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Full Biography for Claude Parrish
Claude Parrish was sworn in as Member of the State Board of Equalization on January 4, 1999. Mr. Parrish has been committed to serving the public through fair, effective and efficient tax administration. Currently he is serving in the capacity of Vice-Chairman of the Board of Equalization. He has been responsive to taxpayers by instituting an open door policy and has been responsible for increasing the percentage of relief received by taxpayers before the Board.
It had been common practice at Board meetings for the Members to hear an appeal, then either vote on the matter or take the case under submission. Usually the latter meant that the taxpayer would lose. If Mr. Parrish believes that the taxpayer's case has merit, he will make a motion and call for the vote, while the taxpayer is present! The result has been that more taxpayers have received a favorable outcome. The percentage of taxpayers receiving relief was 39% in 1999, 41% in 2000, 34% in 2001, 46% in 2002, and 27% in 2003.
While chairing the Board's Customer Service Committee, he implemented a new 800-telephone line able to answer more complex tax problems for tax professionals.
Under Mr. Parrish's leadership, three legal concepts have emerged as taxpayer friendly policies. First, is the Relief of Interest, which grants taxpayers relief of interest owed, based on unreasonable (ministerial act) delays caused by the state. Second, is the Innocent Spouse Relief. Under this provision, the wife or husband who has been unduly entwined in the other spouse's tax liability can, if he or she can prove that circumstances warrant such relief, by act of the Board be relieved of the tax obligation. Third, is Relief from Double Taxation on the purchase of equipment that is then leased to the end user.
Mr. Parrish has been the deciding vote on a number of key issues that taxpayers will be reaping the benefits of for years to come. Mr. Parrish believes any tax policy needs to be sensitive to California's economic well being.
Mr. Parrish spends his days serving his constituents in the counties of San Diego, Riverside, Orange, Imperial, and portions of Los Angeles and most of San Bernardino. He has an open door policy and routinely conducts meetings with taxpayers, small business owners, and industry representatives in his district offices.
THE STATE BOARD OF EQUALIZATION IMPLEMENTED THE FOLLOWING TAX RELIEF WITH THE HELP OF BOARD MEMBER PARRISH:
HELPS TAXPAYERS WITH LAY-AWAY PLANS
The way this charge worked is as follows: a shopper placed an item on cash "lay-away" with a deposit and paid sales tax as well as a nominal service fee (in the subject case, the fee was $5.00). The customer had up to 6 months (interest free) to pay for the item. If the customer changed his or her mind and returned the item or items, then the retailer would refund the purchase price plus the sales tax collected but not the lay-away fee ($5.00). The Board of Equalization's staff position was that the sales tax paid on an item that was returned should be kept because the entire transaction was not completely unwound.
When the case was heard, Mr. Parrish was acting Chairman of the Board of Equalization and was conducting the meeting. In making his motion to grant the taxpayer's petition, he questioned the fairness of the action, deeming it "totally unfair and perhaps unconstitutional," noting that people who use credit cards for purchases do not forfeit sales tax, but those who don't have credit, and must use lay-away plans, would be required to pay tax on an item they returned. Additionally, these items would be resold and sales tax would be collected again. Mr. Parrish's motion for the taxpayer carried by a 2-to-1 vote thus rejecting the staff argument that the state keeps the sales tax from cancelled lay-away transactions.
TAX ELIMINATED FOR AUTO REPAIR INDUSTRY AND CONSUMERS
Previous tax policy was to assess a tax before installation of a bumper on a used car as part of the "fabrication" of the bumper. Mr. Parrish found that the Board's tax policy conflicted with the tax law.
Under the new Board policy there is no tax on the labor charge for painting bumpers for used cars. This is a common-sense approach, as painting a bumper does not connote "fabrication" of the bumper.
ELIMINATION OF THE TEA TAX
Mr. Parrish received complaints regarding application of tax on certain teas. In the ensuing review it was found that certain herbal teas (such as Chamomile and Sleepytime) were being assessed a sales tax. Mr. Parrish then went to work on the matter. As it turned out, tea that does not claim a medicinal benefit should not be taxed. As a result of his intervention, the regulation was clarified and the tax on these teas was abolished.
MANDATORY REVIEW OF ALL BOARD LITIGATION
Mr. Parrish asked that all Board litigation be evaluated for economic feasibility. The other Members were in agreement and this new policy was implemented. The purpose of this was to prevent unsupervised litigation expenses.
SIMPLIFICATION OF CORPORATE TAXATION
The issue of whether funds earmarked for investment were business or non-business income was heard before the Board of Equalization. In order to maximize the yield on their cash reserves, a freight company invested proceeds in long-term securities. The Franchise Tax Board determined that interest received by investing funds in longer-term investments should be treated as non-business income. This designation subjected a larger portion of income to California Franchise Tax, which resulted in tax due in excess of $2 million.
When seconding the motion to grant the appeal, Mr. Parrish described the investment as the company's attempt to maximize the yield on its cash reserves. He added that if companies thought that they could not invest funds without being penalized, in a diversified manner by varying the length of time on their cash instruments, (bills, notes, bonds), then the state would be sending a very bad message to companies nationwide. Noting that communism in Russia used central planning, also referred to as "state capitalism," Mr. Parrish added that California does not want to get into "state capitalism." The taxpayer was granted relief by a majority vote of the Board.
TAXPAYER FRIENDLY LIEN PROCEDURES INSTITUTED
This problem came to light because Mr. Parrish was concerned about the reliability of the Board's computer system known as the Integrated Revenue Information System (IRIS). Although IRIS is an important part of the internal functioning of the Board of Equalization, it appeared that IRIS was inappropriately issuing tax liens.
Initially Mr. Parrish's motion of April 21, 1999, which was to require human oversight and verification of these tax liens, was defeated by a 4-to-1 vote. Undeterred, Mr. Parrish made a second motion on May 11, 1999, which won by a 4-to-0 vote. New procedures now require three individuals to verify tax liens in a step-by-step process before any lien is placed on a taxpayer's property. Lien releases will be filed directly with the county, with a copy provided to the taxpayer. The cost of these releases will be borne by the Board. In the past, the taxpayers had to file these releases with the county recorder and pay a fee. Some taxpayers were confused and did not know that they had the burden of recording these releases themselves.
This change also promotes a better working relationship with the taxpayer by contacting the taxpayer directly. In contacting the taxpayer first, the state is resolving problems and thereby increasing collections on past due accounts. Additionally, California taxpayers have been helped as approximately 75% fewer liens are now being placed against taxpayers' property.
Lastly, in a further effort to reduce the burden of California taxpayers, on February 22, 2000, the State Board of Equalization passed Board Member Claude Parrish's motion to raise the minimum lien threshold from $1,000 to $2,000. This means that if a taxpayer's liability is under $2,000, a lien will not be filed. In addition, the Board voted to lengthen the time period for filing liens to 6 months from the liability date rather than the previous policy of filing liens within 2 months of the liability date. This gives all taxpayers a longer opportunity (up to six months) to pay their liability or enter into an installment agreement before a lien goes on their record. The State Board of Equalization must now mail a preliminary notice at least 30 days before filing a lien with the county recorder and the notice must contain: 1) The specific statutory authority for filing the lien; 2) The earliest date on which the lien may be recorded, and 3) Explanation of the remedies available to prevent the filing of the lien.
STUDENT MEALS FURNISHED BY AN AGENT OF THE SCHOOL ARE NOT TAXABLE
On December 8, 1999, the California State Board of Equalization voted not to tax meals furnished by an independent contractor to students at a Catholic High School. The Board staff held that, although student meals furnished by schools are exempt, the meals in this case were taxable because the independent contractor had furnished the meals.
Board Member Claude Parrish pointed out that the independent contractor did not have exclusive use of the facilities, the school owned the facilities and equipment, and the perception was that the school provided the food service. "Clearly," Mr. Parrish said, "the independent contractor was acting as an agent of the school." This argument was successful as the Board voted 3-to-2 to grant the taxpayer's petition. Mr. Parrish seconded the motion to grant in favor of the taxpayer and this decision was published.
ELIMINATION OF TAX ON CERTAIN MEDICAL SUPPLY ITEMS
On August 9, 2000, Claude Parrish was the key vote (3-to-2) to decrease the cost of health care at the State Board of Equalization's Business Taxes Committee meeting. At issue were proposed regulatory changes to clarify application of tax on medical supply items by medical service facilities.
Mr. Parrish voted to exempt from sales tax enteral feeding, total parenteral nutrition and other medical supplies required to deliver nutrition to the patient. These supplies are equivalent to the spoons and forks that are considered part of tax-exempt meals provided to other individuals receiving care. Mr. Parrish felt that to tax enteral supplies is discriminatory to the disabled individuals who cannot receive nutrition by other means. Mr. Parrish's efforts to exempt these items from tax will reduce the cost of health care.
HELPING THE VENDING INDUSTRY
Claude Parrish proposed amendments to a regulation to clarify the application of tax on items sold through vending machines. The amendments, passed by a majority vote, were effective on October 20, 2001 and clarified that all taxable vending machine sales are considered tax included. This regulation alleviated a major problem for vendors who previously were required to post signs at or near the vending machines indicating that the items sold were tax included. If the vendor did not meet these technicalities, the tax was deemed not included in the selling price, and the vendor was forced to pay a higher tax amount to the state.
ENTERTAINMENT/ARTIST TAX NULLIFIED
This case came before the Board on January 6, 1999, which was Claude Parrish's first day of hearings after being elected as Board Member. The issue was whether petitioner, in the performance of her business, provided a nontaxable entertainment service with the caricature drawings being incidental to the providing of such service or whether the caricature drawings provided by petitioner were sales of tangible personal property subject to tax. Specifically, the taxpayer provided caricature drawings of guests at parties for a fee; the purpose of this endeavor was primarily entertainment. Mr. Parrish voted in favor of the taxpayer.
DIABETIC TESTING EQUIPMENT IS NOW TAX FREE
The Board had historically treated items used outside the body as not qualified for exemption as a medicine. Mr. Parrish believed that the use of the glucose test strips and lancets, which are used by diabetic patients to determine the level of their blood sugar are an integral and necessary part of anti-diabetic medications, and not subject to tax. The lancet comes into intimate contact with the body and the test strips are essential to the day-to-day treatment of diabetes. The Board ultimately changed its previous position and agreed that glucose test strips and lancets are exempt from sales and use tax. The vote was 3-to-2 in favor of adopting this regulation.
TAX EXEMPT STATUS FOR RELIGIOUS HOUSING
In the past, portions of living space used by members of the clergy for consultation and meeting with parishioners was exempt from tax, while the private living quarters of the clergy was assessed for property tax purposes. Rule 137 was adopted unanimously to provide clarity. Effective December 31, 1999, the use of property by the owner organization solely for a residence for a member of the clergy is an exempt purpose.
A VOTE TO HELP SCHOOL CHILDREN
Since being elected to the State Board of Equalization, Mr. Parrish is proudest of his efforts on behalf of the Scholastic Book Club Incorporated. The Scholastic Book Club uses a bonus point system when schoolteachers buy their materials, which could be compared to a redemption program used with the old S & H Green Stamps. Mr. Parrish believed that this program should not be subject to sales tax and considered it to be just a book entry form of trading stamps that teachers used. The Board's staff was recommending that all of the `bonus points' redeemed by teachers and school districts should be subject to sales tax. Worse yet, it would have also subjected the teachers themselves to additional state income tax. It would have been a disaster for every classroom in California if that program had been stopped.
At the Board Hearing, Mr. Parrish said, "if we follow the staff recommendation, the kids wouldn't have the little globes of the world in their classrooms. They wouldn't have the little books about trains or about boats. They wouldn't have overhead projectors. They wouldn't have all of the things that they will remember throughout their lives." Mr. Parrish worked behind the scenes to get a representative of the California Teachers Association in attendance during the hearing and announced to all of the Board Members that he had asked the representative to be present to keep an eye on what the Board was doing. Mr. Parrish was the deciding vote (3-to-2) in that case and believes this to be the most important vote of his career. It affects more children in California than any other vote he has made to date. Now schoolteachers throughout California are able to collect these bonus points without fear of being subject to sales or income tax.
STATUTE OF LIMITATIONS ON PARKING TICKETS
During one of Mr. Parrish's interviews on a radio show in San Diego County, a taxpayer called in and requested his help after the State attempted to collect on a 14 year-old parking ticket. Mr. Parrish discovered that the State had withheld over $600 from the taxpayer's Franchise Tax Board income tax refund to pay the $20 ticket that had been issued over 14 years prior. Mr. Parrish was shocked that the State would attempt to collect on such a debt given the length of time that had passed since the ticket was issued.
Mr. Parrish was not satisfied with helping just this individual taxpayer. After assisting the taxpayer in her attempts to obtain the entire income tax refund that she was due, Mr. Parrish was the sponsor of legislation placing a 36-month statute of limitations on the collection of parking tickets. With the help of the bills author, Assembly Member Strickland's, A.B. 197 (2003) was signed into law by Governor Davis on September 28, 2003.
ASSISTANCE FOR DISABLED PERSONS, SENIOR CITIZENS AND VETERANS
Mr. Parrish is especially proud of his accomplishments when he has been successful in gaining relief for disabled persons, senior citizens, and veterans in difficult situations where all seemed lost.
Mr. Parrish helped thirty-two taxpayers who moved from different counties to Riverside County. An 87 + year-old lady called Mr. Parrish. She explained that she could not sleep because of a "terrible tax problem" and said to Mr. Parrish, "I hear you help people". She had moved to Riverside County relying on the inter-county transfer process that allows the disabled and senior citizens to keep Proposition 13 base-year values on comparable homes in other counties. She was told by the Riverside County Assessor's Office that she qualified under the process. For two years everything went along fine. She received her property tax bill about $700 a year. Then she received a horrendous tax bill for around $10,000.00. The county wanted to back-assess all of the property taxes because they said they made a mistake and her inter-county base-year value transfer was invalid.
Believing that this was very unfair, the first thing Mr. Parrish did was to go to Riverside County Assessor Gary Orso, who apologized for making the mistake but said that it was the law and he had to follow the law. He claimed that the higher tax was based on the new value of the property and insisted that he could not do anything about it. He said, "Claude, you know no member of the BOE has ever come to my office, and you've been here dozens of times." Then he said, "I'll tell you what I'll do. I'll just become neutral on this whole issue, okay?" Mr. Parrish then met with County Supervisor Wilson and the county counsel.
After that meeting, Senator Haynes stepped forward and introduced bill (SB 383) which provides that, once a county assessor accepts an inter-county base-year value transfer and it is later found in error, then the back-tax for the period before the error was discovered does not have to be paid. The back tax is forgiven and the higher tax only applies to periods after the error was discovered. With help from Assembly Revenue and Taxation Committee Chair Knox the bill got through. This is now law by unanimous votes of the Senate and Assembly. Mr. Parrish's good rapport with assessors ultimately helps taxpayers, which is his ultimate goal.
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