BILL ANALYSIS
AB 276
Page 1
Date of Hearing: April 21, 2009
ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS
Mary Hayashi, Chair
AB 276 (Hayashi) - As Amended: April 13, 2009
SUBJECT : Professional fiduciaries: licensing.
SUMMARY : Exempts certified public accountants (CPAs) and
enrolled agents (EAs) from licensure under the Professional
Fiduciaries Act (Act). Specifically, this bill :
EXISTING LAW :
1)Requires a professional fiduciary (PF) to be licensed by the
Professional Fiduciary Bureau (Bureau).
2)Exempts CPAs and EAs from licensure under the Act if they are
acting within their scope of practice.
3)Prohibits an unlicensed person from acting or holding himself
or herself out as a PF.
FISCAL EFFECT : Unknown
COMMENTS :
Purpose of the bill . According to the author's office, "SB 1550
(Figueroa), Chapter 491, Statutes of 2006, established licensing
or registration of professional fiduciaries and was intended to
regulate previously unregulated individuals. EAs and CPAs were
exempted from these registration and licensing requirements.
Since EAs and CPAs already undergo stringent licensing
requirements, requiring dual licensing is unnecessary,
expensive, and complicated, and could burden consumers with
additional costs. Costly licensing and duplicative requirements
deter EAs and CPAs from applying for a PF license and obtaining
dual licensure. As a result, EAs and CPAs will simply decline
the work and resign from the current fiduciary functions they
perform in many instances, even when dealing with long-term
elderly clients. This places clients with the difficult task
finding someone else to provide the work they need. AB 276 will
allow EAs and CPAs to continue providing services to their
clients who request them without undue hardship or additional
licensing costs."
AB 276
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Background . Created in 2006, the Bureau licenses and regulates
non-family member private fiduciaries, including conservators,
guardians, trustees and agents under durable powers of attorney
as defined by the Act. PFs manage matters involving consumers'
daily care, housing and medical needs, and also offer financial
management services ranging from basic bill paying to estate and
investment management. PFs commonly manage services for
vulnerable seniors, disabled persons, and children. There are
approximately 320 licensed PFs, 5,000 licensed EAs, and 76,000
licensed CPAs in California.
To become a licensed PF, applicants are required to have a
baccalaureate degree of arts (B.A.) or sciences or an associate
of arts or sciences degree, at least three years of experience,
and to annually complete CE, which includes two hours of ethics.
In addition, there is a four hundred dollars ($400) application
fee to take the licensing exam and an additional six hundred
dollars ($600) fee upon passage. The PF renewal license fee is
seven hundred dollars ($700).
EAs are regulated by the Internal Revenue Service (I.R.S.) and
the U.S. Department of Treasury (DOT). There are two ways to
become a licensed EA: either by practicing five consecutive
years before the I.R.S. or by passing a three-part examination.
The EA exam tests an applicant's knowledge on wills, trusts and
estates, audits, conflict of interests, financial advice, powers
of attorney, and insurance. EA responsibilities include
familiarity with a taxpayer's finances, assets, and properties.
In addition, EAs are required to complete CE requirements,
including two hours of ethics annually, and undergo a federal
background check. The requirements to become a licensed EA are
similar to requirements to become a licensed PF. Like tax
attorneys and CPAs, EAs are governed by Treasury Circular 230 in
their practice before the I.R.S.
CPAs are licensed by the California Board of Accountancy (CBA).
To become a CPA, an individual must possess a B.A., pass an
exam, meet educational requirements, complete relevant
experience, and pass an ethics course. Like EAs, CPAs also have
licensing requirements similar to those of a PF.
When considering SB 1550, three professions were recognized as a
profession that may serve as fiduciaries to their clients and
AB 276
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already have strict licensing requirements and codes of ethics.
Consequently, full PF license exemptions were extended to a
person licensed as an attorney under the State Bar Act while EAs
and CPAs were provided exemptions for PF licensing requirements
when acting within their scope of practice. Current law exempts
a bank or other entity authorized to conduct the business of a
trust company as well as public conservators, public guardians
and similar public agencies, from the licensing regulations of
PFs.
Support . According to the sponsor, the California Society of
Enrolled Agents, "The original intent of the legislation
requiring licensing or registration of professional fiduciaries
was to regulate previously unregulated individuals. EAs and
CPAs were exempted from the registration and licensing
requirements because they are already regulated? EAs and CPAs
have always provided this service to selected clients. EAs and
CPAs are already regulated by the DOT and the CBA. A double
licensing requirement will be expensive, complicated and
unnecessary to protect consumers."
According the Society of Certified Public Accountants, "CPAs
historically have provided ancillary professional fiduciary
services to clients. As individual clients aged they turned to
their long term trusted financial advisors to oversee financial
matters on their behalf and the profession has always taken this
trusted role very seriously?CPAs are extensively regulated by
the CBA and national professional standards. To require
duplicative licensing for CPAs providing this service would not
improve consumer protection, but would increase costs to
consumers and could discourage these trusted, trained and
regulated professionals from providing this increasingly
necessary service."
Oppose . According to the Professional Fiduciary Association of
California, "EAs have an extremely narrow scope of practice.
They are not licensed, nor is there any oversight of this
profession, in California. The requirements for their federal
licensure is abbreviated at best: the taking of an examination
which only covers the tax code, or working for the I.R.S. for
five years and applying tax code and regulations. By no means
is this sufficient training to prepare an individual to take on
the responsibilities of a private PF. EAs are 'licensed to
practice by the federal government and authorized as such to
appear in the place of a taxpayer before the I.R.S.'"
AB 276
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Prior Legislation .
SB 1047 (Committee on Business, Professions and Economic
Development), Chapter 354, Statutes of 2007, extended the
licensing deadline from July 1, 2008 to January 1, 2009.
AB 1363 (Jones), Chapter 493, Statutes of 2006, established
additional court oversight requirements of conservatorships.
SB 1116 (Scott), Chapter 490, Statutes of 2006, established a
presumption regarding residence of conservatee and increased
sale requirements of a conservatee's residence.
SB 1550 (Figueroa), Chapter 491, Statutes of 2006, established
the Board within the DCA for the purpose of licensing and
regulating professional fiduciaries.
SB 1716 (Bowen), Chapter 492, Statutes of 2006, allowed ex parte
communication in cases involving fiduciaries and expands court
review of conservators.
REGISTERED SUPPORT / OPPOSITION :
Support
California Society of Certified Enrolled Agents (sponsor)
California Society of Certified Public Accountants (sponsor)
Opposition
Professional Fiduciary Association of California (PFAC)
Analysis Prepared by : Joanna Gin / B. & P. / (916) 319-3301