BILL ANALYSIS Ó
AB 1151
Page 1
Date of Hearing: May 15, 2013
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
AB 1151 (Ting) - As Amended: May 7, 2013
Policy Committee: Local
GovernmentVote:6-2
Revenue and Taxation 6-1
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill 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)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.
3)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
represents, a notice of the tax agent's noncompliance.
4)Allows a person to file a complaint with the Attorney General
(AG) alleging that a tax agent has violated a provision of
this bill.
5)Prohibits a person from registering or providing services as a
tax agent if that person has been convicted of a felony under
state or federal tax laws and for other specifies reasons.
AB 1151
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6)Becomes operative on July 1, 2014.
FISCAL EFFECT
Start up costs to the Secretary of State of approximately
$200,000. Ongoing administrative costs of approximately
$100,000 annually. Minor and absorbable costs to the AG's
office.
COMMENTS
1)Purpose . The author states 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. The DAs office looked into complaints
from assessor's office employees who claimed they were under
pressure to lower property taxes. The author notes although
the events in Los Angeles are an infrequent and extreme
occurrence that are 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. The author
argues AB 1151 seeks to improve the property tax appeals
process and create transparency by establishing a public
registration process for tax agents.
2)Support . Proponents of this measure, including the California
Alliance of Taxpayer Advocates, state current law provides a
taxpayer is authorized to file an application for reduction in
an assessment with the county's assessment appeals board and
an authorized agent is permitted to represent a taxpayer in an
assessment appeal proceeding. They note existing law does not
require the authorized agent to register with any
jurisdiction, and does not regulate the profession in any way.
Supporters endorse housing the registration with the state,
where it will be an efficient, convenient and uniform single
portal to register tax agents, collect registration fees and
distribute and organize registration numbers. Proponents note
the synergy created by a single system in the state allows for
information sharing, and makes it easier for tax agents to
operate across county lines. They argue the state oversight
approach will facilitate a flow of information that could
quickly inform all counties of those tax agents in violation
of this bill's requirements, and prevent them from simply
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moving into a neighboring county to conduct business, thus
benefiting the taxpayers in the process.
3)Opposition . Secretary of State Debra Bowen writes in
opposition that she supports the concept but must oppose this
bill because of issues that need to be addressed. She raises
concerns in particular about enforcement. SOS is to contact
taxpayers if the tax agent does not comply with the law, but
it is unclear how SOS would know which taxpayers to contact or
how they could be contacted. SOS states contacting the tax
agent's customers directly is wholly inappropriate. The
mechanism for coordination between the Attorney General's
Office and SOS is not addressed.
4)Background . In recent years, the market value of property has
declined or stagnated in almost every market in California.
As a result, property tax appeals are on the rise, as Section
2(b) of Article XIIIA of the California Constitution allows a
temporary reduction in property tax when a property's fair
market value declines below its assessed value (Proposition 8,
1978). The Legislative Analyst's Office states that tax
appeals have risen from 44,000 in 2006-07 to 173,000 in
2010-11.
5)Comments . This bill raises significant issues:
a) There is no requirement that the SOS conduct an actual
background check before allowing a person to be registered
as a tax agent.
b) The bill creates a period, beginning July 1, 2014 when
no tax agent can legally practice in the state. This
occurs because of the bill's provisions stating no tax
agent can practice after July 1, 2014 without registration
by SOS. However, a tax agent cannot apply for registration
until July 1, 2014. For the time period SOS takes to
process the registration, a tax agent cannot practice.
c) The fee is created in statute but as yet is an
undetermined amount, presumably reflecting the difficulty
in determining the appropriate amount. That illustrates
the problems of calculating a regulatory fee by
legislation. If it is too low, the revenues generated may
be inadequate for the eventual program costs. If it is too
high, the fund accumulates a surplus that can only be
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refunded with subsequent legislation. The surplus cannot
be used for other purposes.
6)Previous legislation .
a) AB 404 (Gatto), of 2011, would have required tax agents
to register as lobbyists in counties with lobbyist
ordinances. AB 404 failed passage on the Senate Floor.
b) AB 2183 (Smyth), of the 2012, would have enacted similar
legislation. AB 2183 was held in the Senate Committee on
Appropriations.
Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081