BILL ANALYSIS Ó
AB 1151
Page 1
Date of Hearing: April 29, 2013
ASSEMBLY COMMITTEE ON REVENUE AND TAXATION
Raul Bocanegra, Chair
AB 1151 (Ting) - As Amended: April 16, 2013
Majority vote. Fiscal committee.
SUBJECT : Tax agent registration
SUMMARY : Requires tax agents, as defined, to register with the
Secretary of State (SOS) 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 SOS an application for a registration containing
the tax agent's full name, business address, business
telephone number, business email address, and the name of the
tax agent's employing tax agent firm, if applicable.
2)Requires a tax agent to pay to 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 the tax agent has registered and paid the fee
as specified above.
4)Prohibits, beginning on July 1, 2014, a tax agent from
representing a taxpayer 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 the date of issuance unless and
until that person terminates the registration.
6)Provides that an expired registration may be renewed
biennially if the registrant pays an annual renewal
registration fee of an unspecified amount to the SOS.
7)Prohibits a person from registering or providing services as a
tax agent if that person:
a) Has been convicted of a felony under state or federal
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tax laws;
b) Has been convicted of any other criminal offense
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.
8)Requires that fees collected under this bill be deposited in
the SOS's Business Fees Fund established in Government Code
Section 12176.
9)Prohibits a county supervisor or member of a county assessment
appeals board from acting as a tax agent in the county in
which they currently serve.
10)Requires a tax agent to file an updated registration with the
SOS within 30 days of any change of the registration
information submitted pursuant to this bill.
11)Requires a tax agent to report to the SOS when all activities
related to influencing official action have ceased.
12)Provides that it shall be a violation of this bill for a
person to act as a tax agent if that person is not registered
as a tax agent pursuant to this bill or if that person was
previously registered as a tax agent pursuant to this bill but
that person is no longer registered as a tax agent.
13)Requires the SOS to semiannually develop a list of registered
tax agents and make that list available to the public on its
Internet website.
14)Provides if, after investigation, it is determined by the SOS
that a 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, whom the tax agent
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represents, a notice of the tax agent's noncompliance.
15)Allows a person to file a complaint with the Attorney General
(AG) alleging that a tax agent has violated a provision of
this bill.
16)Provides the AG with discretion to pursue civil fines for
noncompliance or violations of this bill.
17)Prevents an administrative fine from being issued if the
first violation of this bill is cured within 30 days of the
date in which [sic] 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)Defines "county official" as a 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.
20)Defines "influencing official action" as 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.
21)Defines "official action" as corrections to values and any
other changes in taxable value set; applying all legal
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.
22)Defines "public official" and "public employee" as any
government official or employee of a state or local government
agency.
23)Defines "tax agent" as an individual who is employed, under
contract, or otherwise receives compensation to communicate
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directly, or through agents, employees, or subcontractors,
with any county official for the purpose of influencing
official action. A tax agent shall not include:
a) An elected or appointed public official or public
employee when acting in his/her official capacity;
b) A person representing himself/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,
c) An in-house tax professional or in-house employee
representing his/her employer by influencing official
action.
24)Becomes 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 equalization (BOE) the valuation of taxable
property within the county for the purpose of taxation.
(California Constitution, Article XIII, Section 16).
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 BOE or an 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, 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
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undergo a background check by the Federal Bureau of
Investigation and the California Department of Justice.
FISCAL EFFECT : Unknown
COMMENTS :
1)The author has provided the following statement in support of
this bill:
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.
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 [?.]
2)Proponents of this measure state:
Current law provides that a taxpayer is authorized to file
an application for reduction in an assessment with the
county's assessment appeals board. Existing law also
states that an authorized agent is permitted to represent a
taxpayer in an assessment appeal proceeding. Existing law
does not require the authorized agent to register with any
jurisdiction, and does not regulate the profession in any
way.
This measure would, beginning [July 1, 2014], cause "tax
agents" to register annually with the Secretary of State
and pay a fee for the registration that is sufficient to
cover the cost of the program. Registration with the State
would be a prerequisite to representing a taxpayer before
an assessment appeals board or any county official. AB
1151 would also task the Attorney General with pursuing
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civil fines for failure to comply with the provisions of
the law.
County Clerks are pleased that AB 1151 houses the
registration with the State, where it will be a more
efficient, convenient and uniform single portal to register
tax agents, collect registration fees, and distribute and
organize registration numbers. The synergy created by a
single system in the State allows for information sharing
and more ease for tax agents to operate across county lines
[in compliance] with the bill. The State oversight
approach will facilitate a flow of information that could
quickly inform all counties of those tax agents that were
in violation or being disciplined and prevent them from
simply moving into a neighboring county to conduct
business, thus benefitting [the] taxpayers in the process.
3)Opponents of this measure state:
Our tax system has become so incredibly complicated that
ordinary taxpayers have great difficulty finding anyone to
help them comply with their tax obligations. Even
correcting a simple error that was made by a government
agency can be an arduous and complex task, often requiring
expert assistance from numerous tax professionals. AB 1151
would artificially reduce the number of people who could
assist needy taxpayers, thus increasing the price of
assistance and leaving some taxpayers with nowhere to turn
for help.
What is worse, the registration fees for so-called "tax
agents" seeking to communicate with elected officials are,
in effect, new taxes on citizens who are seeking to
petition their government for redress of grievances. No
American should be forced to pay a tax to hire an expert to
help correct an error or injustice caused by the government
itself.
Finally, the California Taxpayer Protection Committee is
opposed to duplicative and redundant registration
requirements for individuals who are already licensed and
regulated, such as attorneys, accountants, appraisers, tax
preparers, and lobbyists. No legitimate purpose is served
by forcing these professionals to fill out redundant
paperwork, pay additional fees, and navigate yet another
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bureaucratic maze. These licensed professionals should be
exempted from the definition of "tax agent."
4)Committee Staff Comments:
a) Background : This bill has been introduced, in large
part, because of the corruption scandal in the Los Angeles
(LA) County Assessor's Office. On January 4, 2011, an
appraiser at the LA County Assessor's Office spotted
discrepancies in property assessments of affluent homes. A
month later, the LA County District Attorney's Office
announced it had launched an inquiry into allegations of
influence peddling in the office of LA County Assessor John
Noguez. In May 2012, Scott Schenter, a county appraiser,
was arrested on 60 felony counts for lowering the property
tax of homes in affluent areas of LA in exchange for
contributions to Noguez's campaign. Allegations quickly
focused the investigation 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 took an indefinite paid leave of
absence from office, while continuing to receive an annual
salary of $192,000. He was later arrested in October for
allegedly taking $185,000 in bribes from a particular tax
consultant and campaign contributor, Ramin Salari. In
March of this year, Noguez posted bail and was released
after nearly five months in jail.
b) Would this bill help? : AB 1151 establishes a
registration program for tax agents at the SOS and prevents
a tax agent from representing a client before a county
official without first being registered. It also prohibits
anyone from registering as a tax agent with the SOS if the
person has been convicted of a felony or any other offense
involving dishonesty, breach of trust, or moral turpitude.
However, as noted by opposition, there is no requirement
that the SOS conduct an actual background check before
allowing a person to be registered as a tax agent. This
bill seems to address this problem by allowing any person
to file a complaint with the SOS under the provisions of
this bill. Despite the provision, complaints by
individuals, presumably clients, will only arise after a
violation has occurred. Therefore, a tax agent may be
convicted of a felony and be registered with the SOS for
years without ever being found to be in violation of a
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provision in this bill. Additionally, if a tax agent is in
good standing when registered with the SOS but is later
convicted of a felony, a tax agent may or may not decide to
inform the SOS that he/she is no longer eligible to
represent clients before a county official.
This bill is, in part, a response to the scandal with the
LA County Assessor's Office. Specifically, the scandal
dealt with campaign contributions that were made in
exchange for lowering property tax assessments. It seems
unlikely that, under the provisions of this bill, such a
scandal could have been prevented. Specifically, there is
no financial disclosure requirement in this bill. Campaign
contributions may still go unnoticed even if the provisions
of this bill were to become operative.
c) Double referral : This bill was referred to the Assembly
Committee on Local Government on April 24, 2013, and passed
out of that Committee on a vote of 6 to 2.
d) Committee suggested amendments : This bill prevents an
administrative fine from being issued if the first
violation is cured within 30 days of the date "in which"
the tax agent receives notice of the violation from the AG.
However, it may be administratively difficult for the AG
to pinpoint the exact date on which the tax agent received
notice. Therefore, the author may wish to amend this bill
in order to have the 30 day period run from the date on
which the AG sends the notice. Additionally, the author
may wish to delete the word "in" on page 5, line 35, and
replace it with "on".
e) Related legislation :
i) AB 404 (Gatto), of the 2011-12 legislative session,
would have required tax agents to register as lobbyists
in counties with lobbyist ordinances. AB 404 failed
passage on the Senate Floor.
ii) AB 2183 (Smyth), of the 2011-12 legislative session,
would have enacted similar legislation. AB 2183 was held
in the Senate Committee on Appropriations.
REGISTERED SUPPORT / OPPOSITION :
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Support
California Alliance of Taxpayer Advocates
California Association of Clerks and Election Officials
Ryan: Innovative Solutions to Taxing Problems
Opposition
California Secretary of State
California Taxpayer Protection Committee
Analysis Prepared by : Carlos Anguiano / REV. & TAX. / (916)
319-2098