STATE OF CALIFORNIA FRANCHISE TAX BOARD MEETING WEDNESDAY, SEPTEMBER 5, 2007 FRANCHISE TAX BOARD 9646 BUTTERFIELD WAY TOWN CENTER, GERALD GOLDBERG AUDITORIUM SACRAMENTO, CALIFORNIA 10:30 A.M. REPORTED BY: SANDRA VON HAENEL CSR No. 11407 1 APPEARANCES 2 FRANCHISE TAX BOARD: 3 Hon. John Chiang, Chair Hon. Michael C. Genest 4 Mr. Alan LoFaso, Chief Deputy to Board Member Yee Deputy Controller Marcy Jo Mandel 5 6 FRANCHISE TAX BOARD STAFF: 7 Colleen Berwick Marc Distefano 8 Lisa Garrison Patrick J. Kusiak 9 Benjamin A. Miller Marguerite Mosnier 10 Brian Putler Carole Rouin 11 Selvi Stanislaus Geoffrey S. Way 12 Melissa Wulff 13 14 OTHER PARTICIPANT: 15 David R. Doerr - California Taxpayers' Association 16 17 ---oOo--- 18 19 20 21 22 23 24 25 2 1 SACRAMENTO, CALIFORNIA 2 WEDNESDAY, SEPTEMBER 5, 2007, 10:30 A.M. 3 ---oOo--- 4 CHAIR CHIANG: Good morning. This is the scheduled 5 time for the meeting of the Franchise Tax Board. 6 Would the secretary please call the roll to determine 7 whether a quorum is present. 8 MS. BERWICK: Alan LoFaso, Chief Deputy to Board 9 Member Yee. 10 MR. LOFASO: Here. 11 MS. BERWICK: Member Genest. 12 MEMBER GENEST: Here. 13 MS. BERWICK: And Chair Chiang. 14 CHAIR CHIANG: Good morning. 15 At least two members or their designated 16 representatives being personally present, there is a quorum, 17 and the Franchise Tax Board is now in session. 18 The public has a right to comment on each agenda item. 19 If there are members of the public wishing to speak on any 20 item, please come forward when that item is called. 21 First item. 22 MR. KUSIAK: Approval of minutes. 23 CHAIR CHIANG: Very good. 24 Is there a motion? 25 MEMBER GENEST: Move. 3 1 MR. LOFASO: Second. 2 CHAIR CHIANG: Motion by Mike, second by Alan. 3 Without objection, the motion passes. 4 Next item, please. 5 MR. KUSIAK: Legislative matters. 6 CHAIR CHIANG: Okay. Very good. 7 MR. PUTLER: Yes. Brian Putler, Franchise Tax Board. 8 I'd like to start with a brief update on the Taxation 9 Conformity bill, AB 1561. 10 Since the last Board meeting, a conformity bill passed 11 the Senate Recommended Taxation Conformity Committee. It 12 subsequently was held on the suspense file in Senate 13 Appropriations Committee. 14 The Board may please recall that, relative to its 15 size, the bill had a modest revenue gain of $8.6 million 16 over the three-year budget window, which triggers the 17 two-thirds-vote requirement. The author was unable to 18 secure a compromise that either would garner the necessary 19 two thirds votes to get it off the Senate floor or make the 20 bill revenue neutral. Therefore, it is unlikely -- at this 21 point it appears that the conformity bill will not get to 22 the Governor this year. 23 Then two bills for position. I have four bills for 24 position today for the Board to consider. 25 For the audience, a quick explanation of FTB staff 4 1 recommendations. Staff defers to the Board on matters of 2 tax policy, and denotes that by showing an "N" for neutral 3 in the Board materials. Accordingly, the recommendation is 4 not that the Board's position be neutral, but that the staff 5 defers to the Board. 6 Staff will, from time to time, recommend a position 7 other than neutral if there is an administrative issue in a 8 bill, such as a department computer system would not be able 9 to implement a bill's provision. However, there are no 10 administrative problems in any of the bills today. 11 So, if I may, just a quick rundown of the four bills. 12 AB 62 is a disaster loss treatment bill that would cover the 13 Ventura and El Dorado county fires. Since the Board 14 materials were mailed, the bill was amended to include the 15 Zaca fire in Santa Barbara County. That addition has no 16 revenue impact at all. There was only one outbuilding, 17 amazingly, that was destroyed in that fire. 18 And for the Board's recollection, the Board has 19 already taken a support provision on a similar disaster loss 20 bill, SB 38, this year, which covers Riverside County fires 21 from October of '06. 22 AB 680, Wolk, would extend the repeal date, and 23 increase the allocation aggregate amount for the rice straw 24 credit, and that was a credit that encourages new uses for 25 rice straw over burning the rice straw. 5 1 AB 1168, Jones, would redact as currently written 2 or -- excuse me -- as impacting FTB, would redact the first 3 five digits of Social Security numbers on liens that are 4 issued by the FTB, so that the last four digits would be 5 required to show on all liens prepared by the FTB that are 6 then recorded either in the County Recorder's Office or the 7 Secretary of State's office. 8 The Board's material -- or the staff material sent to 9 the Board and released to the public -- shows that the 10 Secretary of State could refuse liens if any digits of the 11 Social Security number appear on a lien. The bill has 12 subsequently been amended to make the requirement for the 13 Secretary of State the same as the County Recorder's, which 14 is the last four digits would have to be shown of a Social 15 Security number. 16 And as of this year, the Board may recall that the 17 Controller had asked the department staff to initiate a 18 redaction of Social Security numbers, so the department is 19 already in compliance with the provisions of that bill. 20 And then finally SB 105 is a technical clean-up bill 21 for the Registered Domestic Partners bill from last year. 22 The major feature of this bill is a change in the way 23 adjusted gross income is calculated. Rather than the two 24 partners adding their AGI from their federal return, they 25 would be able to prepare a pro forma federal return as a 6 1 starting point to their California return. 2 And those are the bills. 3 CHAIR CHIANG: Well done. Thank you. 4 Mike, I take it you are abstaining? 5 MEMBER GENEST: I'm abstaining. 6 CHAIR CHIANG: Very good. 7 Is there a motion? 8 MR. LOFASO: Mr. Chairman, I'd like to move we support 9 all four bills. 10 CHAIR CHIANG: Very good. I'll second that. 11 Without objection, and noting the abstention by 12 Member Genest, motion passes. 13 Next item. Thank you. 14 MR. KUSIAK: Regulation matters. 15 MR. MILLER: Good morning. Ben Miller, Franchise Tax 16 Board legal staff. 17 As a result of a Board of Equalization case several 18 months ago involving Alaska Airlines, where a regulation 19 which had been in effect for several decades was brought 20 into question, staff has instituted a review of many of our 21 special formula rates, et cetera, to see if there would be 22 areas where there might be a possible ambiguity which could 23 be corrected, and also to see if the current regulations 24 were reflective of where the industry was now. 25 Today will be the first day we're coming to the Board 7 1 with respect to three specific regulations of that type, 2 asking to have an interested parties meeting so we can meet 3 with the affected industries and see what problems they may 4 have, see if the problems that we think may exist are there, 5 see if we can come up with a common solution. 6 And the fourth item is a regulation which the NBC has 7 recently adopted. There has been an interested parties 8 meeting on that. 9 Members from our staff are prepared to speak on those. 10 There's actually three people to speak on four regulations. 11 There's two of them one person would deal with slightly out 12 of order. But with the Board's permission, if they can deal 13 with it on that basis, we'd appreciate that. 14 And so if I can turn this over to my staff people. 15 CHAIR CHIANG: Very good. 16 MS. MOSNIER: Good morning. I'm Marguerite Mosnier 17 with Legal Division. 18 The first regulation I'd like to address is Section 19 25128. I believe it's Item 3.a. on your agenda. And that 20 regulation relates generally to double rating of the sales 21 factor except for specific enumerated activities. 22 One of those enumerated activities is "banking or 23 financial business activity," which is not defined in the 24 regulation. There are other exceptions that aren't 25 specifically defined. 8 1 So, because the rulemaking file indicates that the 2 exceptions were too narrowly drawn, and because we have an 3 undefined activity that is an exception to the double 4 rating, what we'd like to do is hold an interested parties 5 meeting, talk to industries, see what the ideas floating in 6 that marketplace are to determine whether we would need to 7 amend the rate. 8 And if I might take my next one out of order. It's 9 Item 3.c, 25137-12, print media. This is a reg where, 10 certainly since the 15 years since it was promulgated, 11 technology has certainly exceeded the terms of the 12 regulation. Media is far more than print now. And since it 13 deals primarily with the salient feature of allocating 14 advertising receipts based on a market approach, it doesn't 15 fit anymore, probably, the way that the new technology is. 16 So, again, we'd like to hold one or more interested 17 parties meetings, talk to industry, and see either whether 18 it would be appropriate to amend 25137-12 or perhaps even 19 promulgate a separate regulation addressing advertising. 20 MS. ROUIN: Good morning. I'm Carole Rouin from the 21 Franchise Tax Board. I would like to take you back to Item 22 3.b, which is Regulation 25137-8, which deals with motion 23 picture industry and television broadcasting networks. 24 This is another regulation that was developed 25 congruently with the industry about 25 years ago. Both of 9 1 those industries have changed considerably in the last 25 2 years. We would like to ask your permission to hold an 3 interested parties meeting with the industry 4 representatives, to see if that regulation needs to be 5 changed in any way. 6 Thank you. 7 CHAIR CHIANG: Thank you. 8 MS. WULFF: Good morning. I'm Melissa Wulff, FTB 9 Legal, and my regulation is 25136, the sales factor for 10 sales other than tangible personal property in the state. 11 Our purpose in requesting an interested parties 12 meeting is to determine whether and how we should conform to 13 the MTC recent amendment to the model regulation upon which 14 our 25136 is based. 15 We do have a legal ruling, Legal Ruling 2006-02, which 16 states that income producing activities of members of the 17 same recording group are includable as activities performed 18 on behalf of a taxpayer. 19 The recent amendment to the MTC model regulations, 20 which were confirmed in the legal ruling, includes income 21 producing activities by independent contractors. 22 So thank you. 23 CHAIR CHIANG: Very good. 24 We have a speaker on this item. Dave. Dave Doerr. 25 MR. DOERR: Thank you very much. 10 1 Let me give you some background so that you can 2 understand where I'm coming from. Former Speaker 3 Jesse Unruh designated me to attend the 1966/67 meetings on 4 behalf of California, where the Multistate Tax Commisson was 5 born. As a result of those meetings, I came away with a 6 distinct impression that this organization was not 7 necessarily, one, operating in California's best interests, 8 controlled by states that are small, that look very 9 different from California, and have different economic 10 bases. 11 And to understand that, when we go to an apportionment 12 formula, what you're dealing with is a fixed pot of money. 13 You've done all the work, determined the units, rate, group, 14 and how much income you have. Now divide that with either 15 the worldwide or countrywide income. This is a zero-sum 16 game, and when you do an apportionment formula, there's 17 usually winners and losers from where you are to where you 18 go. 19 And we're all kind of familiar with winners and losers 20 among taxpayers, but there's also winners and losers among 21 states. If there is more income assigned to this state, 22 there's less income that can go to this state, because it's 23 a zero-sum game. Because if you have a small state doing 24 the formulas, that causes concern that their interests are 25 not necessarily California interests. 11 1 So, for this reason, we want to make sure any change 2 in the formula proposed by the Multistate Tax Commission is 3 really thoroughly vetted and we get a full economic and 4 revenue estimate of what the impact of the change would be 5 for taxpayers and the State of California, because there's 6 winners and losers among taxpayers, probably because most of 7 them have -- but there also could be winners and losers 8 among the states. And with that background, we think 9 California should really look at this to make sure we 10 protect our own interests. 11 CHAIR CHIANG: Thank you, Dave. 12 Is there a motion or comments by members? 13 MR. LOFASO: May I move the staff recommendation for 14 interested parties meetings as presented. 15 CHAIR CHIANG: On all four items? 16 MR. LOFASO: Yes. 17 CHAIR CHIANG: Very good. 18 Is there a second? 19 MEMBER GENEST: Well, I'll second. I don't 20 necessarily -- I've disagreed on one of these issues in the 21 past, but for the purpose of moving forward, I'll second the 22 motion. 23 CHAIR CHIANG: Very good. Thank you. 24 There's a motion and second. 25 Without objection, motion passes. 12 1 Thank you. Next item. 2 MR. KUSIAK: Executive Officer's time. 3 MS. STANISLAUS: You've skipped Item Number 4. 4 MR. KUSIAK: Oh, I'm sorry. 5 Administrative matters. 6 I apologize. 7 CHAIR CHIANG: I know you want to expedite the 8 meeting. 9 MR. KUSIAK: In your best interests, though. 10 CHAIR CHIANG: Universal best interests. 11 MS. GARRISON: Good morning. I'm Lisa Garrison with 12 the Franchise Tax Board Financial Management Bureau. 13 And the first set of items we have for you under 14 Item 4, we have two contracts over a million dollars that 15 the department is proposing to move forward with. 16 The first contract is for a telecommunications wiring 17 contract for roughly 500,000 a year, for a total of three 18 years, totaling 1,500,000. 19 Are there any particular questions? 20 Okay. The second contract is to notice you of a 21 potential issuance of contracts for three private collection 22 agencies to perform debt collection services on in-state 23 accounts. The Request For Proposal has been issued, and the 24 proposals are due back in mid-October. 25 CHAIR CHIANG: Very good. Are there any questions or 13 1 comments? 2 Okay. Dave. 3 MR. DOERR: We'd like to suggest this proposal needs 4 some more vetting with the interested parties. We have 5 major concerns with this kind of contract. Primarily we are 6 concerned about confidentiality in allowing a private 7 company access to taxpayers' confidential income tax 8 records. 9 Secondly, we are also concerned about the application 10 of the Taxpayers' Bill of Rights to this kind of activity. 11 That means I think it needs to be fleshed out in terms of 12 the various provisions relating to bounty hunting, for 13 example, treatment of taxpayers. Let me give -- just go 14 down the list. 15 The Taxpayers' Bill of Rights provides that you can't 16 evaluate employees based on the amount of money collected. 17 It also provides that you have a program to evaluate 18 employees with regard to their contact with taxpayers. It 19 provides that reimbursement of bank charges due to 20 extraneous levies are to be made; that it provides for 21 relief from a levy if the levy threatens the health and 22 welfare of the taxpayer. 23 And so there's various provisions we'd like to know 24 how those relate to this proposal. 25 We also wonder if this is the most economical way to 14 1 do this, whether or not the State employees could be used to 2 collect this money at a reasonable cost. 3 So we think this needs further vetting before you 4 decide to move forward, particularly on the confidentiality. 5 That's the major concern. 6 CHAIR CHIANG: Thank you, Dave. 7 Does staff have a comment? 8 Do you want to come up. 9 MR. DISTEFANO: My name is Marc Distefano. I'm the 10 manager of the department's private debt collection program. 11 As far as the confidentiality issue, we've been 12 contracting with private debt collectors since 1988. 13 Confidentiality of taxpayer data is always a primary concern 14 of ours. One of the things that's in the RFP as part of the 15 evaluation criteria that's always been in there is how well 16 they protect the confidentiality of debtors, whether it's 17 how well -- what they train their staff on, to the extent of 18 how well their systems are designed to protect that security 19 and confidentiality. 20 All of our private debt contractors are expected to 21 meet the provisions of the Fair Debt Practices Act as well 22 as the Revenue and Taxation Code. They are not allowed to 23 levy taxpayers. We make it very clear on what they are 24 allowed to do. Certainly, there is a concern of ours that 25 they're very clear on what they can and can't do and when 15 1 they need to refer the account back to us to take care of. 2 We have a process to vet out complaints, and when 3 there are complaints, there are repercussions for the 4 vendor, and they understand that. And they know that it's 5 to their best objective to not engage in any activities that 6 would compromise the taxpayers' rights or the 7 confidentiality of their data. 8 CHAIR CHIANG: Do you want to address the second issue 9 as to action by the private debt collector consistent with 10 the Taxpayers' Bill of Rights. 11 MR. DISTEFANO: Well, I can tell you I've been in this 12 job for a year now, and working with our vendors and other 13 vendors in the industry, certainly that's a concern of 14 theirs. They know that they're held to that standard. They 15 know that we'll hold them to that standard. 16 Certainly in this RFP, their compensation is tied to 17 how well they meet those standards of the Fair Debt 18 Practices Act. If they cannot meet our standards, it will 19 impact them in their compensation. That's just one little 20 step in there to keep them from crossing any kind of lines. 21 In the past, we've not renewed contracts. There's 22 language in there where they understand that the contract 23 could be terminated if they don't meet our standards in that 24 way. 25 CHAIR CHIANG: So termination of contract, impact on 16 1 compensation. Any other actions possible for a breach of 2 what we deem appropriate conduct? 3 MR. DISTEFANO: Well, some of the things that we've 4 added to this is the requirement -- and this, again, we 5 expect to -- most of these, the larger private collection 6 companies, already monitor the phone calls between their 7 collectors and the debtors. And that's going to be an 8 expectation, that anyone who does business with us will meet 9 that requirement. 10 In addition, there's a requirement in here that they 11 will be able to provide us copies of those, of those 12 recordings, so if we get a complaint from a taxpayer -- 13 something we haven't been able to do in the past -- is we'll 14 be able to listen to that phone call ourselves, and we'll be 15 the judge of whether or not they crossed a line. 16 We will also have a requirement in there that we have 17 view access to their system so we're able to see, on an 18 online availability, we can look to see what are they doing 19 on their system to make sure they're treating the debt the 20 way we've expressed they should in the contract. 21 CHAIR CHIANG: Can you explain the frequency and 22 nature of how the FTB is going to monitor the private debt 23 collectors' activity. 24 MR. DISTEFANO: Certainly. 25 If complaints come up, they get investigated 17 1 immediately. On a quarterly basis we will -- we expect to 2 randomly select accounts from their -- listen to phone 3 recordings, look at the account transcripts to verify that 4 they're doing what they should be doing. 5 We expect to have what are called -- the contract, we 6 expect the contracts will go in place in January with the 7 expectation they'll be ready to take that by March. So 8 January is what we're calling vendor month. We will have 9 all of our vendors out here to go over all the provisions in 10 the contract, make sure they understand what's expected, 11 what they can do, what they can't do. And then, again, on a 12 quarterly basis, not only will we do a performance audit of 13 them, but we will meet with them regularly to discuss 14 issues, what comes up. 15 And then certainly, already, with our current 16 contractors we know, they know -- we have a relationship -- 17 if there's an issue, they'll pick up the phone and call and 18 say, "How do you expect us to treat this situation?" You 19 know, there's always something you didn't think about when 20 you discuss it. 21 They know that it's in their best interest to meet 22 these standards, otherwise either, again, it's going to hurt 23 them compensationwise, assuming we stay with them, or if 24 they lose that contract, it doesn't help them, because they 25 lose out on that money. Plus, you know, they're all 18 1 competing for other contracts, and they don't want a bad 2 reference. 3 CHAIR CHIANG: And the third item, cost effectiveness. 4 If these accounts have been worked by State employees, 5 what's the rationale for going to private debt collection? 6 MR. DISTEFANO: These accounts are accounts that we've 7 determined aren't cost effective to have State employees 8 work them. These are low-yield accounts. Our system takes 9 the account and it scores the account on various criteria. 10 Well, first of all, an account that becomes past due, 11 it goes through our automated system. The automated system 12 sends out notices, looks to find payors to do garnishments, 13 go after bank accounts, or just send a letter to get the 14 taxpayer to volunteer to pay. 15 If that doesn't work, then we'll set that score, and, 16 based on the score, it either goes to an FTB employee or it 17 comes to our area. The accounts that we have, the ones we 18 have designated potential collections, isn't high enough to 19 put a State employee on. And so these accounts, the 20 accounts that we currently place with the vendors, are those 21 accounts we have said these aren't cost effective to have a 22 State employee collect on. 23 The automated system gets a crack at it and then it 24 comes to us. 25 CHAIR CHIANG: And what percentage of accounts are 19 1 those? 2 MR. DISTEFANO: Of the total -- the total accounts, 3 our total AR, I don't know off the top of my head. We can 4 get the number for you. 5 CHAIR CHIANG: Are there questions or comments? 6 MR. LOFASO: I'm prepared to move approval of the two 7 contracts. 8 CHAIR CHIANG: Very good. 9 Is there a second? 10 MEMBER GENEST: Second. 11 CHAIR CHIANG: Without objection, motion passes. 12 Thank you very much. 13 Next item, please. 14 MR. KUSIAK: BCPs. 15 MS. GARRISON: The next item staff would like to bring 16 you is ten BCPs for approval. We brought you the draft 17 concept at your last meeting. These BCPs are currently 18 under review at the agency pending Board approval. 19 Would you like me to go through them, or did you just 20 want to have questions on any one in particular? 21 CHAIR CHIANG: Is there a sense of the members? Would 22 you like to go through each item? 23 MR. LOFASO: We have one comment on BCP Number 6, 24 otherwise we're good. 25 CHAIR CHIANG: Okay. Why don't you review Item 20 1 Number 6. That item has public comment. 2 MS. GARRISON: Okay. BCP Number 6 is our tax gap 3 proposal for this year, and it includes three initiatives. 4 We are asking for an augmentation of about $6.2 million for 5 a total of 68.5 positions. We believe that this proposal 6 will bring in $22 million in the budget year as well. 7 Of the three provisions, the first is to increase our 8 fraud prevention program, particularly in the area of child 9 dependent care credit and W-2 fraud. We have found 10 historically that we need to intercept this type of fraud 11 during the process, because if this money goes out, our 12 chances of recovering it are very small. 13 The second initiative is an audit workload growth BCP. 14 This is looking at backfilling into some of our workloads to 15 attempt a five-to-one workload. 16 And, finally, we are asking for $100,000 in order to 17 conduct a compliance behavioral study. We have been in 18 discussions with the Board of Equalization to look at making 19 this study a joint study, and we'll approach the EDD to see 20 if they are interested as well. 21 The idea behind this is that historically we 22 intrinsically know that activities that the department takes 23 have an impact on voluntary compliance, but we have had a 24 difficult time being able to quantify that. And, therefore, 25 when we pursue resources, we have a difficult time saying 21 1 that if we staff the call center at a certain level, we will 2 have "X" effect on voluntary revenue. 3 So this study is designed to look at those types of 4 impacts and what they have on voluntary compliance. 5 CHAIR CHIANG: Very good. Thank you. 6 Dave. 7 MR. DOERR: I'm the last man in my sole presentation. 8 But we support the Board's approval of the BCP. We 9 are particularly concerned about the fraud in the W-2 and 10 the fraud in refundable tax credits. We think this would be 11 a wise investment. 12 CHAIR CHIANG: Thank you, Dave. 13 Is there a motion? 14 MR. LOFASO: I'd like to make a motion. But before 15 that, I'd like to thank you, Ms. Garrison, for discussing 16 the collaborative goal of the Board of Equalization. As 17 we've mentioned to the staff, we need to take a very 18 specific look into the behavioral compliance aspect as an 19 opportunity for the FTB and the BOE to work collaboratively. 20 And in that vein, I'd like to move approval of the 21 BCPs, with authority to the staff to work collaboratively 22 with the BOE on the behavioral compliance study aspect of 23 BCP Number 6, and to add whatever additional funds might be 24 necessary as it goes through process to examine both 25 agencies' compliance efforts. 22 1 So that's the motion. 2 CHAIR CHIANG: Motion by Mr. LoFaso. Second by 3 Chiang. 4 Is there any objection? 5 Without objection, motion passes. 6 Next item, please. 7 (Ms. Mandel replaces Member Genest on the dais.) 8 MR. KUSIAK: Executive Officer's time. 9 MS. STANISLAUS: Honorable Chairman and Members of the 10 Board, I have two matters of interest today. The first one 11 is called our Boomerang project. I'm very pleased to 12 announce the successful implementation of Phase I of the 13 Boomerang, State of California Retirees Job Connection 14 project. 15 A very special thanks goes out to our amazing, 16 talented, and ever so creative Boomerang team employees who 17 worked hard to make this project a success. 18 A few months ago, FTB was asked to develop an online 19 service that streamlines and simplifies the State retirees 20 hiring process for the State. The concern that was raised 21 by FTB and the administration was that 70,000, or 34 22 percent, of State employees will be eligible to retire in 23 the next five years. When workers retire, they take 24 valuable knowledge and experience with them. This can 25 result in temporary staff shortages and potential delays in 23 1 services and processes. 2 So FTB developed the online solution called 3 "Boomerang, State of California Retirees Job Connection" 4 for all State departments. The meaning behind it is Baby 5 Boomers returning to the workforce. 6 Today, Phase 1 went live. This implementation allows 7 State retirees to provide information online regarding their 8 employment history, education, skills, and employment goals. 9 On November 1st, Phase 2 will go live. This allows 15 10 State departments to search for potential employees to fill 11 job openings. Hiring staff will be able to contact the 12 potential employees directly via email or phone. By January 13 2008, the program will be expanded to include all State 14 departments. 15 The next matter of interest is Assembly Bill 1418, 16 which directs FTB to publicly list annually the 250 largest 17 state income tax debtors who owe more than $100,000 in tax. 18 On August 27th, FTB mailed the letters to its top 250 19 delinquent taxpayers, warning them that their tax debt 20 information is about to be made public on its website if 21 they do not pay. As of last evening, we had ten positive 22 phone calls. So the names of the top debtors will be 23 published on the Web on October 12th. 24 CHAIR CHIANG: Very good. 25 Any comments or questions? 24 1 Next item, please. 2 MR. KUSIAK: Board Member time. 3 CHAIR CHIANG: We are now on Board Members' time. 4 Any questions or comments? 5 MR. LOFASO: None here. 6 CHAIR CHIANG: No? 7 Okay. Next item. 8 MR. KUSIAK: Closed session. 9 CHAIR CHIANG: Very good. 10 We are going into closed session to discuss the items 11 listed on the public agenda. We will reconvene after closed 12 session. 13 (Closed session 11:03 a.m. to 11:17 a.m.) 14 CHAIR CHIANG: Thank you. We're back. 15 The Board met in closed session and discussed pending 16 litigation. 17 Any comments? 18 No comments. 19 We are now adjourned. Thank you. 20 (Proceedings adjourned.) 21 ---oOo--- 22 23 24 25 25 1 2 REPORTER'S CERTIFICATE 3 4 5 STATE OF CALIFORNIA ) ) ss. 6 COUNTY OF SACRAMENTO ) 7 8 9 I, SANDRA VON HAENEL, certify that I was the 10 official Court Reporter for the proceedings named herein, and 11 that as such reporter, I reported in verbatim shorthand 12 writing the named proceedings; 13 That I thereafter caused my shorthand writing to 14 be reduced to typewriting, and the pages numbered 1 through 15 25, inclusive, constitute a complete, true, and correct 16 record of said proceedings: 17 18 IN WITNESS WHEREOF, I have subscribed this 19 certificate at Sacramento, California, on the 14th day of 20 September, 2007. 21 22 ___________________________ SANDRA VON HAENEL 23 CSR No. 11407 24 25 26