Carpinteria hot dog vendor relishes in sales tax victory

As light on his feet as the prizefighter he once was, Bill Connell moves quickly around his Carpinteria hot dog stand, jabbing hot sausages, whipping Monster Dogs into buns, and boasting about the recent knockout he scored against state tax officials.

“They told me the law didn’t mean what it said in plain language, and I told them: ‘Are you kidding me? I was educated in Catholic schools! I know what the law says!’ ”

For 16 years, Connell sparred with the state Board of Equalization over the interpretation of an 1872 statute exempting street peddlers who are disabled veterans from paying various taxes. This morning, he’ll celebrate his victory by giving away hot dogs and carving up sheet cakes decorated with the Stars and Stripes. Politicians who supported Connell’s cause will speechify on a platform set up at his Surf Dog stand, a cart commanding an ocean view that would be the envy of any five-star hotel.

“This was a real David-and-Goliath struggle, and Bill never gave up,” said state Sen. Jeff Denham (R-Atwater), chairman of the Senate Veteran Affairs Committee. “It’s an emotional issue for him and it’s an emotional issue for all veterans.”

Denham sponsored a bill, inspired by Connell, allowing veterans with service-related disabilities not to pay sales taxes when peddling things such as T-shirts, tacos and incense on the street. Gov. Arnold Schwarzenegger signed it into law earlier this month.

At the heart of the new law is the notion of the state giving a boost to self-employed veterans. Connell, a former toxic-waste disposal specialist who knows his way around a law book, contended that’s exactly what the state wanted to do when it passed laws to that effect in the 1800s. State attorneys disagreed, pointing out that state sales-tax laws weren’t imposed until 1933, didn’t mention veterans and superseded rules from the previous century.

“It really galled me terribly,” said Connell, a 55-year-old Vietnam-era veteran who partially lost his hearing when he was boxing for the Army in Germany. He said a vet in San Francisco who peddled decorated seashells and a fellow hot dog vendor in Northern California were unfairly put out of business. “I was just the last one standing,” he said.

Mid-life crisis drove Connell from his native New Jersey and, at the age of 38, into the hot dog business. Since then, he has testified before the Board of Equalization, a state tax agency, 18 times. By his estimate, he has spent 1,000 hours in the law library at Santa Barbara’s courthouse, poring over case law and thumbing through dust-laden statute books. Along the way, the state briefly shut down his business for nonpayment of taxes.

An animated man who talks death, taxes and local politics with his regulars, Connell fumes over some of the lawyerly tactics used against him.

“A comma!” he sputtered. “For years, they tried to tell me I was wrong because there was a misplaced comma in the law.”

The 1872 legislation says veterans may peddle “without payment of any license, tax, or fee whatsoever.” Connell said his opponents claimed the comma after ‘license’ was a mistake.

Bill Leonard, a Board of Equalization member since 2002, agreed with Connell.

“I argued on his behalf and lost,” he said. “I tried to get our regulations changed and lost. But he made such a good argument that we should honor our veterans -- and that itinerant-peddler-veterans didn’t represent a huge drain if they were exempted -- that the board agreed to meet him halfway and support legislation to clarify this conflict in the law.”

The state figures the new law will cost it about $25,000 a year in foregone sales taxes. Only disabled veterans who have no employees but themselves are eligible.

“It’s a very limited business opportunity in the 21st century economy,” Leonard said.

That may be, but it suits Connell just fine.

One afternoon this week, a customer dropped by with a framed line drawing of the Surf Dog stand and the inscription, “Thanks for helping our veterans!” A couple of drywall installers ordered end-of-shift hot dogs. Regulars such as contractor Jon Jorgensen asked Connell about plans for the celebration.

“He’s an individual,” Jorgensen said. “In Sacramento, they hate people like him.”

For Connell, all is well. He claims the state owes him $30,000 in sales taxes he paid over the years, but his pending lawsuit is a fight for another day.

“I love California,” he said. “The people are great. The attitude is great. I love it -- except for the tax lawyers.”

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steve.chawkins@latimes.com