1 BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION 2 450 N STREET 3 SACRAMENTO, CALIFORNIA 4 5 6 7 8 REPORTER'S TRANSCRIPT 9 MARCH 29, 2017 10 11 SALES AND USE TAX APPEAL HEARING 12 APPEAL OF 13 STARS HOLDING CO., LLC 14 NO. 855845 (CH) 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 of Equalization: Diane L. Harkey 3 Chairwoman 4 Sen. George Runner (Ret.) Vice Chair 5 Fiona Ma, CPA 6 Member 7 Jerome E. Horton 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 Board of Equalization Staff: Jeff Angeja 15 Tax Counsel IV Legal Department 16 17 For the Department: Pamela Mash Tax Counsel 18 Legal Department 19 Kevin Hanks Chief 20 Business Tax and Fee Department 21 Lawrence Mendel 22 Tax Counsel III Legal Department 23 24 For Claimant: Azad Amiri Representative 25 Richard A. Stoll 26 Representative 27 ---oOo--- 28 2 1 450 N STREET 2 SACRAMENTO, CALIFORNIA 3 MARCH 29, 2017 4 ---oOo--- 5 MS. RICHMOND: So our first item is item C 6 Sales and Use Tax Appeals Hearings; Item C2, Stars 7 Holding Company, LLC. 8 Please come forward. 9 MS. HARKEY: Mr. Angeja from our Appeals. 10 Hi. How are you? 11 If you would have a seat over here. Thank 12 you. 13 MS. RICHMOND: Board Proceedings has 14 received contribution disclosure forms for today's 15 hearings from the parties, participants and agents. 16 All forms were properly completed and signed and no 17 disqualifying contributions were disclosed. All 18 parties, participants and agents are on the alpha 19 listings provided to your office. 20 Each person sitting at the table will be 21 asked to introduce themselves and, if necessary, 22 their affiliation with the taxpayer for the record. 23 Ten minutes is allocated for the taxpayer's opening 24 presentation, followed by ten minutes for the 25 Department's presentation, and five minutes is 26 allocated to the taxpayer for rebuttal. 27 Chairwoman Harkey. 28 MS. HARKEY: Thank you. 3 1 Mr. Angeja is from our Appeals. Will you 2 please introduce the issues in this case. 3 MR. ANGEJA: Good morning, Madam Chair and 4 Members. I'm Jeff Angeja on behalf of the Appeals 5 Division. 6 The appeal before you presents one 7 unresolved issue, which is whether claimant should 8 be granted a refund of the amounts it paid in 9 connection with the assessments of the Moraga tax 10 increase. 11 MR. AMIRI: This is our case? 12 MS. HARKEY: Thank you. 13 MR. STOLL: Yes. 14 MS. HARKEY: Okay. To the -- 15 MR. AMIRI: I, uh, asked for hearing aid. 16 I didn't hear what is going on. So, would you 17 please have a hearing aid before we go forward? 18 MS. RICHMOND: I think this taxpayer just 19 asked us -- 20 MR. AMIRI: I cannot hear. 21 MS. RICHMOND: -- for a hearing device and 22 we have not had a chance to test it to make sure 23 that it works. So if we could have a five-minute 24 recess. 25 MS. HARKEY: Sure. Fine. Thank you. 26 MR. STOLL: Appreciate that, yeah. 27 MS. RICHMOND: Thank you. 28 (Pause.) 4 1 MS. HARKEY: Okay. We are now ready. 2 Mr. Angeja, will you please introduce the 3 issues in this case. 4 MR. ANGEJA: Good morning, Madam -- good 5 morning, Madam Chair and Members. I'm Jeff Angeja 6 on behalf of the Appeals Division. 7 The appeal before you presents one 8 unresolved issue, which is whether claimant should 9 be granted a refund of the amounts it paid in 10 connection with the assessments of the Moraga tax 11 increase. 12 MS. HARKEY: Thank you. 13 Welcome to the Board of Equalization. You 14 have ten minutes to present your case. After the 15 initial presentation, the Board will respond, and 16 then you will have five minutes on rebuttal. 17 So, ten minutes. Proceed. And please 18 introduce yourself for the record. 19 MR. STOLL: Yeah. Good morning. My name's 20 Richard Stoll. I'm the -- an attorney for Stars 21 Holding Company. And Mr. Amiri, on my right, is the 22 accountant for Stars Holding Company. 23 So I will start with what I see in this 24 case, and then Mr. Amiri will discuss some further 25 issues. 26 Now, hopefully you've gotten the exhibits 27 we've provided because I want to go through a little 28 bit of that. 5 1 MS. MA: This one? 2 MR. STOLL: Yes. 3 Okay. We're going to start right on the 4 top, of course, to make it easy. 5 Now we're talking about the quarters in 6 question are three quarters in 2013. The first item 7 on the top, right under the big "Exhibit A," is the 8 return that was filed for -- for the first quarter 9 of 2014. And I want to show you that for a reason. 10 If you go down through the return -- one, two, 11 three, four -- down to page 5, it's only one 12 percent. You will see that it says under Contra 13 Costa County, one percent. And these returns are 14 filed electronically. 15 And then if we go down a few more pages, 16 there's a blank page, then we get into the return 17 that was filed for 10/1 to 12/31. And we go down -- 18 one, two, three, four -- five pages. And, again, 19 Contra Costa County is listed at one percent in this 20 return. 21 And then the next return we go down a 22 couple -- 23 MR. RUNNER: Well hang on. I'm having 24 trouble getting -- counting those pages down. 25 MS. HARKEY: Well, you just go to the last 26 page of the report. It would be here, where all 27 the -- 28 MR. RUNNER: Last page of the report. 6 1 MS. HARKEY: Where all the count -- they're 2 not separated, but where all the counties are 3 listed. 4 MR. RUNNER: I got the first one. It's the 5 second one I can't find. 6 MS. HARKEY: Okay. That's probably five 7 more pages. 8 MS. STOWERS: Ms. Harkey, can you give me 9 your -- your page number? 10 MS. HARKEY: Well, I don't think they're 11 numbered for exhibits. I just can tell you that 12 they say "print this page," and then, "sales tax 13 locations not in district tax area." And then 14 you've got districts, which are San Joaquin, 15 Stanislaus, Contra Costa and San Francisco. 16 MS. STOWERS: I'm there. Thank you. 17 MS. HARKEY: Thank you. 18 MR. RUNNER: I'm there. 19 MS. HARKEY: And I think he's going to 20 provide us several of these, so we basically need to 21 just get rid of the first few pages and go to that 22 end page. 23 Okay? Thank you. 24 MR. STOLL: I think maybe I had the 25 wrong -- wrong one to start with. So I'm going to 26 start over again if you don't mind. 27 MS. HARKEY: Okay. 28 MR. RUNNER: Okay. 7 1 MR. STOLL: I'll try to go quick. 2 MS. HARKEY: Let's go. 3 MR. STOLL: So we go into the first page of 4 the return. 5 MR. RUNNER: Yeah -- the return now? 6 MR. STOLL: Yeah, we're at the first -- 7 return, right under "Exhibit A" onto the first 8 page. 9 MR. RUNNER: Okay. 10 MS. HARKEY: Okay. 11 MR. STOLL: And that's the return for 12 1/1/14 to 3/31/14. 13 MS. HARKEY: Right. 14 MR. RUNNER: Mm-hmm. 15 MR. STOLL: It's not one of the ones in 16 issue. 17 But then we go page 1, page 2, page 3, page 18 4 and down to page 5. 19 MR. RUNNER: Mm-hmm. 20 MS. HARKEY: Okay. 21 MR. STOLL: And that starts with it down at 22 the bottom San Joaquin County -- 23 MR. RUNNER: Mm-hmm. 24 MR. STOLL: -- City of Moraga, Contra Costa 25 County. 26 MS. HARKEY: Yep. 27 MR. RUNNER: Mm-hmm, mm-hmm. Yep. 28 MR. STOLL: And it shows City of Moraga, 8 1 Contra Costa County, two percent. 2 MS. HARKEY: Okay. 3 MR. AMIRI: That's the first quarter. 4 MR. STOLL: Yeah, that's the first quarter 5 '14. That one's not -- not in dispute. 6 I just show it to you because what I'm 7 going to show you on the other returns is this 8 information is all provided by the Board of 9 Equalization. And when my client filled out these 10 tax returns online, they only listed Contra Costa 11 County at one percent. They hadn't upgraded their 12 form. 13 They're going to present a case that we 14 should have known it had been changed, you know, 15 should have read the newspapers and all this kind of 16 stuff, but they didn't change their forms. So I was 17 saying, you know, why would they not change their 18 forms so the taxpayer would know when he files? 19 Because there's no way to modify these forms. You 20 use the numbers that are in the forms. 21 So then we go down a couple more pages, you 22 come to a blank page. And then you're on the return 23 for 10/1/13 to 12/31/13. 24 MR. RUNNER: Mm-hmm. 25 MR. AMIRI: Fourth quarter. 26 MR. STOLL: Fourth quarter of '13, which is 27 one of the quarters in question. 28 MR. RUNNER: Mm-hmm. 9 1 MR. STOLL: And then you go down one -- 2 count the first page. One, two, three, four, five 3 and you'll see Contra Costa County listed at one 4 percent. 5 MR. AMIRI: No Moraga. 6 MR. STOLL: No -- no Moraga's been added to 7 it. 8 So the taxpayer has no information, based 9 on this form, that the tax has gone up in Contra 10 Costa County. Even though it did technically go up 11 on April 1st of 2013. 12 And then I don't know if you want to go 13 through the next two forms that are in question, but 14 they're the same. The State Board of Equalization 15 did not put in the increase into their printed form 16 which is on the website that the -- the people are 17 required to fill out for the state and pay their 18 taxes. 19 And then later on they contacted Stars 20 Holding and said, "You didn't pay all the taxes that 21 were due for the first three quarters of 2013." And 22 Stars Holding looked at their forms and said, "You 23 know, we filled it out exactly like your forms 24 required, put all the information in, calculated out 25 the tax and we never got the information you said we 26 should have gotten." 27 You know, you say you send out, you know, 28 an email, but the email address they use is an email 10 1 address I've never seen for Stars. I've been 2 attorney for Stars for -- since it was formed and 3 they've never used the email they said they sent it 4 to. But they are sending the tax returns back and 5 forth with a valid email. 6 In any case, they did not know that the tax 7 had gone up. And even if they had known, they'd -- 8 there's no way to modify this form to pay an 9 additional tax. You know, it calculates -- it's all 10 calculated based on the computer program. So what 11 can the poor client do? 12 And then they -- when they find out their 13 form was in error, they contact the client and they 14 want him to pay not only the taxes but interest and 15 penalties for not having complied with it, you know, 16 somehow, which I don't know how he could have 17 complied. 18 But basically that's what I want to talk 19 about. And then Mr. Amiri wants to talk about other 20 issues. 21 MS. HARKEY: Thank you. 22 MR. AMIRI: I am in preparing sales tax for 23 almost 40 years. I have a Masters Degree from 24 Berkeley and always received the form from State 25 Board, which is all the rate and instruction is 26 included. We always filed it based on their 27 instruction. And regardless what's going on, we 28 always follow their instruction to fill out the 11 1 sales tax. 2 In 2010, sales tax on gasoline -- on 3 gasoline is regulated. How regulated? They reduce 4 the sales tax, they increase the state tax. 5 MS. HARKEY: Right. 6 MR. AMIRI: And what we did is -- and 7 diesel has one rate, grocery has one rate. So in a 8 gas station we really have to be very careful when 9 we calculate the sales tax. 10 For this reason, State Board of 11 Equalization offer us online form, which has all the 12 rate and information, so there is no mistake. And 13 we -- from that point we fill it out. 14 In two thousand -- February of 2014, I 15 receive a call from the State Board of Equalization 16 Oakland office. And they said, "You did not pay the 17 district tax for City of Moraga." 18 My understanding of the district tax is 19 usually a county, it called district. And then 20 maybe a city tax increase, and has to be itemized, 21 the district. 22 What I did is I asked them, "We have here 23 educated accountant. Would you please send us our 24 return? We want to see where we made a mistake." 25 No response. 26 Back and forth we went and filed -- I 27 receive a -- a bill for almost $30,000. And I, uh, 28 was told by Sacramento I have no choice to use the 12 1 time and file the petition for redetermining the 2 taxes. 3 We did. And then we recommended, okay, go 4 ahead and pay, otherwise interest and all this 5 thing. We said fine. We start to pay in a payment 6 plan. 7 Now we are end of the June. I said -- they 8 also ask us, "Each time you pay the payment, please 9 file the claim for refund." And which we did. 10 And around the end of June of 2014, I asked 11 where we are, why they don't send me the return? 12 It's filed by us and we paid for it, so I want to 13 see where is the mistake is. 14 I receive a call -- and if you look on 15 Exhibit B -- Exhibit B, first page. They asked me 16 to send them my calculation, a spreadsheet, how I 17 calculate the tax. I said, "You have the form. You 18 have the return." 19 Anyway, I said fine, I send it to them, my 20 spreadsheet. Which is -- is the last page of each 21 quarter, you can see that. 22 And they said, here's the sample how you 23 fill the form. This form sent to me in July 14, 24 2014. One and three months later they said this is 25 the sample, this is the blank form, please follow 26 our instruction and fill it out. I did. 27 I filled it out for three quarters based on 28 that. And they received -- I mail it, uh -- faxed 13 1 it to them on 21st, one week later. 2 And then they receive it. And if you look 3 on the first page of sec- -- third page, first one 4 is a sample blank. And the third page it said 5 audited on July 28, '14 and you are short for each 6 quarter about $10,000. Audited on July 28, '14. 7 I called them. I said, "You already -- I 8 paid for it. What do you mean you audited now?" 9 They said, "Yeah, based on your form you 10 sent." 11 I said, "You told me to amend it and fill 12 it this way so we can look at it. And I follow the 13 instruction." 14 On this new form they send, there is a tax 15 for Moraga. One and 15 months later they send me 16 the blank form which it said Moraga tax is one 17 percent for city tax. 18 I said I -- all these three quarters I file 19 it through online, and Mr. Stoll referred to it. It 20 always said one percent district tax. And now you 21 come and say, "Oh, the city tax is two percent." I 22 didn't know that. 23 No response. 24 And I argued with them, "Why you say is 25 audited now?" July 28th you -- on February 12 of 26 2014 you inform me it's a short payment and it's 27 almost $30,000. But now you tell me it's seven 28 months later you audited again. They said, "Yeah, 14 1 based on amended form you sent, we audit you and you 2 owe that much." 3 This is really -- I sincerely want this 4 Board to look. You are our voice sitting over 5 there. If these employees or this department 6 doesn't update the information, which it went in 7 November 6 of 2012, it was passed and it went into 8 effect on April 1st of 2013, State Board had the 9 four months time to update their form. And their 10 claim is why I didn't listen to the radio and 11 television. 12 I said, "Why you didn't listen and update 13 the form? You want me to listen and change the form 14 and you are -- you're not changing it?" 15 I -- and, also, I paid it. This is 30 -- I 16 paid 35 -- Star paid $35,000 for this three 17 quarters. 18 MS. RICHMOND: Time's expired. 19 MR. AMIRI: Thank you. 20 MS. HARKEY: Thank you. 21 To the Department, please introduce 22 yourself for the record and you also have ten 23 minutes. 24 MS. MASH: Thank you, Madam Chair, Members 25 of the Board. I'm Pamela Mash from the Board's 26 Legal Department, along with Lawrence Mendel and 27 Kevin Hanks representing staff. 28 The amounts for which claimant seeks a 15 1 refund were properly due to the Board and there's no 2 basis in law for refunding these amounts to 3 claimant. 4 In April 2013, a district tax was 5 implemented in Moraga which increased the combined 6 tax rate within Moraga from 8.5 percent to 9.5 7 percent. Claimant argues that it didn't know about 8 the one percent tax increase; for that reason it 9 failed to report or pay the additional tax rate. 10 Claimant argues that it was only informed 11 of the new tax rate when it was contacted by the 12 Department in February 2014. 13 In February 2015, claimant paid the 14 liability in full and filed this claim for refund. 15 There's no statutory authority for 16 relieving a tax liability based on a taxpayer's lack 17 of knowledge or the contention that the Department 18 adequately -- didn't adequately inform or educate a 19 taxpayer about a tax increase. 20 That said, the Department made reasonable 21 efforts to convey information about the tax increase 22 to permit holders by sending out two -- sending out 23 one tax information bulletin, two special notices, 24 and a news release which contained information about 25 the new tax rates. 26 Also, this tax increase was a result of the 27 passage of Measure K in the town of Moraga which the 28 town's voters approved by 70 percent, and there was 16 1 a lot of information in the media surrounding this 2 measure before it passed during the November 2012 3 election. 4 In fact, of the 351 permit holders in the 5 area, only three were billed for underreporting the 6 district tax, and that includes this claimant. 7 So clearly the information about the tax 8 increase was out there and pretty much all of the 9 other businesses in the area recognized that it 10 applied to them and they reported it correctly using 11 the forms we provided online. The same forms that 12 claimant used. 13 I'd also like to point out that the first 14 Notice of Determination was sent to claimant on 15 December 2nd, 2013 and it included specific 16 information about the tax increase and the reason 17 for the liability. So, at the very least, claimant 18 had direct notification from the Department before 19 the fourth quarter of 2013 tax return was due, and 20 yet he continued to underreport anyway. 21 But more importantly, and really what's at 22 issue here today, is that there is no statutory 23 authority for relieving this tax liability simply 24 because claimant was unaware of the tax increase. 25 Claimant paid the correct amount of tax 26 that was legally due and there was no overpayment of 27 tax by claimant. Claimant simply paid what all 28 other businesses in Moraga paid, nothing more. 17 1 There's nothing to refund to claimant. There's 2 absolutely no basis in law or inequity for granting 3 this claim for refund; and for that reason, it 4 should be denied. 5 I would like to ask Mr. Hanks to address 6 the issue about the forms that were updated 7 online. 8 MR. HANKS: Good morning, Madam Chairwoman 9 and Members. 10 I wanted to share the information 11 concerning how the -- the tax rate forms identified 12 the different district taxes that are applicable. 13 And so I don't know if the petitioner's aware that 14 we've got a Contra Costa district tax, as well as a 15 City of Moraga tax. Both of those could have been 16 input into his e-filed return and submitted to us. 17 That information is captured on our 18 Schedule A return; that's a paper return that the 19 taxpayer's been provided a copy of and that he was 20 referencing earlier this morning. 21 But I just wanted to clarify that there are 22 district taxes that apply to both the county and 23 the -- the city, and I think perhaps that's 24 confusing for -- for the taxpayer and their 25 accountant. 26 MS. HARKEY: Thank you. 27 MS. MASH: Thank you. 28 MS. HARKEY: Okay. You have five minutes 18 1 on rebuttal. 2 MR. STOLL: Well, I would just say that I 3 think the Department could've done a lot better to 4 get the information out to this taxpayer. 5 They mention that there's only three out of 6 150 businesses that report -- didn't report the tax 7 right. I suspect most of those are businesses and 8 people that live in Moraga. 9 You know, Mr. Amiri doesn't living in 10 Moraga, so he's not a resident and he owns gas 11 stations in various places, as you can see on the 12 returns, throughout northern California. So he's 13 not apt to keep up with what's going on in Moraga 14 and get that news. 15 But, uh, the effect of not knowing about 16 the tax increase hurts his business dramatically 17 because this is a gasoline station which basically 18 makes about 10 cents a gallon gross profit. And 19 when the tax goes up one percent with a 10-cent 20 margin, the gas is $3, that's 3 cents. So you lose 21 about a third of your profit, gross profit. You 22 expect to pay all your expenses. 23 So that -- that's what his real complaint 24 is, is that he didn't -- if he had knowledge, he 25 could've adjusted his prices accordingly to be able 26 to recoup the tax increase, because that's what a 27 gasoline station and most businesses do. If there's 28 an increase in your cost, you can't absorb it 'til 19 1 you're working for free or not making any money. 2 You have to have -- be able to pay your employees 3 and your other maintenance expenses on -- on the 4 business. 5 So -- 6 MR. AMIRI: Let me talk. 7 MR. STOLL: Okay. Now Mr. Amiri wants to 8 say a few words. 9 MR. AMIRI: There is a sales tax reduction 10 in the State of California, effective January of 11 this year. One quarter went down. But we didn't 12 reduce. We looked at the form and we confirm it 13 with the State Board. It said gasoline is 14 regulated. These changes doesn't affect the 15 gasoline. 16 If the gasoline is regulated and any 17 changes it doesn't affect, this one percent, if it's 18 affect, why they didn't tell us? 19 How we can -- it said three per- -- three 20 people. I bet you the three people is three gas 21 stations. We have three gas stations in Moraga. 22 So, for sure, all of -- because we are believing the 23 gasoline, diesel, grocery in gas station is 24 regulated, we don't look at anybody. We just listen 25 to the State Board and guide how we should file the 26 form, and accordingly raise the price, or if it's 27 reduced -- there is no way on gasoline the tax it 28 goes down. It usually goes up, and we always watch. 20 1 And changes is happening in April or July 1st. But 2 we watching very carefully. 3 We -- the changes is happened to the sales 4 tax is different than in gasoline. That's the 5 reason gasoline is regulated. We pay a state tax. 6 No product pay a state tax besides the fuel. We pay 7 federal tax. 8 Anyway, we really -- it was lack of 9 information by the state. The state had enough time 10 to update the form. Not send me the mailing form 15 11 months later and ask me, okay, amend it this way and 12 now we audit you. That was absolutely a game they 13 played with me, and I didn't like it. 14 They didn't tell me, "Okay, file the 15 amended and we going to audit you again." 16 They said, "File it." They send me the 17 sample, and I did it. And they said, "Okay, now you 18 are audited." 19 I believe we shouldn't be charged, and we 20 paid it, but it's -- it's most of our profit it went 21 there. Even in 2014, when I heard about it on -- 22 middle of February, almost 45 days we lost that 23 penny increase. We immediately increase because we 24 just heard about it. 25 We never got the notice on December. First 26 time we received the call, it was from Oakland, 27 February 12, on our new office. 28 Thank you very much. I hope you look into 21 1 this matter carefully for sake of the public, the 2 taxpayer. 3 Thank you. 4 MS. HARKEY: Thank you. 5 Members, discussion? 6 MS. MA: Yeah. 7 MS. HARKEY: Member Ma. 8 MS. MA: Okay. So to the Department, I see 9 that the actual forms, which were revised 7/13, did 10 have the new city of Moraga tax, right? 11 MS. MASH: Correct. 12 MS. MA: The code 301.02 tax rate. 13 So, and I see when the taxpayer filled out 14 the manual form, he did separate a number in the 15 Contra Costa line, code 025 at one percent, then he 16 split out his city of Moraga in code 301 under that 17 tax rate. 18 Then, if you go to the State Board of 19 Equalization filing, uh, tell me what happened. Is 20 there, uh, an actual, um -- because I don't see the 21 301 tax code in his 2013 filings. But then I see it 22 on the 2014 filing. 23 So I guess my question to you is, did you 24 guys update your electronic filing forms to make 25 sure that there was that city of Moraga 301 code; so 26 if he filed it exactly like his manual form, he 27 would have seen, you know, put the Contra Costa in 28 the 025 code, put the city of Moraga in the 301 22 1 code. 2 MR. HANKS: Right. Right. Ms. Ma, that's 3 a great question. And actually that's a -- the 4 first time that the taxpayer's made this argument 5 that that code didn't appear in our electronic 6 filing. 7 I don't have a copy of the electronic 8 filing information in front of me. To my knowledge, 9 no one has ever indicated that -- that there was an 10 issue with our electronic filing. The paper returns 11 that -- that I'm working from are the ones that the 12 taxpayer filed with us that were amended and then 13 subsequently filed with the Board. 14 Actually, there were two amended returns 15 that the taxpayer filed. The first -- the first 16 electronic copy that was filed with us, we noted 17 that the Moraga tax was not reported, and so a -- 18 that triggered an exception within our return 19 analysis, or our local revenue area. 20 Um, that also triggered a Notice of 21 Determination for what appeared to be the unreported 22 district tax. That happened in early December. So 23 our records indicate the taxpayer was put on notice 24 in early December that this was happening. 25 A short time thereafter, we communicated 26 with the taxpayer, indicated to them over the phone 27 that there were problems with the reporting. And so 28 we engaged in communications with them to file 23 1 amended returns. 2 They filed a set of amended returns that 3 looked as though it overreported or increased the -- 4 the tax from our perspective. So we communicated 5 with them further. 6 We made a reduction in the amount of tax 7 that was owing in a second amended return that the 8 taxpayer filed with us. But it was discussions with 9 our local revenue branch and the taxpayer that 10 resulted in the amended returns that we have before 11 us and the self-declared amounts that are before us. 12 So -- 13 MS. MA: No, I -- I -- I understand that. 14 But I'm just asking when did our Board of 15 Equalization update the electronic filing forms to 16 make sure that the code was in there? 17 MR. HANKS: I don't have that 18 information. 19 MS. MA: Because that's what the taxpayer's 20 saying, is that there was no code for Moraga and, 21 therefore, he put both of the amounts in the Contra 22 Costa line. 23 Am I right? 24 MR. AMIRI: Ms. Ma -- 25 MS. MA: Is that what I'm hearing? 26 MR. AMIRI: -- that's correct. And the -- 27 on the -- on the form they sent to me, they sent to 28 me 15 months later. 24 1 MS. MA: I -- I -- I understand that. I 2 understand that. But that's what I'm saying, is 3 that he filed online timely. 4 MR. HANKS: Right. 5 MS. MA: Right? 6 MR. HANKS: Right. 7 MS. MA: Those are the first three forms. 8 MR. HANKS: Right. 9 MS. MA: And the 2013 forms, tax -- tax 10 filings, do not have the Moraga code. 11 MR. HANKS: I can -- I can say 12 categorically that that code 301 was on the e-file 13 return. I've received that information from staff, 14 indicating to me that that does appear on the 15 electronic form. 16 MS. HARKEY: May I just ask a quick 17 question here? I think, for our own edification. 18 How does the electronic form get populated 19 with the counties and the areas you're supposed to 20 pay? 21 MR. HANKS: So the -- the electronic form 22 knows the location from -- from which you're 23 operating from. That information would have been 24 prepopulated. But then the taxpayer is -- is guided 25 through the -- the electronic form and asked to 26 report sales that occur in each of those individual 27 locations. 28 But it's up to him or her to -- to remember 25 1 and be mindful that if you've got sales within the 2 city of Moraga, that those sales are subject to 3 that -- that increased tax rate. 4 MS. HARKEY: I'm -- I'm sorry to interrupt 5 you. 6 MS. MA: So, no, no, no. 7 So you're saying because his address was in 8 Moraga, there should have been -- 9 MR. HANKS: Yes. 10 MS. MA: -- a question that said, "How much 11 is your Moraga sales?" 12 MR. HANKS: Correct. 13 MS. MA: Okay. 14 MR. HANKS: Correct. 15 MS. MA: And -- I mean, he filled it out 16 correctly on his handwritten one, after. So are you 17 saying because it didn't show up, he didn't put it 18 on the right line? 19 MR. HANKS: He -- he didn't -- yeah. 20 MS. MA: He didn't populate -- 21 MR. HANKS: He didn't populate -- 22 MS. MA: -- the Moraga one. 23 MR. HANKS: He didn't populate the Moraga 24 one. 25 MS. MA: And he just put everything in the 26 Contra Costa -- 27 MR. HANKS: Correct. 28 MS. MA: -- line. 26 1 MR. HANKS: Correct. 2 MS. MA: That's your contention, right? 3 MR. HANKS: Correct. 4 MS. MA: Okay. 5 MR. HANKS: Correct. 6 MS. HARKEY: Member Runner? 7 MR. RUNNER: Yeah. Let me just -- let me 8 go to this form that, uh -- that the taxpayers are 9 using to kind of, you know, kind of point out what 10 they think was the -- the, um, misinformation that 11 the Board provided. 12 And that would be the second set of filing, 13 I believe, which is in the period. And going to 14 that last page. If I can get there. Yeah, going to 15 that last page where it lists the district taxes, 16 um, that are listed there. 17 MS. MA: What's the period? 18 MR. RUNNER: And this is during the right 19 period, correct? Yeah, this is during the right 20 period. 21 Um, let me just ask again, from the 22 taxpayer's point of view, what is significant about 23 that line? Tell me again. 24 MR. AMIRI: We -- it's very important to us 25 because it guides us to what is the rate is, and we 26 calculate the sales tax for city or district or 27 whole sales tax. That is give us the guide to 28 calculate, and that's the regulation. 27 1 MR. RUNNER: And you would -- you would -- 2 you would say that this is the printed-out version 3 after you did it, right? That's what I have in 4 front of me. 5 MR. AMIRI: Which form? 6 MR. RUNNER: I'm looking at, um -- 7 MS. HARKEY: The electronic. 8 MR. RUNNER: -- the electronic filing form 9 here that you guided us to. 10 MR. AMIRI: Yeah. 11 MR. RUNNER: Okay. So this is the 12 printed-out form that you did after -- that you 13 did. 14 MR. AMIRI: We look in the -- it comes to 15 the computer, and then we give them the 16 information. 17 MR. RUNNER: Right. But this is the 18 printed-out form -- 19 MR. AMIRI: Right. 20 MR. RUNNER: -- that you printed out then, 21 as a result of filling out the form 22 electronically. 23 MR. AMIRI: Right. 24 MR. RUNNER: Okay. And what you're saying 25 here is during that -- that -- that form indicates 26 that there was nothing then that was called out for 27 that new city tax. 28 MR. AMIRI: Right. 28 1 MR. RUNNER: Okay. Let me go back to the 2 Department. 3 You tell me about this form. Why would 4 that take place in a form that he then populated 5 with the number that he was prompted with, I assume, 6 and then the form would not indicate anything about 7 a local city -- new city tax? 8 MR. HANKS: Right, right. Mr. Runner, um, 9 the taxpayer in this case has multiple opera- -- 10 multiple locations that he operates from, from 11 multiple districts. So actually, the form that 12 would populate in his computer screen wouldn't 13 prepopulate with -- with those locations. 14 It would actually identify all locations. 15 He would have to allocate where his sales are made 16 within each of those jurisdictions. 17 MR. RUNNER: Well -- 18 MR. HANKS: So -- so he would have to -- he 19 would have to know that, okay, I'm making sales in 20 Moraga, I need to populate that -- 21 MR. RUNNER: So let me ask you this then -- 22 MR. HANKS: -- that line. 23 MR. RUNNER: Let me ask you this then, then 24 these items that are listed here, that are shown 25 here as a report, part of this report, are based 26 upon what he inputted into the computer. 27 MR. HANKS: Correct. Correct. 28 MR. RUNNER: That's what makes them show up 29 1 here. 2 MS. MASH: Correct. 3 MR. RUNNER: So, for instance, if indeed 4 he, for instance, forgot to put in San Joaquin 5 County and put a zero in there, San Joaquin County 6 would not show up on this report. 7 MR. HANKS: Correct. 8 MS. MASH: Correct. 9 MR. RUNNER: Okay. Um, so, I guess I'm 10 just trying to get to -- to -- to the bottom line on 11 what this report shows. So, what I'm hearing from 12 the Department is the reason why the city is not on 13 here is because that particular item was not filled 14 out on the line -- excuse me -- in the report when 15 it is that you were putting the numbers in the 16 report. 17 MR. AMIRI: Sir, this -- first of all, if 18 I -- we have multiple locations. 19 MR. RUNNER: Mm-hmm. 20 MR. AMIRI: As you see in the allocation -- 21 MR. RUNNER: Right. 22 MR. AMIRI: -- this -- each county it says 23 what is the rate is, and it's -- San Joaquin is half 24 and Contra Costa is one, and Stanislaus is -- 25 MR. RUNNER: Right, right. 26 MR. AMIRI: We look at this rate and then 27 we say, if this much sales happened, the -- the 28 gasoline tax is two and quarter. We add the -- if 30 1 there's any district tax, like in Contra Costa, we 2 add one percent, and then we also calculate one 3 percent for city of Moraga. 4 If city of Moraga is not here, we don't 5 calculate it. Has to be in the form, which -- 6 MR. RUNNER: Well, hold on. Let's -- okay, 7 that's good. But what I'm hearing is, what you're 8 giving us is the report to which gets generated 9 after you fill out the form. 10 MR. AMIRI: Right. 11 MR. RUNNER: Okay. So it doesn't, for 12 instance, if you would have not -- well, in fact 13 that's the case. If you didn't pay city of Moraga, 14 then it doesn't show up on the form. 15 MR. AMIRI: Right. 16 MR. RUNNER: Okay. So going back to the 17 Department. Right now, at least from what we're -- 18 you're getting report back that indeed at the time 19 there -- in the form, that was listed, the city was 20 listed at the time of this filing -- 21 MR. HANKS: Mm-hmm. 22 MR. RUNNER: -- there was listed the new 23 city tax. 24 MR. HANKS: Yes, that's correct. 25 MR. RUNNER: And you are saying it was not 26 listed. 27 MR. AMIRI: No. I provide you the copy of 28 my return for three quarters. It was not -- 31 1 MR. RUNNER: You mean what I'm looking at 2 right now? 3 MR. AMIRI: Right. 4 MR. RUNNER: Well again, what -- I hear 5 you, but I think you're trying to use this form 6 differently than how it's developed. It's -- 7 MR. STOLL: He's saying on the blank form 8 there would have been a city of Moraga tax. 9 MR. RUNNER: Right. That's -- that's my 10 point. My point would be, on the form that was on 11 there, it was there. And it would've -- and if you 12 would have paid it, it would have shown up in this 13 report. 14 MR. AMIRI: Right. 15 MR. RUNNER: At least that's what I'm 16 understanding. 17 Let me go -- okay, so again, I -- we need 18 to kind of walk through this argument because this 19 is kind of a new argument than I was aware of in 20 regards to the issue of -- of what our forms had 21 versus what you were looking at. 22 MR. HANKS: Right. 23 MR. RUNNER: To me, that was kind of new 24 and I needed to kind of walk through that. 25 Now let's go back to the other issue, which 26 was kind of the original that I thought was of 27 concern that we need to talk through, and that is 28 notification. 32 1 MR. HANKS: Right, right. 2 MR. RUNNER: Multiple notifications were 3 sent to the taxpayer. Um, why wouldn't -- well, let 4 me ask you this, were those notifications sent to 5 the taxpayer with a normal -- with his normal 6 address that we would send all updates in regards to 7 what's happening and communication that the BOE 8 would have with that particular individual? 9 MS. MASH: Yes, as far as we know. 10 MR. RUNNER: Okay. 11 MS. MASH: It should all be the same 12 address. 13 MR. RUNNER: What -- I guess the question 14 is, did you -- apparently those were not received; 15 is that what the argument is? 16 MR. AMIRI: I -- they keep telling me they 17 email it to us. 18 MR. RUNNER: Right. 19 MR. AMIRI: And they ask for email, and 20 Mr. Stoll also. They give us some email which 21 absolutely not related to us. It was different 22 email. This is not our email. 23 MR. STOLL: But -- but he does have -- 24 MR. RUNNER: Walk up to the mic. 25 MR. STOLL: Sorry. He does have quite a 26 few notices, you know. And I looked through -- 27 through all the notices that he has -- 28 MR. AMIRI: Recently. 33 1 MR. STOLL: -- you know, from that time 2 period, and he didn't have a notice, that I saw in 3 there, that talked about -- 4 MR. RUNNER: And were those notices sent to 5 the same email? 6 MR. STOLL: No, they were delivered in the 7 mail. 8 MR. AMIRI: They deliver it in the mail. 9 MR. RUNNER: Okay, let me ask about the 10 mail delivery. 11 MR. AMIRI: Right. 12 MR. RUNNER: What -- what -- what address 13 do we use for the email -- the mail delivery? 14 MS. MASH: Uh, I'd have to look that up. 15 But if the email address that we sent it to bounced 16 back to us, we would sent a hardcopy to the -- 17 MR. RUNNER: Right, but if -- 18 MS. MASH: -- correct address of record. 19 MR. RUNNER: Yeah, but -- 20 MS. MASH: Which is where all the notices 21 went. 22 MR. RUNNER: But if indeed it was an email 23 and somebody else received it, it didn't bounce 24 back -- 25 MS. MASH: Right. 26 MR. HANKS: Right. 27 MR. RUNNER: -- we wouldn't know. 28 MS. MASH: Then we wouldn't. Um -- 34 1 MR. RUNNER: But how about hardcopies? 2 What kind of -- what's our -- what's our policy in 3 regards to sending hardcopies? 4 MS. MASH: So we -- we -- we send 5 hardcopies. And if they get returned as an 6 undeliverable address, then we try to connect with 7 the taxpayer to find -- 8 MR. RUNNER: Hard -- hardcopies, when you 9 say undeliverable, you mean they're returned by the 10 US mail? 11 MS. MASH: It gets back from the mail, 12 right. 13 MR. RUNNER: Okay. So -- and -- and 14 what -- what address did we use? Was that a 15 different address than we had used in previous times 16 for -- for -- for hardcopy mail? 17 MS. MASH: I think it's all been the same 18 address. It would be, um, 398 Rheem Boulevard. 19 MR. RUNNER: Okay. Is that -- what is -- 20 what address is that? 21 MR. STOLL: That's a gas station. 22 MR. RUNNER: Okay. So the gas station was 23 receiving these notifications. 24 MR. AMIRI: Your Honor, this -- sir, this 25 is a four unit and we have Star Holding doing 26 business in four. 27 MR. RUNNER: Right. 28 MR. AMIRI: We have a P.O. Box for all our 35 1 notices. It's 15 years we established this. So we 2 don't -- 3 MR. RUNNER: So you would say that the BOE 4 was in error for sending notices to the address? 5 That is not a -- that is not a valid notification to 6 the -- to the -- to the owner? 7 MR. AMIRI: No. No, I don't say. The 398 8 is one of the four stations. 9 MR. RUNNER: Okay. 10 MR. AMIRI: And they never send it. They 11 send the notice to the Star Holding Company in the 12 P.O. Box. 13 MS. MA: What's the address? 14 MR. RUNNER: What's the address of that? 15 MS. MA: What's the address? 16 MR. AMIRI: P.O. Box 5728, Concord, 17 California 9452 -- 94524. 18 MR. RUNNER: Do we have any record of that 19 as an address to which we correspond? 20 MR. HANKS: Ordinarily, we'd send notices 21 to the business address that's identified in -- in 22 the application. 23 MR. RUNNER: Okay. 24 MR. HANKS: And the application identifies 25 the 398 Rheem address. So that's -- that's 26 generally the -- 27 MR. RUNNER: Okay. So the application for 28 the permit that you operate with uses the street 36 1 address. 2 MS. MASH: Right. 3 MR. AMIRI: Because, first, Moraga was -- 4 got the sales tax. In 2011, when the Star Holding 5 created and four other -- three other stations is 6 combined with that, so we have one sales tax number 7 for Star Holding, and then we have sub-account one, 8 two, three, four and Star Holding address. 9 Application for Rheem Boulevard is belonged 10 to -- if you look at it, I guarantee you it's '06. 11 It's sometime in June, or May or June of '06. 12 That's the first time that station purchased and 13 opened. 14 MR. RUNNER: Okay. Let me ask you this, 15 just in terms of operational, operation. Gasoline 16 sales is pretty competitive. 17 MR. AMIRI: Very. 18 MR. RUNNER: Right? Pretty competitive, 19 right? 20 MR. AMIRI: Right. 21 MR. RUNNER: So if all the other gas 22 stations in your area were paying the tax, okay -- 23 MR. AMIRI: Yes. 24 MR. RUNNER: -- and your taxpayer wasn't, 25 how did he -- how did he adjust his price? 26 MR. AMIRI: We -- sales gasoline is really 27 very sensitive, one percent or half a percent. 28 MR. RUNNER: Right, right, right. Yeah, 37 1 yeah, yeah. 2 MR. AMIRI: We immediately calculated this 3 way: We have the cost, we add all the taxes. 4 MR. RUNNER: Right. 5 MR. AMIRI: Then calc- -- add the margin, 6 and then calculate the sales tax, and that's the way 7 we watching. On -- 8 MR. RUNNER: You don't calculate price 9 based upon your competitors? 10 MR. AMIRI: We base on our margin. We can 11 meet the competition. But if competition is, for 12 example, is Costco -- 13 MR. RUNNER: Right, right, right. 14 MR. AMIRI: -- they sell it below cost. 15 MR. RUNNER: Right, right, right. 16 MR. AMIRI: We cannot. 17 MR. RUNNER: Okay. 18 MR. AMIRI: We just -- we say want -- 19 MR. RUNNER: Okay. Thank you. 20 MS. HARKEY: Thank you. 21 Any other Members? 22 MS. STOWERS: Um -- 23 MS. HARKEY: Ms. Stowers. 24 MS. STOWERS: Thank you. 25 Um, okay, my notes indicate that BOE sent 26 the notification to an email address. And where did 27 BOE get that email address from? 28 MR. HANKS: That's from the application for 38 1 seller's permit. 2 MS. MASH: Seller's permit. 3 MS. STOWERS: So that's on the application 4 for seller's permit. 5 MS. MASH: Correct. 6 MR. HANKS: Correct. 7 MS. STOWERS: When BOE sends notifications 8 via email, um, is there any type of notation within 9 the taxpayer's account that notification was sent? 10 Is there a trace or record or indicator? 11 MR. HANKS: There is a trace today. And so 12 beginning 2014 actually, um, there's a -- there's a 13 trace. And so we identify those accounts that 14 bounce back to us as not valid addresses for 15 whatever reason. When that happens, it 16 automatically triggers -- triggers notification in 17 the system where we send paper copies of special 18 notices, tax rate increases, TIBs, and so on, to the 19 taxpayer. 20 MS. STOWERS: Was that in place for these 21 particular quarters? For prior -- well, you said 22 2014, so -- 23 MS. MASH: Right. 24 MS. STOWERS: -- the notice went out in 25 2013. 26 MR. HANKS: Correct. 27 MS. STOWERS: I just answered my own 28 question. 39 1 MR. HANKS: Correct. 2 MS. STOWERS: Okay. So it is in place, so 3 we don't have to ask CROS to do it. 4 MR. HANKS: Correct. 5 MS. STOWERS: And I think I'm okay with -- 6 I'm just kind of summarize, the first Exhibit A 7 represents the end result of the tax return of the 8 data that was inputted by the tax representative or 9 the taxpayer. But BOE's saying that a line was 10 there for the city of Moraga for information to be 11 inputted. And had the information been inputted, 12 the appropriate tax rate would have shown and been 13 computed. 14 MS. MASH: Right. 15 MR. HANKS: That's correct. 16 MS. STOWERS: So there's no error in BOE's 17 forms. 18 MR. HANKS: Correct. 19 MS. STOWERS: If there was an error, 20 Appeals, would this be subject to relief under 6596? 21 MR. ANGEJA: That -- that would be the only 22 legal theory by which you could do it. This being a 23 self-reported return and the evidence that we've 24 heard about how and where it got populated, I don't 25 know that you have advice given by the Department. 26 MS. STOWERS: Right. Okay. Thank you. 27 Thank you, Chairwoman. 28 MS. HARKEY: Thank you. 40 1 Any other Member comment? 2 MS. MA: I have another question. 3 MS. HARKEY: Yes, Ms. Ma. 4 MS. MA: Okay. I have -- I have one more 5 question. 6 So, in, um, the taxpayer's filing period 7 4/1 to 6/30/2013, there is summary sheets -- 8 MR. HANKS: Mm-hmm. 9 MS. MA: -- that shows four locations: His 10 Walnut Creek, Moraga, San Francisco, Westley 11 locations. 12 Do you see that? 13 MR. HANKS: Mm-hmm, yes. 14 MS. MA: Okay. 15 MR. HANKS: Yes. 16 MS. MA: Then in his 10/1/2013 to 17 12/31/2013 it looks like he bought another location. 18 There's a Walnut Creek, the Moraga, San Francisco, 19 Lodi and Westley. So it looks like he bought a Lodi 20 location sometime between, uh, six -- July 1st 21 through, uh, October. 22 MR. AMIRI: August, actually. 23 MS. MA: You bought it in August, okay. 24 So, so I'm wondering, you know, when he 25 input -- like, who inputs these addresses; is it the 26 BOE or is it the taxpayer? Like, how did you know 27 that he bought a place in Lodi, on his electronic 28 filing? 41 1 MR. HANKS: He would typically indicate 2 that to us, or he can populate the form and identify 3 that he's making sales from a -- a new district. 4 MS. MA: Okay. 5 MR. HANKS: So -- so he can populate the -- 6 the screen and identify sales being made from a new 7 location. 8 MS. MA: Okay. But if not, if he came in 9 and took out a seller's permit or did it online, 10 would it automatically -- it would be in the system 11 presumably, right, that he bought a new site, Lodi. 12 He got a new permit number, that he now is going to 13 be reporting since it showed up on the summary 14 sheet. So somehow either we did it or he did it. 15 MR. HANKS: Right. Right. 16 MS. MA: Okay. So to the taxpayer, like -- 17 MR. AMIRI: What -- what we do is we inform 18 the State Board of Equalization we now have 19 sub-account number five. 20 MS. MA: Okay. 21 MR. AMIRI: And this is the address. 22 MS. MA: Okay. 23 MR. AMIRI: Please add it to our form, we 24 want to pay the sales tax on that account. 25 MS. MA: Right. So presumably like when 26 you -- these screens pop up, these autopilot 27 screens, it's because of the taxpayer putting in now 28 he has a site in Lodi. So Lodi should come up 42 1 saying, "How much taxes did you pay in Lodi?" 2 MR. HANKS: So it would identify, let's 3 say, the Lodi location and it would ask you what's 4 the taxable measure for sales made from Lodi. 5 MS. MA: Right. 6 MR. HANKS: And then it's got a 7 precalculated tax rate -- 8 MS. MA: Right. 9 MR. HANKS: -- for that area. And then it 10 would -- it would identify the district taxes owing 11 now from that new location. 12 MS. MA: Okay. But he owns one in Moraga. 13 So wouldn't Moraga also populate saying, "You have a 14 location in Moraga and this is the tax rate for 15 Moraga. How much sales did you make in Moraga?" 16 MR. HANKS: Right, right. That -- that 17 would happen if he only had a single location. If 18 he's got multiple locations, then actually he needs 19 to populate the form and identify where -- where the 20 sales are being made from, each -- each of the 21 different district locations. 22 So if you've got a single location, it's 23 going to prepopulate. If you've got multiple 24 locations, you need to allocate. 25 MS. MA: Okay. So he has five locations 26 now. So you're saying nothing would pop up on the 27 screen. He would have to go and figure it all out, 28 whether he owes in Walnut Creek, there's a separate 43 1 city tax in Walnut Creek, Moraga, San Francisco, 2 Lodi, or Westley. That it would not pop up 3 automatically saying you have a location in San 4 Francisco, San Francisco, you know, has an 5 additional tax, how much sales did you have in San 6 Francisco, and then list the tax. You're saying 7 that that does not happen; like he would have to go 8 figure it out and populate whatever the box was. 9 MR. HANKS: Well, he wouldn't have to go in 10 and figure it out. I mean he would know, obviously, 11 where -- where his locations are, and probably he 12 would have had some instruction from -- from the 13 Board when he came in and obtained a new application 14 for a seller's permit. And we would have guided him 15 through this process. 16 But the form as it comes up is going to 17 identify all the district areas, all the counties 18 where they might have locations. And the district 19 staff would have communicated to him, "If you're 20 operating in Lodi or Moraga or Sacramento, you know, 21 this is what you need to do on the district tax 22 form. You need to identify whether or not you're 23 making sales from each of these areas." 24 But the form, the form has grown over time. 25 As we're all aware, the special taxing 26 jurisdictions, um, have increased incrementally 27 over -- over the past 30 years. I've been here 30 28 years. I remember when, you know, we had 10 of 44 1 these. We're over 200, 200 of these -- 2 MS. MA: Right. 3 MR. HANKS: -- special taxing jurisdictions 4 today. 5 So it means that the -- the form is long, 6 but you need to know, hey, if I'm operating from 7 Sacramento County or Lodi, or whatever location, I 8 need to scroll down in that form, find that 9 location, populate it with the sales made from that 10 location. 11 So that would have been communicated to the 12 taxpayer. 13 MS. MA: I -- I -- I get it. But how do we 14 know that when the Moraga tax passed in April of 15 2013, that our electronic filing forms were updated? 16 How do we know that? 17 MR. HANKS: I verified that with -- with 18 our administrator in our return analysis -- 19 MS. MA: Well, I get it. 20 MR. HANKS: -- section. 21 MS. MA: Do we have a writing? I mean 22 something that says, "Hey, you know, we've updated 23 these forms, they are up-to-date"? I mean, just 24 because you verify, I can verify, too. 25 MR. HANKS: Right, right. 26 MS. MA: But we kind of -- we ask the 27 taxpayers to prove. We ask you guys to prove. 28 MR. HANKS: Right, right. 45 1 MS. MA: So how do we know that our 2 electronic filing section updated the, um, you know, 3 the electronic filing forms? That's all I'm asking. 4 MR. HANKS: Right, right. 5 MS. MA: Besides verifying with someone. 6 How do we know? 7 MR. HANKS: Our TSD division would have 8 been responsible for modifying that form. And our 9 TPD folks would have been responsible for -- for 10 amending the form and creating that -- that new 11 space for the 301 district code. So we would 12 definitely have the paperwork that identifies 13 exactly when -- when that coding happened. 14 MS. MA: Okay. So how long would it take 15 to get it to us? 16 MR. HANKS: Um, we can get that to you, um, 17 within a week. I mean we can identify when that -- 18 when that happened and when that information was -- 19 populated -- 20 MS. MA: Okay. Because I'm interested 21 because that's why I hear, is that there was a new 22 tax. The tax form was updated, but not the 23 electronic filing on the computer side. So that's 24 what I'm hearing, and so I'd like to -- 25 MR. HANKS: No, the electronic filing was 26 updated. So that -- that was updated. 27 MS. MA: Okay. 28 MR. HANKS: So that 301 code was most 46 1 definitely in place at the time that the taxpayer 2 could have reported these sales to us back in 2013. 3 It was updated. 4 MS. MA: Okay. So I guess my question then 5 to Mr. Amiri, do you -- did you file the tax returns 6 yourself? 7 MR. AMIRI: No, we have an accountant. I 8 am head of the account. 9 MS. MA: Huh? You're the -- you have an 10 accountant doing it. 11 MR. AMIRI: I have a accountant. 12 MS. MA: Okay. So does your accountant -- 13 did the accountant not know the new law? 14 MR. AMIRI: No, they know. She's 15 graduated. She's Masters Degree. We go over it. 16 She worked for me for eight years. 17 MS. MA: Okay. 18 MR. AMIRI: She is very -- 19 We really looking on the form. As the 20 gentleman said, there is changes constantly happened 21 to these sales tax and I want to the make sure we 22 get the information from the State Board. 23 MS. MA: Right. 24 MR. AMIRI: We just followed their 25 guideline. 26 MS. MA: No, I -- I get it. So -- so are 27 you saying that your accountant knew that they were 28 supposed to allocate the number from Contra Costa, 47 1 also put the Moraga number in. That there was a new 2 tax, there was a new code -- 3 MR. AMIRI: They didn't know. 4 MS. MA: -- that they were supposed to do 5 it, and they just didn't do it, or it wasn't there? 6 MR. AMIRI: It was not there. And actually 7 when we heard, both of us heard, we were very 8 surprised and we asked constantly. We asked please 9 send us our return and to see where we made a 10 mistake. 11 They never give us the form. They 12 didn't -- you know, we say, this -- see, where is 13 our mistake is? No, they never gave us the copy. 14 Even I was with the attorney from the State 15 Board, Ms. Abrams, Ms. Abrams, Eva Abrams. I asked 16 her and she ask the Oakland, please send us their 17 return. We want to see -- they want to see where is 18 mistake. 19 They never did because we had our forms in 20 our hand and doesn't have anything about the Moraga. 21 We want to see what we find. 22 MS. HARKEY: Okay. Thank you. Thank you. 23 Mr. Runner. 24 MR. RUNNER: What -- what -- again, how 25 many accounts do we have in the city? 26 MS. MASH: 351. 27 MR. RUNNER: 351? 28 MS. MASH: Correct. 48 1 MR. RUNNER: And how many of them missed 2 paying this particular issue? 3 MS. MASH: In addition to this taxpayer, 4 two were billed for underreporting the district 5 tax. 6 MR. RUNNER: So it's far less than one 7 percent. 8 MS. MASH: Yes. 9 MR. RUNNER: So we had a 99 -- we had a 10 99.3 percent compliance. 11 MS. MASH: And it's all the same forms 12 online, and it's all the same hardcopy paper forms 13 that people get. We don't have different forms for 14 different businesses. 15 MR. RUNNER: Mm-hmm. 16 MS. MASH: So everybody used the same 17 forms. 18 MR. HANKS: That's actually a way of 19 looking to see whether or not the programming was in 20 effect. I mean other people reported. 21 MR. RUNNER: That's what I'm kind of 22 going -- that's what I'm trying to think through. 23 MS. MASH: Right. 24 MR. RUNNER: It seems to me if we -- if we 25 were in error there, we'd have -- we'd have some 26 kind of a spike -- 27 MS. MASH: More numbers, sure. 28 MR. RUNNER: -- of -- of noncompliance. 49 1 MR. HANKS: Right. 2 MR. RUNNER: You know, at that point. 3 Because -- and I gotta believe of those numbers 4 there's a signif- -- again, there's a lot of people 5 with multiple businesses. And I'm sure -- 6 MS. MASH: Sure. 7 MR. RUNNER: -- many of those gas stations 8 and many of those other folks in those kind of 9 businesses have multiple locations in other 10 jurisdictions. 11 MS. MASH: Sure. 12 MR. RUNNER: Not entirely unique. 13 Okay, thank you. 14 MS. HARKEY: Thank you. I -- I just want 15 to kind of round this out. My big concern was that 16 we didn't -- was that the form was populated by the 17 Board of Equalization, that it popped up for him and 18 he entered the numbers. 19 What I hear you saying is there's a 20 drop-down menu. 21 MR. HANKS: Mm-hmm. 22 MS. MASH: Right. 23 MS. HARKEY: You go and you select where 24 you are. If it's a county, is there a subcategory 25 somewhere for the cities, under the counties? 26 MR. HANKS: There is. There is. Well, it's 27 in the same -- 28 MS. HARKEY: Because it has to be -- yeah, 50 1 okay. 2 MR. HANKS: -- same listing. 3 MS. HARKEY: As long as it's in the same 4 kind of listing. 5 MR. HANKS: Right. 6 MS. HARKEY: So here's where I am. I 7 totally understand and appreciate the issue. 8 The problem that I have is that when you're 9 self-reporting, as it appears we did here because 10 it -- you're saying it was never in the choices, the 11 listing of choices of items. And I think if it's 12 more than one other service station and is it -- was 13 it other service stations that we had the problem 14 with? Excuse me? 15 MS. MASH: I don't have that information 16 exactly -- 17 MS. HARKEY: Okay. 18 MS. MASH: -- who the businesses were. 19 MS. HARKEY: I do understand the 20 complexities. But I think when you're going to a 21 form and your pulling down your choices of 22 locations, I do feel that that somewhat is up to 23 you. 24 I -- I heard all of this and I've -- I've 25 understood. But it appears to me you -- you did 26 have access to the same form that everyone else had. 27 And that once you were notified, the next time 28 automatically you did pull it down. 51 1 I had thought that the Board, when we 2 initially started, that the Board, you know, 3 automatically populated your return with the 4 information that it had on the permits. And now 5 what I'm hearing is that is not true. That you -- 6 if you have multiple locations, you need to populate 7 your own form to use the online filing. 8 MR. AMIRI: No, that's not correct. 9 MS. HARKEY: Well -- 10 MR. AMIRI: Because if you look at the 11 form -- 12 MS. HARKEY: Okay. 13 MR. AMIRI: We told them and then -- 14 MS. HARKEY: Okay. Excuse me, sir. This 15 is not really a debate. 16 MR. AMIRI: Oh, I'm sorry. I apologize. 17 MS. HARKEY: I'm just wrapping this up. 18 Yeah, I would love to hear from you, but I've 19 listened to everybody. 20 MR. AMIRI: Okay, apologize. 21 MS. HARKEY: And my two questions were, how 22 does the information pop up on the e-filing; how is 23 it populated? And I've heard the taxpayer has a 24 menu and pulls that down. 25 The second question I had is, did you ever 26 even collect it? And that's the "no." And that's 27 where I am in sympathy with you, though I don't 28 believe there's anything we can do about that 52 1 legally. 2 So that's kind of where I am. But I will 3 entertain any motion. 4 MS. STOWERS: Madam Chair. 5 MS. HARKEY: Yes. 6 MS. STOWERS: Move to adopt staff 7 recommendation to deny the claim for refund. 8 MR. HORTON: Second. 9 MS. HARKEY: We have a motion and a second. 10 Do we have any objection? 11 No, we don't. 12 We apologize, but your claim is denied and 13 we support the -- the administration. 14 MR. AMIRI: What else you can do besides -- 15 MS. HARKEY: Thank you. 16 MS. MASH: Thank you. 17 MR. AMIRI: This for us is from day one is 18 State Board to the end. We'll see you in court. 19 ---oOo--- 20 21 22 23 24 25 26 27 28 53 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 March 29, 2017 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 53 constitute 14 a complete and accurate transcription of the 15 shorthand writing. 16 17 Dated: April 6, 2017 18 19 20 ____________________________ 21 KATHLEEN SKIDGEL, CSR #9039 22 Hearing Reporter 23 24 25 26 27 28 54