Tom Berry is the first person in 20 years to request a tape-recorded session with the state Board of Equalization.

He is also the first to be denied.

Berry, owner of AKKT Tool in Camarillo, said he wanted the recent meeting tape-recorded for his permanent record.  He said the board’s denial of the recording is a violation of his civil rights.

Berry’s 9-year-old company is under-going its second audit within three years.  The 1989 audit resulted in Berry owing the state about $20,000 in unpaid taxes because of errors in record keeping.  The owner paid the state, hired a secretary to keep his purchase orders and resale cards straight, and a certified public accountant to keep the books.

Berry’s extra hands gave him peace of mind - until now.

This time, “they sent rookies out to do my audit,” said Berry, who claims they didn’t know what they were doing, and he paid $392 per hour for two sessions with different auditors going over the same material.

“My little company can’t go through another audit like that,” he said.  “I’ll close my company and go sailing before I’ll let them do this to my company again.”

But Berry doesn’t want to do that.  He said his workers are like family and have been with him since the beginning.  He said closing his company would cost the county more than 10 jobs.

However, Berry said the financial burden is getting to be too much.  “The yolk is getting heavier and I don’t know if we can stand it much longer.”

Berry doesn’t have any record of his first audit.  This time, he thought he’d protect himself and his company by taping a meeting with two auditors and their supervisor, Bob Kaudse, from the equalization board, which is responsible  for  making  sure  businesses  pay

 

their taxes.  Berry had a video camera set up in his office when the boss came in.

“One of them made a joke out of it,” said Berry.  “He wanted to fix his hair for the camera, but as soon as I pulled out the tape recorder, they immediately refused to talk to me.  All I wanted was a few simple questions answered.”

“I do not wish to be tape-recorded or video taped,” said a voice Berry said was Kaudse’s.  “This is not a court of law.”

Berry wants to know why his resale cards, valid three years ago, are not valid now.

“There is nothing dark here, or hidden,” said Berry on tape.  “I need this for my permanent record.”

“No,” was the response given to Berry.  “We are a public agency and anything we discuss is private and confidential.”

“But this is for my permanent record.  I just told you that,” repeated Berry.

The argument continued.

“I am frustrated because I know my civil rights are being violated,” Berry said.

In fact, he was so sure, he called Richard Hamlish, a civil rights attorney recom-mended by the California Bar, who told him, according to Berry, that it was indeed a violation of his civil rights.  “As long as one person in the room consents to use of the recorder, meaning me,” quoted Berry, “I had every right to use it.”  Hamlish could not be reached for comment.

Mike Webber, district administrator of the Ventura district of the state Board of Equalization, said he would violate a confidence by commenting on Berry’s case, but did say it is “not appropriate to tape-record or video tape an auditing session.”

“It’s a waste of our time and puts the auditor under a lot of added pressure,” he said.

Webber explained an audit can take from 50 to 200 hours.

“We go out and audit businesses,” he said.  “We are not adversaries, and we have never had a request for videotaping during the proceeding of an audit.”

But this wasn’t an audit.  This was a meeting in Berry’s office with an audit supervisor.  After Kaudse walked out of the tool company, Berry was stuck with a five-minute tape-recording of an argument - nothing accomplished.

Recently, Berry had a second meeting, this time in the board’s chambers.  He said he felt good about the meeting after receiving a courteous phone call from Webber, “the diplomat of the bunch,” inviting him to come down “so we can put this thing to rest,” according to Berry.

“It was my desire to attempt to show Mr. Berry we have nothing to gain by creating animosity, but we have a job to do,” said Webber.  “Even if a taxpayer doesn’t cooperate, we still have to do it.  It’s just a lot easier if there is cooperation.”

Again, he brought his tape recorder and again was immediately denied the use of it.

“I declined to be tape-recorded,” said Webber, taking the advice of the board’s legal staff.

“I am not a man with something to hide,” said Berry.  “I believe in taxes, in our schools and in America.  If they’re getting a copy of the tape, what the hell’s the problem?”

The problem, said Webber, is someone could alter a tape.  Even if there is a copy, “he still has the original.”

Berry’s CPA, Jim Galloway, assisted him at the meeting.

“They expect these machine shops’ records to be perfect,” he said.

Galloway said keeping records straight is the secretary’s job, but “half the machine shops around don’t have secretaries and Tom’s secretary does the best she can.”

Galloway and Berry agreed the board is being very nit-picky saying the word non-taxable should not appear anywhere.  Well, it does appear on the customer’s purchase order.  Berry said he was informed it was up to him to let his customers know the purchase orders must read resale, the same as the resale cards.  For example, a company buys a non-taxable AKKT Tool product, is not charged tax, if it is a non-taxable item, and resells it to a customer charging sales tax.  Some of Berry’s products can be sold this way because they are used to make other, taxable, products.

Galloway, who spent two years as an auditor, is frustrated.  “If they find one little thing wrong, the whole thing is no good.  They totally disrupted business,” he said.

“There is absolutely no excuse for looking at so much information.  The IRS is far more reasonable.”

“They are,” agreed Joe Micallef, owner of Associated Sales Tax Consultants, Inc., based in Sacramento.  Micallef used to work for the state Board of Equalization - now he fights them.

“It’s hard to tell people what it’s all about because they don’t believe it,” he said.  “The agency is corrupt.”

There is one man who does believe Micallef.

Gary Crowe, owner of FCC Commercial Furniture of Oxnard, had a run-in with the state board during his audit three years ago.

Crowe said the auditor was questioning non-taxable sales of furniture to restaurant owners who would then resell the items to their franchises as taxable.  The board claimed the owner owed sales tax on that furniture because it should not have been resold.  Crowe said he would have had to go back to each customer and collect the sales tax to pay the board the nearly $400,000 they said he owed.

“I told him that would put me out of business,” said Crowe.  “He said, ‘well, that’s not our intent, but it’s the law.’”

Enter Micallef.

“My bookkeeper, bless her heart,” said Crowe, “saved this brochure from Associated Sales Tax Consultants and he came in at that point.”

Crowe said Micallef had the auditors finalize their work and upon going over it, he discovered the auditor charged Crowe a collective tax twice.

A mistake?  Maybe.

While auditing FCC’s audit, Crowe said Micallef found a policy within the Board of Equalization that was unpublished, therefore, enabling him to reduce Crowe’s taxes to below $6,000.