Peymon Mottahedeh
Tustin, USA
In Pro Per

CASE ID # 40777


This is an appeal from the adverse finding of the California Franchise Tax Board (hereafter, “FTB”) against the APPELLANT for the years 1995, 1996 and 1997.


On January 25, 1999 FTB issued Notice of Proposed Assessments (Hereafter, “NPAs”) against the APPELLANT for each of the years 1995, 1996 and 1997. The amount of tax claimed to be due and owing for each year, inclusive of penalties and interest was $1,842.91, $1,767.74 and $1,672.75, respectively, as of January 25, 1999. These NPAS were not signed by anyone, nor did they indicate which individual at the FTB issued them.

On March 25, 1999, APPELLANT requested an oral hearing and asked to be informed of the factual basis of the NPAs under general discovery and 6th Amendment right to be informed of the nature and cause of the accusation and under the Information Practices Act of 1977, as codified in California Civil Code, Section 1798 et. seq.(hereafter, “IPA”.) This request was sent to Gerald Goldberg, the Executive Director of the FTB and Donna Webb, a disclosure specialist, who is responsible for producing documents to the people of this State under IPA. See Exhibit #1.

On June 30, 1999, David Issac, (hereafter, “ISSAC”) a disclosure specialist with the Disclosure office of the FTB, sent a written response to Exhibit #1. In this response, ISSAC disclosed that no documents were available about the factual basis of the NPAs. The only information which ISSAC did provide was that a person named Mark Embry (hereafter, “Embry”) at the Franchise Tax Board had the NPAs produced. See Exhibit #2. No other response was received by the APPELLANT from anyone at the FTB in response to the questions posed to the FTB in Exhibit #1.

On August 25, 1999, a hearing was held before Kimberly Gardner, an audit examiner of the FTB (hereafter, “GARDNER”.) Before this hearing, APPELLANT had vigorously attempted to secure the factual basis of these NPAs through telephone contacts with Mark Embry and Kimberly Gardner. Both Embry and Gardner failed to provide any information or documents to the APPELLANT regarding these NPAs. Gardner in one of these phone conversations stated to APPELLANT that she has absolutely no information or documents regarding the factual basis of these NPAs, therefore she has nothing to give or tell APPELLANT about the factual basis of the NPAs.

At the August 25, 1999 hearing the following took place:

GARDNER admitted that she has no information or documents about the factual basis of the NPAs. Gardner shared her speculation with APPELLANT that perhaps EMBRY had used numbers of the 1992, 1993, 1994 NPAs, which were still under consideration of FTB and/or appeal to this Board, as the basis which EMBRY then inflation adjusted those numbers to come up with the numbers on the 1995,6,7 NPAs. APPELLANT asked to have the hearing continued so that EMBRY could be brought to the hearing so that APPELLANT may have an opportunity to examine EMBRY and find out the factual basis of these NPAS so that APPELLANT can respond to such alleged facts. GARDNER denied this request.

APPELLANT asked GARDNER if she was a hearing officer under the supervision and control of The Protest Unit of the FTB, headed by Paul Stankeivicz (hereafter, “PAUL”.) GARDNER disclosed that she was appointed to conduct APPELLANT’s hearing by her supervisor, Kathy Mia (hereafter, “MIA”.) APPELLANT asked GARDNER if she had any training on how to conduct hearings such as APPELLANT’s. GARDNER disclosed that she had no such training. APPELLANT asked GARDNER if she had any legal degree or training of any kind to conduct a quasi judicial hearing, such as this one. Gardner disclosed that she had no such degree or training. APPELLANT asked GARDNER if the rules of evidence would apply to the evaluation of purported facts which the hearing officer would rely on to make her findings. GARDNER said that she does not know what rules of evidence are and that rules of evidence do not apply in any way to APPELLANT’s hearing. In support of APPELLANTS contention that the above requests of the APPELLANT were proper and should have been adhered to, APPELLANT gave Exhibits #4 and #6 to GARDNER. APPELLANT objected to GARDNER conducting the hearing, since she was not properly qualified and appointed to do so, and also on the basis that the rules of evidence would not be adhered to in making findings of fact. These requests/objections of APPELLANT were denied by GARDNER.

APPELLANT asked GARDNER if the information used by the FTB to construct these NPAs, if any, were acquired, maintained and used against the APPELLANT according to the IPA. GARDNER stated that either the IPA does not apply to the FTB or these NPAs meet the requirement of the IPA. APPELLANT in support of his contention that the requirement of the IPA do apply to the FTB and that these NPAs were constructed against the APPELLANT in violation of the IPA, gave Exhibit #3 to GARDNER. Exhibit #3 is a copy of the IPA sections and related California Constitution provision, Article 1, Section 1.

APPELLANT contended that in unreported income cases, such as APPELLANT’s instant case, the burden of proof is not on the citizen, but is on the government to come forward with some predicate, direct facts, minimum as that may be, to substantiate its claim of unreported income. APPELLANT gave a copy of Exhibit #5, which is a collection of Federal Court cases in support of this position of APPELLANT to GARDENER for her consideration and review before making a final determination regarding these NPAs.

GARDNER did not allow APPELLANT to fully explain or defend his position and abruptly cut off the hearing in less than half an hour. APPELLANT objected to this arbitrary and capricious time limitation and asked for a continuation of the hearing on another day for another hearing date for a full and properly heard hearing. APPELLANT informed GARDNER that due to this arbitrary setting of time on the hearing time, APPELLANT reserves his right to bring evidence and law which he did not get to bring up at this hearing. GARDNER denied these requests of APPELLANT and concluded the hearing.

On September 3, 1999, GARDNER ruled against APPELLANT and upheld the validity of these NPAs. This appeal followed.


The Supreme Court of the United States in GOLDBERG v. KELLY, 397 U.S. 254, 267 concluded: ADVANCE \d4"The fundamental requisite of due process of law is the opportunity to be heard." Grannis v. Ordean, 234 U.S. 385, 394 (1914). The hearing must be "at a meaningful time and in a meaningful manner." Armstrong v. Manzo, 380 U.S. 545, 552 (1965). In the present context these principles require that a recipient have timely and adequate notice detailing the reasons for a [397 U.S. 254, 268] proposed termination, and an effective opportunity to defend by confronting any adverse witnesses and by presenting his own arguments and evidence orally. These rights are important in cases such as those before us, where recipients have challenged proposed terminations as resting on incorrect or misleading factual premises or on misapplication of rules or policies to the facts of particular cases.15" (Emphasis added.)

At pages 269-70 the court held:
“In almost every setting where important decisions turn on questions of fact, due process requires an opportunity to confront and cross-examine adverse witnesses. E. g., ICC v. Louisville & N. R. Co., ADVANCE \d4227 U.S. 88, 93-94 (1913); Willner v. Committee on Character & Fitness, 373 U.S. 96, 103-104 (1963). What we said in [397 U.S. 254, 270] Greene v. McElroy, 360 U.S. 474, 496-497 (1959), is particularly pertinent here:
ADVANCE \d4"Certain principles have remained relatively immutable in our jurisprudence. One of these is that where governmental action seriously injures an individual, and the reasonableness of the action depends on fact findings, the evidence used to prove the Government's case must be disclosed to the individual so that he has an opportunity to show that it is untrue. While this is important in the case of documentary evidence, it is even more important where the evidence consists of the testimony of individuals whose memory might be faulty or who, in fact, might be perjurers or persons motivated by malice, vindictiveness, intolerance, prejudice, or jealousy. We have formalized these protections in the requirements of confrontation and cross-examination. They have ancient roots. They find expression in the Sixth Amendment . . . . This Court has been zealous to protect these rights from erosion. It has spoken out not only in criminal cases, . . . but also in all types of cases where administrative . . . actions were under scrutiny." (Emphasis added.)

California Revenue and Taxation Code (hereafter, “R&T”), Section 19044(a) provides an “oral hearing” for the APPELLANT. However the California Legislature was silent on the requirements of these hearings at this section of the law. However R&T, Section 17024.5 provides that the IRS Code and Regulations apply to the State of California Taxation so long as they do not conflict with California’s Tax laws and regulations. Therefore all the standards of Federal Tax Court must apply.

In addition, the standards of due process hearings outlined above must apply to the hearing of APPELLANT. Both of the above standards were violated by the APPELLEE in APPELLANT’s hearing. Violations that require a reversal of the finding of the APPELLEE against the APPELLANT. The standards which were not met at APPELLANT’S hearing are laid out in more detail below.


In COMMISSIONER v. SHAPIRO, 424 U.S. 614, 626 (1976) Respondent argues on the other hand that unless the Government has some obligation to disclose the factual basis for its assessments, either in response to a discovery request or on direct order of the court, the exception to the Anti-Injunction Act provided in Enochs v. Williams Packing Co., supra, is meaningless. The taxpayer can never know, unless the Government tells him, what the [424 U.S. 614, 627] basis for the assessment is and thus can never show that the Government will certainly be unable to prevail. We agree with Shapiro.

In INTERSTATE COMMERCE COMMISSION v. LOUISVILLE & N. R. CO., 227 U.S. 88 (1913)(hereafter, “ICC”) the court held: “The Commission is an administrative body and, even where it acts in a quasi judicial capacity, is not limited by the strict rules, as to the admissibility of evidence, which prevail in suits between private parties. Interstate Commerce Commission v. Baird, 194 U.S. 25, 48 L. ed. 860, 24 Sup. Ct. Rep. 563. But the more liberal the practice in admitting testimony, the more imperative the obligation to preserve the essential rules of evidence by which rights are asserted or defended. In such cases the Commissioners cannot act upon their own information, as could jurors in primitive days. All parties must be fully apprised of the evidence submitted or to be considered, and must be given opportunity to cross-examine witnesses, to inspect documents, and to offer evidence in explanation or rebuttal. In no other way can a party maintain its rights or make its defense. In no other way can it test the sufficiency of the facts to support the finding; for otherwise, even though it appeared that the order was without evidence, the manifest deficiency could always be explained on the theory that the Commission had before it extraneous, unknown, but [227 U.S. 88, 94] presumptively sufficient information to support the finding. Interstate Commerce Commission v. Baltimore, &c. R. R. 226 U.S. 14, 57 L. ed. --, 33 Sup. Ct. Rep. 5.” ICC also states that such arbitrary claims of an administrative body, such as FTB’s in the instant case are clearly unconstitutional.

The facts of this case clearly show that the APPELLEE failed to disclose the factual settings of the NPAs to enable the APPELLANT. Therefore the APPELLANT was denied the right to be informed of the factual basis of the NPAs to be afforded an opportunity to test the sufficiency of the purported facts relied upon by the APPELLEE. The finding of the APPELLEE against the APPELLANT should be set aside on this basis for violations of the 5th and 14th Amendment Due Process rights of the APPELLANT as well as violation of the corresponding California Constitutional Provisions.


The facts of this case clearly point out the fact that the APPELLANT was denied the opportunity to confront the only possible witness against him, Mark Embry. The citations recited above, hold for the proposition that the APPELLANT had a right to be able to confront witness(es) that have provided information or have made a determination on his case. The finding of APPELLEE against the APPELLANT should be set aside for the denial of the 6th Amendment right of the APPELLANT as well as violations of the corresponding California Constitutional provision.


PHILLIPS v. COMMISSIONER OF INTERNAL REVENUE, 283 U.S. 589, 598 (1931) states: “Thus within sixty days after the Commissioner determines that the transferee is liable for an unpaid deficiency, and gives due notice thereof, the latter may file a petition with the Board o Tax Appeals.... Formal notice of the tax liability is thus given; the Commissioner is required to answer; and there is a complete hearing de novo according to the rules of evidence applicable in courts of equity of the District of Columbia. Act of May 29, 1928, c. 852, 601, 45 Stat. 791, 872 (26 USCA 1217-1219).”

GARDNER, admitted that she was not aware what the rules of evidence are and how they applied to the hearing process in evaluating facts and reaching conclusions. Exhibit #4, was given to GARDNER to have her see, read and apply the California Rules of Evidence, Sections 14000 and 1500 as well as some legal literature about the inadmissibility of hearsay, copies (non-originals) and evidence that lack foundation. The NPA by itself is not any evidence. Yet that is all that GARDNER relied upon to find against the APPELLANT; As clear admission of a hearsay within a hearsay document, which lacks originality and was admitted without its foundation having been laid by anyone. The finding of APPELLEE against the APPELLANT should be set aside for violation of Rules of Evidence of the State of California.

If we were to assume that the California Rules of Evidence apply to every kind of hearing except for tax purposes under California law, then by reference of R&T, Section 17024, through Tax Court Rule 243(a), the Federal Rules of Evidence regarding hearsay, Best Evidence and Foundation of evidence should apply under Federal Rules of Evidence, Sections, 801, 901 and 1003, in addition to Tax Court, Rule 142()a), which denies the admissibility of copies, if one objects like APPELLANT did to GARDNER at the hearing. Again, since the NPA is a hearsay within hearsay, non-original document, whose foundation had not been laid, was used against the APPELLANT in this hearing, in violation of applicable Federal Rules of Evidence, the finding of APPELLEE against the APPELLANT should be reversed.

The most glaring violation of the rules of evidence occurred by finding against the APPELLANT, since there was NO EVIDENCE on file to make a finding against the APPELLANT. How can a finding be made against one without any evidence? On this ground, once again, the finding of APPELLEE should be reversed also.


IPA, and more specifically, Section 1798.18 of the California Civil Code, provides that: “each agency shall maintain all records to the maximum extent possible, with accuracy, relevance, timeliness and completeness.” Section 1798.45(b) provides for civil action against the agency if it “Fails to maintain any record concerning an individual with such accuracy, relevancy, timeliness and completeness as is necessary to assure fairness in any determination relating to the ... rights... of ... the individual that may be made on the basis of such record, if as a proximate result of such failure, a determination is made which is adverse to the individual.” (Emphasis added”.)

Exhibit #2 which was a response of the APPELLEE to the APPELLANT for the factual basis of the NPAs as asked in Exhibit #1, clearly shows that NO BASIS of the NPA was on file with the NPA; absolutely none! Clearly when there is NO BASIS for the NPA, and based on such a “record” (which is really nothing!) such an adverse determination of APPELLEE against the APPELLANT was based on a “record” which was neither accurate, relevant, timely or complete. The intent of the Legislature to prevent this kind of abuse of power was made explicitly clear by the fact that the Legislature had waived its sovereign immunity against suits by giving the violated citizen the power to sue the violating agency for redress of said violation by enacting Section 1798.45(b). The finding of APPELLEE should be set aside for violation of the IPA as well.


There is a clear line of Federal cases which repeatedly make it clear that although in cases which involve the citizen proving his deductions and expenses the citizen has the burden of proof; in unreported income cases, such as APPELLANT’s, the burden of proof is on the government to come forward with its proof of income. This proof could be minimal in order to reverse the burden of proof on the citizen, however such proof must be by predicate, direct evidence of income. See Weimerskirch v. C.I.R., 596 F.2d 358 (9th Cir. 1979), Gatlin v. C.I.R., 754 f.2d 921 (11th Cir. 1985) Charles Edward Senter v. Commissioner, 1995 RIA TC Memo 95,311 (1995),Weller, v. Commissioner, 83 AFTR2d 99-2118 (dc Tex., 1998), Scar v. C.I.R., 814 F.2d 1363 (9th Cir. 1987), Portillo v. C.I.R., 932 F.2d 1128 (5th Cir. 1991). Copies of all of the above cases were given to GARDNER at the hearing to help her make the proper finding on the basis that the burden of proof in the instant case was on the APPELLEE to prove its assertion of unreported income, not the other way around.

In Wertin v. Franchise Tax Board, 68 Cal.App.4th 961, (1998), the court agreed with the federal court cases cited above by explicitly agreeing with Scar, Supra, that the FTB must rely on CONCRETE DATA to make its determinations by stating on page 971:
“No California case has similarly analyzed what is required to assess a deficiency under California tax law. However, where a California tax statute uses the same language as a federal statute, federal case law is persuasive on the proper interpretation to be given to the California statute... Thus Scar is instructive on the issue of whether the FTB’s notice was valid. As Scar is factually very similar to the instant action, and the federal and California statutes are very similar, the trial court did not err in finding under Scar the FTB’s notice was invalid.”

On page 972, Wertin, Supra, Continues: “We agree Scar is intended to require the taxing authority to rely on some concrete data in computing a deficiency...” The instant case is factually most similar to Scar. In Scar, the tax deficiency determination of the IRS was invalid on its face. Exhibit #2 and the admissions of GARDNER that no information, list of witnesses or documents which the NPAs were based on was available is PROOF that the NPAs are arbitrary, capricious under Weimerskirch, Supra, and baseless and utterly void under Scar. Not only the finding of APPELLEE against the APPELLANT should be voided because the FTB failed to meet its burden of proof with regard to the alleged unreported income, but also becuase there was NO DETERMINATION MADE in the first place. CONCLUSION

For the above mentioned reasons, which will be further elaborated at the oral hearing, which this APPELLANT is hereby requesting to have in Culver City, the NPAs of FTB for the years 1995, 1996 and 1997 should be set aside by reversing the finding of APPELLEE.

I, Peyman Mottahedeh, declare that the above stated facts are true and correct to the best of my knowledge.

____________________/_________________ Peyman Mottahedeh/Date