -- 22 MR. NANJO: Well, I mean, testimony has 23 already been accepted in this one. So I would just 24 close this one out. 25 MS. HARKEY: Okay. I think -- I think -- 26 MR. HORTON: Can unwind this. Nobody's 27 voted. 28 MS. HARKEY: I -- I think -- no -- no. 15 1 Just -- just a second. Just a second. 2 We've heard this. Let's hear it. Let's be 3 done with it. Let's get this under -- under our 4 belts. Let's not confuse the issues. 5 But there's something here, if the 6 Department challenges, OTA will not be bound. What's 7 that mean? If the Department challenges the 8 presidential opinion? 9 MR. NANJO: We have -- it -- it -- the OTA 10 is -- it is unclear whether the OTA is bound by any 11 decision that this Board has rendered. So whether or 12 not you choose to hear it or not is immaterial to 13 that decision. 14 MS. HARKEY: Right. But if they -- I -- I 15 would think -- I would think that, um -- I think the 16 emergency regs or something allow OTA not to be bound 17 by our presidential opinion. I think that's -- 18 that's a little game that's going on. 19 So let me just say that I do believe 20 taxpayers are better with a full hearing. So that if 21 they go to OTA, they can see that the Department -- 22 that the Board decided -- made a decision, 23 irregardless of whether they choose to honor our 24 presidential opinion. 25 Because for some reason, even though the 26 statute says we're supposed to hear these things, 27 we're getting all sorts of push back. And I don't 28 believe we were the bad players here. I think some 16 1 of these cases show that we're -- that there's some 2 other things going on. 3 So quite honestly, I think we just probably 4 need to -- need to hear them all based on that. 5 MR. NANJO: Well -- 6 MS. HARKEY: I had -- I had forgotten 7 that. 8 MR. NANJO: My -- my understanding -- and 9 Mr. Angeja can correct me if I'm wrong though -- is 10 that for Appeals to do their decision, would be 11 essentially equivalent to the Board having the full 12 hearing. 13 MS. HARKEY: Is that true? 14 MR. NANJO: Yes. Yes. 15 MS. HARKEY: Okay. So then the SD&Rs could 16 be written for the remaining cases? 17 MR. NANJO: Correct. 18 MR. HORTON: And this one. 19 MR. NANJO: And that -- and that is -- 20 MS. HARKEY: And we can -- we can hear this 21 one based on the appeal. I think we just get it out 22 of the way. I really don't want to pull this back. 23 I am very nervous in this world. Because I want to 24 be sure the taxpayers get their decision, can walk 25 out of here. 26 If they get -- pardon the expression -- but 27 jerked around after December with new rules, new 28 regs, new Boards, new this, and everybody trying to 17 1 undo what we did, I want to be sure they at least 2 have a case, a file, as well as minutes from the 3 meeting, transcripts from the meeting that show that 4 we heard the case; we decided the case. 5 Okay. So now we've had the -- we've got the 6 whole story. 7 If the SDRs -- when are they going to be 8 issued for the December cases? 9 MR. ANGEJA: They go into the normal work 10 cue. It would be -- we have the 90-day rule that 11 applies. So it would be within three months. 12 MS. HARKEY: Okay. So then -- 13 MR. ANGEJA: And they're ready to write now. 14 MS. HARKEY: So they'll be in -- they'll be 15 in 2018. Is that a problem for the taxpayers? 16 MR. ANGEJA: I can't speak to that. 17 MS. HARKEY: Okay. So let's just hear all 18 of our cases. I guess this is why we decided to hear 19 the cases, unbeknownst to me. 20 I mean, I understood all the -- because I've 21 been dealing with this for a couple months now trying 22 to get cases heard and final. So we'll just hear all 23 of the cases. 24 MR. RUNNER: Madam Chair. 25 MS. HARKEY: Yes. 26 MR. RUNNER: The problem is, though, even 27 the ones in December -- 28 MS. HARKEY: Doesn't go final for 30. 18 1 MR. RUNNER: -- they -- correct. So if 2 that's going to be the intent, they can get there 3 anyway. 4 MS. HARKEY: I understand. But I -- I -- I 5 do think if there's a transcript, and we hear the 6 cases, is that better or worse? I think that might 7 be better. Might be support. 8 MR. RUNNER: Well, let's hear -- I don't -- 9 what's the opinion on that? I don't know if that's 10 better. Or -- or is it -- or -- 11 MS. HARKEY: I don't -- I -- it would be up 12 to the taxpayers. 13 MR. RUNNER: Or -- or is it -- or are we -- 14 MR. HORTON: Madam Chair, just -- 15 MR. RUNNER: -- ignoring our own opinion? 16 MR. HORTON: Madam Chair, just from a -- 17 from a policy perspective and a procedural 18 perspective -- in anticipation, if there is any 19 challenge to the Board's Memorandum of Opinion, it 20 ends up in court, because this is an entire 21 industry -- I would suggest that we follow our normal 22 procedure and not deviate from it. So that we're not 23 part of that process of -- but -- and so I would 24 abstain, just because I'm not going to participate in 25 this. 26 I think that the Board has spoken. They've 27 issued a Memorandum of Opinion. The SD&R should be 28 issued for this taxpayer and all the rest of them. 19 1 MS. HARKEY: I -- I'm sorry. 2 MR. HORTON: And to deviate says that 3 there's something wrong with what happened. 4 MS. HARKEY: There is something wrong with 5 what's going on. Let me just put that -- let me just 6 put it bluntly. There's a lot going with what -- 7 there's a lot wrong with what's going on. 8 We are getting exempted from a lot of the -- 9 I mean, at the last minute, you know -- there's no 10 cooperation. Let me just put it this way. No 11 cooperation between the agencies. None. 12 And the Department can hold for any reason, 13 and the taxpayer can force an opinion to be released. 14 But it's just -- I -- let's get the taxpayers out of 15 the loop, and give them as much paper trail as they 16 possibly can -- as they possibly can get. And not 17 stand on our own little procedure. Because I think 18 they're going to hang on it. 19 I want to be sure that we get everyone 20 heard, and just do our job to the end. And -- and at 21 least there's a transcript. At least there's 22 something. 23 I'm -- you know, the SD&Rs are going to be 24 in 2018. I'm not trusting anybody will even know 25 they happened. And so -- I mean, I know -- I see it 26 over there. 27 I know. Just doing your job, right? Just 28 doing -- I know. Just doing your job. 20 1 MR. SMITH: I don't want to be here for this 2 either. 3 MS. HARKEY: I just -- I just -- I just want 4 to be sure -- I just want to be sure we're giving the 5 taxpayer's the maximum benefit of -- of the Board 6 hearing. 7 MR. RUNNER: My -- again, my preference 8 would be to go [sic] what is the normal procedure. I 9 think if we follow normal procedure, we are best in 10 our own defense. 11 MS. HARKEY: Okay. Let -- 12 MR. RUNNER: Hang on. Hang on. 13 And it also, I think, gives, then, the 14 taxpayer the best defense. Because let me tell you, 15 if indeed this Board has decided something, and then 16 future organizations decide to undo them, there will 17 be court issues attached to that. 18 And I'm afraid that if we deviate out of our 19 normal processes, that we could be, in fact, 20 potentially undermining their own argument. 21 MR. McCLELLAN: May I respond to that on 22 behalf of the taxpayer? 23 MS. HARKEY: Yes, please. 24 MR. RUNNER: Yes, please. 25 MS. HARKEY: If the taxpayer would like -- 26 would like us to hear, I think we should hear. 27 MR. McCLELLAN: And -- and perhaps after I 28 make my comment, I can briefly confer with the -- the 21 1 president of the company. 2 But I think that perhaps a solution -- from 3 what I've heard is Appeals concedes that this 4 petition should be granted pursuant to the Key Events 5 opinion. The Department has conceded that pursuant 6 to the Key Events opinion, this petition should be 7 granted. 8 I would suggest that the Board can make a 9 motion to grant the petition pursuant to the 10 concession made by Appeals, pursuant to the 11 concession made by the Department, that this case 12 falls under the Key Events opinion. Then, 13 essentially, we have -- 14 MS. HARKEY: Everybody -- 15 MR. McCLELLAN: -- a bringing together of 16 everybody. And it's on the record, and it's 17 official. And -- and hopefully Chris can go home and 18 sleep well for the first time in -- 19 MR. LEE: Fourteen years. 20 MR. McCLELLAN: In 14 years. 21 MR. LEE: We started -- in 2004 was the 22 first time we were contacted. And the audit went 23 back to 2001. 24 MS. HARKEY: I would like to make that 25 motion. 26 Mr. Angeja -- 27 MR. HORTON: A rebuttal, Madam Chair. 28 MS. HARKEY: You may rebut, for crying out 22 1 loud. Go ahead. 2 MR. HORTON: I mean, if you want to follow 3 procedures. 4 MS. HARKEY: There's procedures. There's 5 a -- I could -- we could make a motion, and then we 6 could -- 7 MR. HORTON: (Inaudible) rebuttal, and then 8 you all can do what you want to do. 9 MS. HARKEY: I just -- I just think we need 10 a motion from -- that we're -- you know, in light of 11 what Appeals said. Just like the taxpayer said. 12 Just get it done. 13 MR. HORTON: We could accept his -- we could 14 accept -- the Board could accept his statement as a 15 rebuttal, then open it up for discussion, and then 16 make the motion. 17 MR. RUNNER: I -- I'll -- I would make that 18 motion based upon hearing from the taxpayer. What 19 the taxpayer's requesting that we -- that we grant 20 for the taxpayer based upon the, um -- the Key Events 21 memo opinion. That it applies. And that we would 22 grant for the taxpayer. 23 MS. HARKEY: Yeah. And that -- that is 24 agreed by Appeals and by the Department that the 25 Key Events presidential opinion applies. 26 MR. RUNNER: And, again, that's all on the 27 record. So I don't need to have it in the motion. 28 MS. HARKEY: I would put it in the motion. 23 1 MR. RUNNER: It's not in the motion. Just 2 move forward. 3 MS. HARKEY: I'll amend the motion. 4 MR. RUNNER: Okay. 5 MR. HORTON: Members, I would -- I would 6 abstain. Because I don't feel that that's -- I don't 7 feel that's consistent with normal procedure, and -- 8 and, quite frankly, in the best interest of the 9 taxpayer. 10 MS. HARKEY: Thank you. 11 MR. HORTON: But I respect the opinion of 12 the Members. I would abstain. Not participate. 13 MS. HARKEY: Is there a second? Will you -- 14 you -- 15 Okay. Is there a second for the motion, for 16 the Runner motion or for my amended motion? 17 MR. RUNNER: I don't care if it's amended. 18 MS. HARKEY: There's a -- 19 MR. RUNNER: Let's just get through this. 20 MS. HARKEY: Okay. It's -- okay. 21 I -- I would prefer to use the wording -- 22 use -- augment Member Runner's motion. 23 He finds for the taxpayer on this case in 24 light of the -- the presidential opinion determined 25 by the Board, that the Appeals Department has 26 acknowledged, and that the CDTFA has acknowledged as 27 governing this case. 28 That's my motion. Is there a second? 24 1 Member Ma, second? 2 Yes, she seconds. 3 Okay. Is there any objection? 4 MS. STOWERS: I'll -- I'll -- 5 MR. HORTON: Objection. 6 MS. HARKEY: Okay. There are objections. 7 Will you please call the roll? 8 MS. MA: Why don't we -- hold on. 9 Mr. Angeja, you're our attorney. 10 MR. ANGEJA: That would be Mr. Nanjo, but go 11 ahead. 12 MS. MA: Mr. Nanjo. 13 Okay. Can someone just -- okay. I think 14 everybody -- right? 15 Ms. Harkey, everybody knows what we want. 16 MS. HARKEY: It just seems like every time 17 I -- 18 MS. MA: It's like every time we like -- 19 MS. HARKEY: -- want to get everything 20 thorough -- 21 MS. MA: Like -- 22 MS. HARKEY: -- there seems to be a little 23 push-back over there. Which is why there's the 24 separation. 25 MS. MA: Mr. Nanjo. 26 MR. NANJO: Yes. 27 MS. MA: What is your understanding of what 28 we want to do here today? 25 1 Because, I mean, these motions and 2 everything is just -- I mean, I think we all are on 3 the same page. But I don't know what the motion is 4 saying. But we all want -- 5 MR. NANJO: There -- there essentially is no 6 difference between Chairwoman Harkey's motion and the 7 one made by Member Runner, except that Chairwoman 8 Harkey's has some additional factual elements to it. 9 But, essentially, the motions do the same thing. 10 MS. MA: What is it? 11 MR. NANJO: It's -- they -- 12 MS. MA: Just put it on the record. 13 MS. MA: I would rather have the motion 14 stated. Well, the -- okay. So the motion, as I 15 understand Chair Harkey was trying to make, was that 16 she's finding -- granting the petitioner's request 17 --or -- 18 MS. HARKEY: Appeal. 19 MR. NANJO: -- appeal, based upon the fact 20 that -- acknowledging both CDTFA's and Appeals' 21 acknowledgment that this case is -- follows under the 22 Key Events decision, which is a presidential opinion 23 adopted by this Board. 24 That's my understanding of what 25 Chairwoman Harkey was trying to motion. 26 MS. HARKEY: Yes, that's a beautiful motion. 27 That's my motion. 28 MS. MA: Second. 26 1 MS. HARKEY: Is there any objection? 2 MR. HORTON: I'm still abstaining. 3 MS. HARKEY: There's one abstention. 4 Please call the roll. 5 MS. RICHMOND: Chairwoman Harkey. 6 MS. HARKEY: Aye. 7 MS. RICHMOND: Mr. Runner. 8 MR. RUNNER: Aye. 9 MS. RICHMOND: Mr. Horton. 10 MR. HORTON: Abstain. 11 MS. RICHMOND: Ms. Ma. 12 MS. MA: Aye. 13 MS. RICHMOND: Ms. Stowers. 14 MS. STOWERS: Abstain. 15 MS. RICHMOND: Motion carries. 16 MS. HARKEY: Okay. God bless you. 17 MR. McCLELLAN: Thank you. 18 MR. LEE: Thank you very much. 19 MR. McCLELLAN: That wasn't as short as we 20 set out to make it, but it's done. 21 MS. HARKEY: Well, nothing's short up here. 22 Okay. We're going to take a half-hour 23 break. 24 ---oOo--- 25 26 27 28 27 1 REPORTER'S CERTIFICATE 2 3 State of California ) 4 ) ss 5 County of Sacramento ) 6 7 I, Jillian Sumner, Hearing Reporter for 8 the California State Board of Equalization certify 9 that from November 16, 2017 audio, I recorded 10 verbatim, in shorthand, to the best of my ability, 11 the proceedings in the above-entitled hearing; that I 12 transcribed the shorthand writing into typewriting; 13 and that the preceding pages 1 through 28 14 constitute a complete and accurate transcription of 15 the shorthand writing. 16 17 Dated: July 20, 2018 18 19 20 ____________________________ 21 JILLIAN SUMNER, CSR #13619 22 Hearing Reporter 23 24 25 26 27 28 28