1      BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION

            2                        450 N STREET

            3                   SACRAMENTO, CALIFORNIA

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            8                    REPORTER'S TRANSCRIPT

            9                       AUGUST 30, 2017

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           12              SALES AND USE TAX APPEAL HEARING

           13                         APPEAL OF 

           14              PUBLIC MOTORS ORANGE COUNTY, LLC

           15                         NO. 766507

           16               AGAINST PROPOSED ASSESSMENT OF

           17                      SALES AND USE TAX

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           27                       Reported by:  Kathleen Skidgel 

           28                                      CSR No. 9039




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            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 the Appeals Bureau:    Jeff Angeja
                                            Tax Counsel IV
           15                               Legal Department
                                            
           16    For CA Department of
                 Tax and Fee
           17    Administration:            Dario Romano
                                            Business Taxes 
           18                               Specialist III
                                            Business Tax and Fee
           19                               Department
                 
           20                                    
                 
           21                          ---oOo---

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            1                               450 N STREET

            2                               SACRAMENTO, CALIFORNIA

            3                               AUGUST 30, 2017   

            4                          ---oOo---

            5             MS. HARKEY:  We have a waived appearance.  

            6             MS. RICHMOND:  Correct.  Our last issue for 

            7    today is C11 Public Motors Orange County, and it's a 

            8    waived appearance.  

            9             MS. HARKEY:  I just have one question.  I 

           10    know that they waived their appearance, but I do 

           11    have one question.  And I'm not sure why they didn't 

           12    show up.

           13             So I'd like to know if -- from Appeals, 

           14    if -- if they have noted the tax on bad debts on 

           15    this case?  We thought we were going to hear it and 

           16    we noticed that there was no -- that there was no 

           17    allowance or taxable -- no deduction for the sales 

           18    tax claimed on bad debts of 349,865.  

           19             MR. ANGEJA:  And I never got a satisfactory 

           20    answer to that, and I don't have enough information 

           21    to give you an answer.  I'd have to turn to the 

           22    Department because it had to do with an audit method 

           23    for the periods that were reconciled.  

           24             MS. HARKEY:  Do you -- do you -- who's -- 

           25    who's got the Public Motors case?  

           26             MR. ROMANO:  I have the Public Motors case.  

           27             MS. HARKEY:  There you are.  Thank you.

           28             MR. ROMANO:  Okay.  What we did was we 




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            1    looked at the audit.  And in the period they were 

            2    given credit for the bad debts, the question that 

            3    was still at hand is that in the tax accrual account 

            4    it's inconclusive, based on the information that we 

            5    have in the audit working papers, whether or not an 

            6    adjustment was made in the tax accrual, which is 

            7    ultimately the basis of the audit assessment.

            8             And so based on looking at this audit and 

            9    checking, we weren't able, with the information that 

           10    we had available to, you know, either say -- there 

           11    was no adjustments -- the adjustments that we found 

           12    that were adjustments to the accrual were the 

           13    unwinds and that type of thing.  

           14             I have -- I printed out a listing of all 

           15    the adjustments, but there -- there wasn't anything 

           16    that would say "ah-ha" or any journal entries that 

           17    say this was the bad debts.  But that could be in a 

           18    different period.  We don't know.  Without more 

           19    information, we couldn't tell.

           20             MS. HARKEY:  Okay.  Thank you.  

           21             I'm -- I'm just thinking that the reason 

           22    this is a waived appearance is he didn't have, uh -- 

           23    couldn't afford to pay for the counsel.  

           24             So, anyway.  

           25             MR. HORTON:  Move to sustain the 

           26    taxpayer -- I mean the Department.  

           27             MS. HARKEY:  Go ahead.  

           28             MR. RUNNER:  Second.  




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            1             MS. HARKEY:  Okay.  Any objection?  

            2             No.

            3             MS. RICHMOND:  I'm sorry, I didn't get the 

            4    second.  

            5             MS. HARKEY:  The motion -- the second was 

            6    Member Runner.  

            7             MS. RICHMOND:  Thank you.  

            8                          ---oOo---

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            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 August 30, 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 5 constitute 

           14    a complete and accurate transcription of the 

           15    shorthand writing.

           16    

           17    Dated:  September 8, 2017

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           20                           ____________________________

           21                           KATHLEEN SKIDGEL, CSR #9039

           22                           Hearing Reporter

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