West Virginia Department of Tax & Revenue Attn: Craig Griffith 1001 Lee St.

East Charleston, WV 25301 July 22, 2011 To Whom It May Concern: In response to the results of the level one grievance hearing I am filing an appeal to level two. My rebuttal is regarding the remaining two points of the reprimand and my additional points included in the grievance as filed. Mr. Stiles did remove point one regarding the early arrival. However, I disagree with Mr. Stiles decision to uphold the additional two points of the reprimand and dismiss my contributing factor points as red herrings. I have attached a full complete copy of Mr. Stiles letter for your review. (See attachment A) (2) Not having in your possession the proper documentation regarding your assigned account. Mr. Stiles: The Grievant avers that he was not instructed regarding the documents that he would be expected to bring to a business revocation hearing. Stiles goes on to cite an email I sent my Supervisor, Kim Silvester, requesting a list of everything I needed to take with me to the hearing. See attachment B (Excerpt from Stiles Decision) Mr. Stiles is making the assumption that because Kim Silvester said, I would just take the file w/you, that there was a drawer in my office that contained a file that had a draft of each contact, payment plan set up, etc that I had with this Taxpayer. The fact is, that is not how all cases are handled now. With the implementation of a new 22 million dollar plus software system called GenTax, we have been encouraged to enter all such transactions into the computer so that anyone authorized to access the system and having a need to know the status of a certain account could do so. When GenTax was first implemented, there was a gigantic effort to convert all account information from the old Accounts Receivable System. This meant that our computers were now the case files for a taxpayer and open to everyone with access to GenTax. The Revenue Agent IIs at North Central Regional Office were instructed by Mike Coutz to go through our files and correct addresses, show what level of contact that we had made with the Taxpayer, none were to be listed as initial, etc. Generally speaking, we were to bring them up to date. Consequently, a lot of the old paper files were purged. Mike Coutz participated in the shredding of old case files by transporting a least 4 very large boxes of case files, (the contents of two large 4-drawer filing cabinets and one 2-drawer filing cabinet) to Charleston to be shredded.

Things that can be known about an account by casually observing the taxpayers profile page are: Current balances of each tax type Bad checks Indicators Liens Indicators Levies Indicators Payment plans Indicators Holds Indicators Payment Plan Indicators Notices such as 10-day letters, revocations, and non renewal Indicators Account notes from Taxpayer correspondence, liens recorded or released, Notes added by different Tax department employees. Attachments of letters or other documents received or sent regarding the Taxpayer and his or her tax accounts. Returns filed and paid Any returns or payments missing or misapplied. Additional payments on past due and delinquent taxes Collection activities such as levies sent and monies collected from such ventures.

Prior to the GenTax System multiple people would have parts of a taxpayers file meaning no one particular person had a complete file. Taxpayers with specialty taxes such as IFTA, Excise, and Tobacco were handled by those respective units prior to GenTax. Field agents did not work these particular tax cases. Now with GenTax anytime someone adds a note or attaches a document anyone that accesses the taxpayers account can view everything regardless of who added it. This makes it easier to see all types of taxes. However, some of the specialty taxes are still handled by the corresponding units. One of the benefits of GenTax was that everyone had access to the taxpayers file. There was a great effort to attach everything to the taxpayers account in GenTax to become paperless. Mr. Stiles: Additionally, the Grievant asserts that he never received training in how to prepare for a business revocation hearing. The respondent, Mike Coutz argues that I have been trained, and Mr. Stiles agreed because I attended the Compliance Division Annual Meeting, October 14, 2009 October 16, 2009. Mike Coutz presented a printed Agenda showing that one of the topics was Business Revocations, and that the employees of the Compliance Department were given actual notice of the Divisions procedures and policies regarding the conduct of a business revocation hearing. This is the only proof of training Mike Coutz presented. The thing that is left out of this argument is that, when asked, the gentleman that gave this presentation said that he prepared for and spoke for only 30 minutes. To my knowledge no other training has been conducted as a refresher course for current employees or for any new employees since that meeting in October of 2009. 2

It can be substantiated that the most egregious action the Compliance Division can take against a business owner is to prevail at a revocation hearing. When we take a business license we take the owners livelihood. We take the owners investment. If the business was to be his retirement, it is gone. The list goes on and on. Considering the damage and destruction a successful business revocation can cause a family it is perplexing that Mike Coutz, would submit that 30 minutes of training is adequate. A Revocation Hearing is a legal procedure that involves an: OTA Judge: Education; 4 years under graduate school 3 years Law School. Attorney/s: Education; 4 years under graduate school, 3 years Law School. Revenue Agent II: Education: A 4 year under graduate degree, one 30-minute presentation at an annual meeting.

(3) Mr. Stiles: Respondent, Mike Coutz alleges that Grievant, Hudson Yates gave misleading testimony under oath at a judicial hearing before the West Virginia Office of Tax Appeals. Specifically, it is alleged that the Grievant stated that the Taxpayer had defaulted on three payment plans into which he or she had entered with the Tax Department, when in fact no such plans existed. The above statement is not what Mr. Coutz alleged in my letter of Reprimand. Mike Coutz: Testifying under oath as to having three signed payment agreements with none completed in GenTax or prepared manually. The key word is SIGNED. Judge Piper was interested in signed payment plans. Not even the Tax Payer used the word signed.: The transcript of the OTA hearing indicates that it was State Tax Attorney Danielle Boyd who testified that there were three signed payment agreements. Danielle Boyd has access to the same computer information as supervisors, agents, and Compliance Division Directors/ Assistant Directors. Although all of the above were involved in the preparation of this case in some capacity, it appears that the information available was misinterpreted. I do not know how much training Danielle Boyd has had in GenTax, but because Revenue Agents have to report each month how many payment plans they have written to their supervisors. It is a given that supervisors can tell when a payment plan is in GenTax. These reports go to Mike Coutz who also knows where to look for a payment plan. Mike Coutz is the person in Compliance that handles all revocation hearings and is the liaison between OTA, Compliance Legal and the Supervisors. Mike Coutz

is also the person in Compliance that approves conditional payment plans for Letters of Good Standing. These letters are issued to multitudes of taxpayers on a yearly basis. Most are issued to obtain an alcoholic beverage license, which was the case with this particular taxpayer. These letters are issued to the Taxpayer by the Tax Department stating they are in good standing with the Tax Department as well as Workers Compensation and The Unemployment Insurance Commission. Mike Coutz approves each conditional letter. It is only approved if certain conditions are met, such as a payment arrangement. This Taxpayer has received such a letter annually for the past three years, all approved by Mike Coutz. His issuance of such letters indicates he has approved, along with the taxpayer, of the arrangements made, whether written or otherwise noted on the taxpayers account. When Danielle Boyd ask me if there 3 payment plans I said yes because in the five years that I have been with the Tax Department it has been Accepted Practice that if a taxpayers liability would not fit the parameters of GenTax we could accept regular payments. Anyone with access to GenTax would be able to see notes regarding payment plans three times by three different people. All three times Mike Coutz approved a conditional Letter of Good Standing. This letter is conditional based upon the Taxpayer entering into a payment agreement. If Mike Coutz approved these good standing letters were the conditions not verified? His tacit silence on the verification indicates his approval. Mike Coutz obviously looked over the account carefully to make sure a payment plan was in play. Had that payment plan been written he could have viewed a copy and read the particulars. In this case there was no written payment plan. Mike Coutz three times approved a letter of good standing and did not find a written payment plan in the taxpayers account. If a Taxpayer regularly, month after month, sends to the Tax Department $1,000.00 per month and the Tax Department retains that $1,000.00 and credits his account as $1,000 paid, any reasonable person, when asked, would call it a payment plan. Compliance has been silent as to what we are to call such payments and to my knowledge; no one has complained that they are listed as payments in the computer. Also we have never been instructed to return the payment. Even Compliance Attorney Jan Mudrinich at the OTA Hearing said that we accept any payment. Mr. Stiles: In his defense, the Grievant raised allegations of disparate treatment and a hostile work environment. He writes, We fail to see how the Grievant can claim a hostile work environment when the testimony shows that he works alone in a satellite office. Furthermore, the incidents that the Grievant points to as evidence of a hostile work environment occurred more than two years before the events that led to this to this grievance. Therefore, we find no merit in the Grievants claim of a hostile work environment. Mr. Stiles response to the hostile working environment being without merit is inaccurate. Mr. Stiles fails to see that disparate treatment does not have to be in person. Harassment can also occur via telephone conversation, emails, and yes, physical confrontation. During that time every time Mike Coutz would call me and he would already have an irritated tone 4

and demeanor towards me before I even responded to crux of the phone call. Events that happened beginning two years ago are directly related to the manifestation of this disciplinary procedure. Issues and incidents raised during the level 1 hearing are not exhaustive of hostile actions toward me by Mr. Coutz. I made no complaint two years ago for fear of retribution considering Mike Coutz was the Assistant Director of the Compliance Division. The perceived cost to press the issue was greater than cost to remain silent for fear of further harassment. Just because I remained silent on this matter doesnt mean others have as well. On several occasions when Mike Coutz chastised me for a perceived error my supervisor intervened to explain that the action I was taking had been suggested or approved by said supervisor. The disparate treatment has been occurring from the fist day I met Mike Coutz and continues to this day. I have no idea why it began almost immediately. Mr. Coutz has avoided and taken an instant dislike to me from the beginning. There was a time Mike Coutz was making regular visits to the North Central Regional Office in Clarksburg, WV. Prior to this I had a great friend and coworker in Connie James. When I was at the Clarksburg office Connie James and I routinely went out to lunch together. Connie James and I would talk nearly every morning and through out the day. Anytime she had a question regarding GenTax or anything else she would call me and I would try my best to help her. While he was visiting he would join Connie and I at lunch. This abruptly stopped. I was no longer asked to join this regular lunch outing. Mike Coutz and Connie James, however, did continue this lunch outing on a regular basis alone. At this same time Connie James abruptly stopped talking to me and calling me for help. I can only conclude that Mike Coutz had said or done something to poison Connie James against me. Roger Shaw, the other agent in the office was a good friend as well, during this same time he became colder and more distant. I was only left with one friend in the office, Janet Swinler. She treated me as an equal. Mike Coutz went so far as to attempt to poison her against me by calling her shortly after the revocation hearing at the heart of this proceeding to tell her he was going to fire Hudson Yates. This occurred well before I received my official letter of reprimand. He also asked her, Janet Swinler, to talk to me not my current Supervisor, Kim Silvester. Janet Swinler spoke to Kim Silvester and relayed to me that Kim stated, its certainly not imminent regarding my termination. I was stunned to learn that Mr. Coutz testified that his visit to my office in Elkins on February 3, 2010 that this was my verbal warning for poor job performance. Mike Coutz told me that he was visiting every office and meeting with every agent to discuss their high risk cases and action that have and should be taken. My Supervisor, Kim Silvester was also present at that time. I spoke to Kim Silvester at 1:30pm on June 24th, 2011 about a payment plan on another taxpayer. During this same conversation I asked her if she remembered when she was here with Mike Coutz discussing my cases, referencing the date of February 3, 2010, and her response was yes. I continued asking if she was aware that this was a disciplinary visit for a verbal warning on poor job performance. She responded with no. She also continued 5

with that she wasnt aware and it was never mentioned of it being a disciplinary visit. I ask, if this visit was as serious as a verbal warning, as Mike Coutz claims, for poor job performance, should my direct supervisor be aware of what is happening? I even made a note after they had left my office regarding the visit. I had felt extremely nervous with Mike Coutz here. It was so tense that after he had left I experienced a panic attack for the first time. I didnt know what was happening until I spoke with a doctor. I later phoned Kim Silvester when she returned to her office in Clarksburg to talk about this visit. She relayed to me that Mike Coutz was pleased with my progress with my high risk, that I had made a dent and to keep working on them. Again, I ask, If this was a review for poor job performance, why would he make such a statement regarding my work. That statement is an indication that I was doing my job to his satisfaction. Kim Silvester also testified at the Level 1 hearing that I was doing an adequate job and would rate me as such on job performance. She also stated, when asked if I had done everything she asked me to do, her response was yes. Additionally, immediately following the hearing Mike Coutz was enraged at me and was yelling at me that it was my fault the hearing was dismissed. That I screwed the pooch from beginning on this one. This was said in front of Danielle Boyd and Jan Mudrinich as we were riding down the elevator with the taxpayer and walking back from the Office of Tax Appeals to the Revenue Center. Mike Coutz immediately blamed me, me alone, for the hearing being withdrawn. I cannot explain to you how mortified I was being publicly humiliated in front Danielle Boyd and Jan Mudrinich as well as the brief ride on the elevator with the taxpayer. When I arrived in Charleston at 10am that day and the first words out of Mike Coutzs mouth was, What are you doing here at 10am for a 2pm show cause hearing I, at that point, knew it was going to be a challenging day. This is just the most recent example of how Mike Coutz addresses me. I have never heard him speak to anyone else in that tone. After I had met Danielle Boyd to discuss the case for 20 minutes and she made no mention or request for documents, of which I was more than willing to provide on the spot from the Taxpayer file in GenTax as that was my reason for arriving early. I had a very uneasy feeling for the direction of the hearing. Im not sure what I could have done as a witness. I left it in the hands of the attorney, in good faith, that she was the professional and more experienced than I in court. Mr. Stiles: The Grievant raises another red herring issue in his Statement of Grievance, concerning his supervisors having printed the Grievants name on an Offer in Compromise form for a taxpayer, indicating that the Grievant had recommended acceptance of the offer. Testimony indicated that these offers must ultimately be approved by the Tax Commissioner, and that the Revenue Agents recommendation is not binding in any way. We fail to see any harm to the Grievant arising from his name being entered on the document without his knowledge or approval. No attempt was made to forge the Grievants 6

signature- his name was printed in block letters that in no way resembled his distinctive signature- and the appearance of his name on the document in no way committed him to any action. It appears that the purpose was simply to indicate who the Revenue Agent was on that case. The Grievant failed to show what relevance, if any, this issue had to the acts for which he was being reprimanded. This is certainly not a red herring issue as Mr. Stiles stated. It is directly related to his treatment towards me from the beginning. It concerns me greatly that Mike Coutz feels comfortable applying anyones name to a legally binding document. Mike Coutz made no effort to obtain my signature. I had no opportunity to sign my own name to these documents. It is also my understanding that Mr. Coutz has affixed no one elses signature to a document. Mr. Stiles also states that these offers are ultimately approved by the Tax Commissioner and a Revenue Agents recommendation is not binding. That said, Mike Coutz affixing my name to this document was completely unnecessary. Whatever Mike Coutzs intent was isnt the issue. The issue is when someone unfamiliar with my signature viewing this document and reading the section that starts with We recommend that my name appearing on that line is interpreted as a signature. Im sure if you asked anyone who signed this document? that I would be included along with those that actually signed. It is my contention that any reasonable person would interpret my name as a signature, regardless of it being printed in block letters. Additionally, if you look closer you will see a few of the letters are jointed together. I know I would interpret it as a signature because I have friends that actually sign their checks by printing their names. The bank accepts this as a signature as does the merchant accepting the check as payment. It could be successfully argued that an Offer In Compromise is the Compliance Divisions document that has the greatest potential to receive outside scrutiny and get the attention of a Legislative Auditor. An Offer In Compromise is a legal and binding agreement between a Tax Payer and the West Virginia State Tax Department that states that the tax department is willing to accept an amount other that what is actually owed. While it is true that an OIC cannot legally be granted without the signature of the Tax Commissioner, and his/her signature is the only one necessary, the persons who composed this document had good reason to begin the signature section with We recommend ... The two signatures that follow are Tax Division Employee and Unit Manager. (Please see attachment C) These people are Compliance Department employees that with the signing of their name they are declaring that they have read this document and agree that with the information given, that it should go forward to the Legal Department for signature. The criterion that we use in making this decision is what is in the best interest of the State of West Virginia. Mr. Stiles: the appearance of his name on the document in no way committed him to any action. It appears that the purpose was simply to indicate who was the Revenue Agent on that case.

I submit that who prepared the document is irrelevant. Which Revenue Agent is assigned to the area in which the Taxpayer lives is irrelevant. When Mr. Coutz affixed my name to that document he was falsely giving the appearance that: 1) That at some point that document was in my possession; The truth is that I never saw this document before it was accepted by the Tax Commissioners Agent, Jeff Oakes. 2) That I had read that document; The truth is that I never saw this document before it was accepted by the Tax Commissioners Agent, Jeff Oakes 3) That if the facts contained in that document were true, I believed that the accepting of this offer was in the best interest of the State of West Virginia. The truth is, I would not have approved this OIC. I do not believe that the taxpayer owed this money. I believed the taxpayer, like many who had gone before him, should have been allowed to file amended returns and any money we collected through a wage levy should have been applied to his Personal Income Tax liability. Mr. Stiles: No attempt was made to forge the Grievants signature- his name was printed in block letters that in no way resembled his distinctive signature- and the appearance of his name on the document in no way committed him to any action. It appears that the purpose was simply to indicate who was the Revenue Agent on that case. The Grievant failed to show what relevance, if any, this issue had to the acts for which he was being reprimanded. If I am to believe Mr. Stiles finding that Mike Coutz made no attempt to forge my name, then his defense statement should have included the answers to the following questions. Why after affixing my name to this document did he not include by Mike Coutz? This, as everyone knows, is the accepted way to attach a signature when the signatory is not available. Why did Mike Coutz not call me to tell me that he had signed my name? Why, when Kim Silvester learned that Mike Coutz signed my name, did she alert me of his unprecedented action? As time went on Kim told me there were two other times that Mr. Coutz signed my name. (Please see attachment C) Why, when I posted a comment in GenTax that it was not my signature on the OIC attached to the account did the Compliance Division Secretary put the explanation for the signing of my name to the OIC and not Mike Coutz? Please do not take my last question as a criticism of the secretary. I have nothing but admiration, praise and thanks for all the wonderful help I have received from her. It was Mike Coutz that owed the explanation and he should have been the one to put it in writing.

I would be interested to know that whoever signed for the legal department and Jeff Oakes for the tax commissioner would have signed the document had they known my signature has been forged? Additionally, after protesting and making it clear that I do not appreciate my name being forged to a document Mike Coutz, on May 13, 2011 signed my name again to two additional Offers In Compromise. This illustrates the blatant disrespect Mike Coutz has had toward me from day one. No attempt was made to obtain my signatures on these documents either. He was so bold as to sign my name again after I made my objections known and after the reprimand was sent to me. Mr. Stiles: The Grievant failed to show what relevance, if any, this issue had to the acts for which he was being reprimanded. The relevance is that to the best of my knowledge no other Revenue Agent II has had their name signed to a document that they had voiced opposition to. My supervisor knew my reservations as to whether or not the taxpayer was in business when the estimated liability was accrued. Kim said that when she told Mr. Coutz of my concerns that he said he was not giving back the money we had received in a wage levy and that the money was not to be transferred to pay personal income tax liability. Within 15 days of the first incident of my signature being applied to an Offer and Compromise came the OTA Hearing. Mike Coutz, made no attempt to explain why we could have payment plans that were not in writing on this account, a fact that he definitely knew because for 3 consecutive years he, personally, had approved a Conditional Letter of Good Standing that was conditioned on the fact that a payment plan was in place. The procedure is that when he is called by someone in the unit that issues these letters, he checks the account to see if all returns have been filed and most importantly, if there is an acceptable payment plan in place to meet the conditions of the Good Standing. Three times Mike Coutz found no written and signed payment plan and three times Mike Coutz blatantly violated Compliance policy by awarding a conditional letter of good standing. Another 10 days later, after the OTA hearing, on May 9, 2011 Mike Coutz called Janet Swinler, Revenue Agent II, in Morgantown and said that he was going to Fire Hudson Yates because I had lied under oath. He told her that I had testified that I had 3 signed payment plans. Mr. Coutz did not tell the truth as the transcript of the OTA hearing proved. Two days later on May 11, 2011 at 4:48pm Janet spoke to Kim Silvester when she mentioned that my firing certainly isnt imminent. It was the States Attorney that swore under oath that we had 3 signed payment plans. The key word is signed. Mike Coutz had to be aware that the payment plans were not signed. If the payment plans were signed, Mike Coutz would have found them in the computer all three years that he checked before he approved a Conditional Letter of Good Standing. There were no signed payment plans. This account is one that was based Accepted Practice. Mike Coutz was fully aware of the written policy and yet he still approved the Conditional Letters of Good Standing. 9

Below is a timeline to show the correlation of events. March 10, 2011- My name was forged to the first Offer and Compromise March 24, 2011- The document mentioned above was attached to the taxpayers account in GenTax. March 29, 2011- I added the note to the account that this wasnt my signature April 13, 2011- Paula Junkins adds a note that Mike Coutz applied my name and it wasnt meant to be interpreted as a signature. April 28, 2011- The revocation hearing was conducted that prompted this reprimand. May 11, 2011- Mike Coutz prepares and sends me via certified mail my letter of reprimand. May 13, 2011- Mike Coutz adds my signature to two more offers and compromise. May 19, 2011- I received the letter of reprimand.

Respectfully,

J. Hudson Yates

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