BILL ANALYSIS Ó
AB 1151
Page 1
Date of Hearing: April 24, 2013
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
K.H. "Katcho" Achadjian, Chair
AB 1151 (Ting) - As Amended: April 16, 2013
SUBJECT : Tax agent registration.
SUMMARY : Requires tax agents to register with the Secretary of
State's Office and prohibits certain persons from acting as tax
agents. Specifically, this bill :
1)Requires each tax agent, within 30 days after July 1, 2014, to
file with the Secretary of State (SOS) an application for a
registration containing the following: the tax agent's full
name, business address, business telephone number, and
business email address, if applicable; and, the name of the
tax agent's employing tax agent firm, if applicable.
2)Requires a tax agent to pay the SOS a registration fee in an
unspecified amount.
3)Requires the SOS to issue a tax agent registration number to
the tax agent, if a tax agent has registered and paid the fee
as specified above.
4)Prohibits, beginning July 1, 2014, any tax agent from
representing taxpayers before a county official without first
being registered and issued a registration number pursuant to
this bill.
5)Provides that a registration issued pursuant to this bill
shall expire two years from its date of issuance unless and
until that person terminates the registration. An expired
registration may be renewed biennially if the registrant pays
an annual renewal registration fee in an unspecified amount to
the SOS.
6)Prohibits a person from registering or providing services as a
tax agent if that person:
a) Has been convicted of any felony under state or federal
tax laws;
b) Has been convicted of any other criminal offense
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involving dishonesty, breach of trust, or moral turpitude;
or,
c) Has been disbarred or suspended for any reason other
than the failure to pay dues from practice as an attorney,
certified public accountant, public accountant, actuary,
real estate broker, real estate salesperson, or licensed
real estate appraiser by any duly constituted authority of
any state, territory, or possession of the United States,
including a commonwealth, or the District of Columbia, any
court of record, or any agency, body, or board.
7)Requires fees collected pursuant to this bill to be deposited
in the SOS Business Fees Fund established pursuant to current
law.
8)Prohibits any county supervisor or member of a county
assessment appeals board from acting as a tax agent in the
county in which they currently serve as a county supervisor or
as a member of a county assessment appeals board.
9)Requires a tax agent to file updated registration information
with the SOS within 30 days
of any change in any of the registration information submitted
pursuant to this bill.
10)Requires, when a tax agent ceases all activities related to
influencing official action, this fact to be reported to the
SOS.
11)Provides that it shall be a violation of this bill for any
person to act as a tax agent if that person is not registered
as a tax agent pursuant to the bill or if that person was
previously registered as a tax agent pursuant to the bill but
that person is no longer registered as a tax agent.
12)Provides that nothing in this bill shall be construed to
prohibit a county from, by ordinance, enacting tax agent
reporting requirements for campaign contributions to elected
officials in that county.
13)Requires the SOS to semiannually develop a list of registered
tax agents and make that list available to the public on its
Internet Web site.
14)Provides that, after investigation, if it is determined by
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the SOS that any tax agent acting on behalf of the taxpayer
fails to comply with this bill and the tax agent has failed to
cure the violation within 30 days of first receiving notice,
the SOS shall send the tax agent and the taxpayer or taxpayers
whom the tax agent represents a notice of the tax agent's
noncompliance.
15)Allows any person to file a complaint with the Attorney
General (AG) that any tax agent has violated any provision of
this bill.
16)Provides that, for any violation of this bill, the AG shall
have the discretion to pursue civil fines for noncompliance or
violations. The AG shall be designated as the enforcement
officer for determination and imposition of the civil fines
and noncompliance fees to be issued.
17)Provides that no administrative fine shall be issued if the
first violation of this bill is cured within 30 days of the
date in which the tax agent receives notice of the violation
from the AG.
18)Allows the SOS to develop rules and regulations for the
administration of this bill, subject to the Administrative
Procedure Act.
19)Provides the following definitions for the purposes of this
bill:
a) "County official" means the county assessor, an
assessment appeals board member, an assessment hearing
officer, and any other county employee within those offices
whose duties are not primarily clerical or manual;
b) "Influencing official action" means representing a
taxpayer as an agent in connection with any matter before
any county official by promoting, supporting, influencing,
seeking modification of, opposing, or seeking delay of any
official action by any means. The filing or submitting of
required county forms for compliance purposes and
communication relating to those filings shall not be
considered influencing official action;
c) "Official action" means corrections to values and any
other changes in taxable value set; applying all legal
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exemptions to assessments; and, deciding all property
assessment disputes between taxpayers and a county
official, including hearings before an assessment hearing
officer or a county assessment appeals board;
d) "Public official" and "public employee" mean any
government official or employee
of any state or local government agency;
e) "Tax agent" means any individual who is employed, under
contract, or otherwise receives compensation to communicate
directly, or through agents, employees, or subcontractors,
with any county official for the purpose of influencing
official action. A tax agent shall not include:
i) An elected or appointed public official or public
employee when acting in his or her official capacity;
ii) A person representing himself or herself, an
immediate family member, or an entity of which the person
is a partner or owner of 10% or more of the value of the
entity; or,
iii) An in-house tax professional or in-house employee
representing his or her employer by influencing official
action.
20)Makes the bill's provisions operative on July 1, 2014.
EXISTING LAW :
1)Establishes the position of county assessor, and requires
every assessor to assess all property subject to general
property taxation at its full value and to prepare an
assessment roll in which all property within the county which
it is the assessor's duty to assess is required to be listed.
2)Requires a county board of equalization or an assessment
appeals board to equalize the valuation of taxable property
within the county for the purpose of taxation.
3)Allows a taxpayer, with respect to each assessment year, to
file an application for a reduction in an assessment, as
specified, with the county board, which is the county board of
supervisors meeting as a county board of equalization or an
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assessment appeals board.
4)Regulates the practice of a number of businesses and
professions through the boards and bureaus within the
Department of Consumer Affairs (DCA), and regulates attorneys
through the State Bar of California.
5)Provides a registration program for notaries public through
the SOS, and requires all applicants to complete an approved
course of study, pass an exam, file an oath and a bond, and
undergo a background check by the Federal Bureau of
Investigation and the California Department of Justice.
FISCAL EFFECT : Unknown
COMMENTS :
1)This bill establishes a registration program for tax agents at
the SOS and requires all tax agents to register and pay
initial and renewal fees. It does not require completion of
any specified education, nor does it require bonding or
background checks.
This bill prohibits anyone from registering if they have been
convicted of a felony or any other offense involving
dishonesty, breach of trust, or moral turpitude. A person
also cannot register if they have been disbarred or suspended
for any reason except failing to pay dues from practice as an
attorney, certified public accountant, public accountant,
actuary, real estate broker, real estate salesperson, or
licensed real estate appraiser by any authority of any state,
territory, or possession of the United States, the District of
Columbia, any court of record, or any agency, body, or board.
Active members of the State Bar and certified members of the
Institute for Professionals in Taxation (CMI) with a
designation in Property Tax are exempt from the bill's
requirements. This bill is sponsored by the author.
2)According to the author, "In 2011, investigators for the Los
Angeles County district attorney began probing improper
property tax reductions granted to more than 100 Los Angeles
County property owners. They started looking into complaints
from assessor's office employees who claimed they were under
pressure to lower property taxes.
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"Although the events in Los Angeles are an infrequent and
extreme occurrence that is not reflective of most property tax
appeals processes in California, it has generated public
concern over the transparency of the individuals who may
represent taxpayers in property tax appeals cases. Therefore,
AB 1151 seeks to improve the property tax appeals process and
create transparency by establishing a public registration
process for tax agents and imposing a requirement of ongoing
professional and ethical education for tax agents."
3)County assessors are governed by the California Constitution,
the laws passed by the Legislature, and the rules adopted by
BOE. The county assessor must annually assess all taxable
property in the county, except for state-assessed property, to
the person, business, or legal entity owning, claiming,
possessing, or controlling the property on January 1. The
duties of the county assessor are to discover all assessable
property, to inventory and list all taxable property, and to
enroll the property on the local assessment roll. The
assessor's primary responsibility is to annually determine the
proper taxable value for each property so the owner is assured
of paying the correct amount of property tax for the support
of local government.
The assessor must reassess real property to current market
value whenever there is a change in ownership or completed new
construction. In addition, the assessor may change the
assessed value of a property to recognize a decrease in value,
to correct an error, or to enroll an escaped (previously
overlooked) assessment. Property owners can appeal the value
of the property by filing an application for a changed
assessment with the clerk of the board of supervisors (sitting
as a local board of equalization) or the assessment appeals
board. If the county board denies the appeal, the taxpayer
may file an action in superior court, but only under certain
circumstances.
4)Tax agents are individuals who help clients reduce their
property tax bill by representing them during the county's
property assessment process. There is no general definition
in California law for tax agents, nor is any training or
registration legally required. However, state law does
regulate the solicitation and representation by "assessment
reduction filing services," which requires specified
disclosures and prohibits certain false or misleading
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statements and abusive practices.
Tax agents come from a variety of disciplines, including
attorneys, realtors, mortgage brokers and former employees of
a county assessor's office. Some tax agents possess licenses
in real estate appraisal, several levels of which are issued
by the California Office of Real Estate Appraisers. By
comparison, tax agents who practice before the Internal
Revenue Service (IRS) are heavily regulated at the federal
level as enrolled agents.
Homeowners and businesses do not need to be represented by a
tax agent in order to request a reassessment. Private
individuals can represent themselves and even other family
members. However, if a tax agent is retained for this
purpose, the client is required by law to sign an affidavit or
form specifying that that tax agent is representing that
client.
5)In February 2012, the Los Angeles County District Attorney's
Office announced it had launched an inquiry into allegations
of influence peddling in the office of Los Angeles County
Assessor John Noguez, who was elected in 2010. While a
lower-level employee was charged with fraud in May of 2012,
the investigation ultimately focused on the possibility that
Noguez himself had directed staff to illegally reduce certain
tax assessments in exchange for campaign contributions. In
June of 2012, Noguez was formally charged with 60 felonies and
took an indefinite, paid leave of absence from the office. He
was arrested in October for allegedly taking $185,000 in
bribes from a particular tax consultant and campaign
contributor, Ramin Salari, who has also been charged with
corruption. Noguez recently posted the $1.16 million bail set
for his release after nearly five months in jail.
6)On November 6, 2012, Los Angeles County voters rejected
(78-22%) an advisory measure asking if the county charter
should be changed to make the County Assessor an appointed
position instead of elected.
7)On June 20, 2012, this Committee held a joint oversight
hearing with the Assembly Revenue and Taxation Committee on
property tax agents and their interactions with local
governments. The members heard testimony and recommendations
from the Legislative Analyst's Office, the Assessors of three
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counties, and various representatives of the tax agent
community.
8)Several bills were introduced in 2012 in response to the
Noguez scandal:
a) AB 404 (Gatto, 2012) would have required the board of
supervisors of a county that regulates lobbying to require
annual registration and quarterly reporting by any
individual representing a taxpayer for compensation before
county assessment or equalization officials, and also would
have prohibited registrants from making campaign
contributions to an elected county assessor or candidate.
This bill died on the Senate Floor;
b) AB 2183 (Smyth, 2012) would have required an agent
representing a taxpayer before the assessor, a county board
of equalization, or an assessment appeals board to register
with the county prior to representing a taxpayer. This
bill died in Senate Appropriations Committee; and,
c) AB 2210 (Smyth, 2012) would have required a county
assessor to, upon request, estimate whether annual property
valuations for the county have decreased by 3% or more and,
if so, to notify the requesting body and other public
agencies of the decrease. This bill died in the Senate
Governance and Finance Committee.
Other recent bills include:
a) SB 342 (Wolk, 2011) would have prohibited a person from
charging a contingency fee for services rendered in
connection with any matter before the BOE, FTB, or an
assessment appeals board, or for any other tax imposed
under state law. This bill died in the Senate Judiciary
Committee; and,
b) AB 992 (Lieu), Chapter 496, Statutes of 2009,
strengthened the provisions that govern assessment
services, and eliminated an exception that was used as a
loophole to capture, within the definition of "assessment
reduction filing service," persons who actively advocate on
behalf of a property owner. The bill also required written
authorization from a property owner before a request or
application for reduction in assessment is filed, and
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required a copy of the authorization to be submitted with
any request or application for reduction in assessment.
9)AB 1151 requires registrants to pay an initial registration
fee and a biennial renewal fee to the SOS in amounts that are
unspecified. The author's office indicates that discussions
with the SOS regarding these fee amounts are ongoing and have
yet to be settled.
10)Support arguments : The California Association of Clerks and
Election Officials argues that a central state registration
program "allows for information sharing and more ease for tax
agents to operate across county lines," and will "facilitate a
flow of information that could quickly inform all counties of
those tax agents that were in violation of being disciplined
and prevent them from simply moving into a neighboring county
to conduct business, thus benefitting taxpayers in the
process."
Opposition arguments : Opponents argue that AB 1151 will make
it more difficult for homeowners to exercise their legal right
to appeal unfair property tax assessments, that most of the
professionals who act as tax agents already practice under the
oversight of state and/or federal agencies, and that the bill
imposes a redundant and needlessly burdensome layer of
regulation.
11)This bill is double-referred to the Revenue and Taxation
Committee.
REGISTERED SUPPORT / OPPOSITION :
Support
California Alliance of Taxpayer Advocates
California Association of Clerks and Election Officials
Ryan
Silicon Valley Leadership Group
Opposition
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California Chamber of Commerce
California Society of CPAs
CalTax
Howard Jarvis Taxpayers Association
National Federation of Independent Business
Analysis Prepared by : Angela Mapp / L. GOV. / (916) 319-3958