BILL ANALYSIS
AB 276
Page 1
Date of Hearing: May 6, 2009
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Kevin De Leon, Chair
AB 276 (Hayashi) - As Amended: April 13, 2009
Policy Committee: Business and
Professions Vote: 11 - 0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill exempts certified public accountants (CPAs) and
enrolled agents (EAs) from licensure under the Professional
Fiduciaries (PF) Act.
FISCAL EFFECT
Loss of licensing revenue in the range of $287,500 in the first
year and $157,500 on-going thereafter if a small percentage of
the existing EAs who operate as PFs are exempt from the PF
licensing requirements. Specifically:
1)Assuming 25 existing PF licensees meet the criteria of being
an exempted EA and therefore shift to the less costly
licensing fees assessed for EAs, the Professional Fiduciaries
Bureau (PFB) would lose $17,500 in licensing revenue each
year.
2)If four percent (or 200), of the existing 5,000 licensed EAs
operate as PFs and are now exempt from licensure requirements,
the PFB would not collect approximately $270,000 in licensing
revenue the first year and would forgo $140,000 in licensing
renewal fees thereafter.
COMMENTS
1)Rationale . According to the author's office, SB 1550
(Figueroa; Chapter 491, Statutes of 2006) established
licensing or registration of professional fiduciaries (PFs)
and was intended to regulate previously unregulated
individuals. EAs and CPAs were intended to be exempt from
AB 276
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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 could deter EAs
and CPAs from applying for a personal fiduciary 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 incurring
additional licensing costs.
2)Personal Fiduciary Licenses . Created in 2006, the Professional
Fiduciary Bureau licenses and regulates non-family member
private fiduciaries, including conservators, guardians,
trustees and agents under durable powers of attorney. 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 340 licensed PFs 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 continuing education
requirements, 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).
3)Enrolled Agents Licenses . 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,
AB 276
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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.
There are currently approximately 5,000 EAs licensed in
California.
4)Certified Public Accountants . 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. There are currently 76,000 CPAs licensed in
California.
5)Concern . Exempting EAs from the requirements of the PF laws
could create an incentive for individuals wishing to enter the
PF profession to circumvent the licensing requirements by
becoming licensed as an EA instead. The licensing process for
becoming an enrolled agent is significantly less costly than
becoming a professional fiduciary. Primarily, for EAs there
is no application fee, an initial licensure fee of $125 and a
$297 examination fee. Alternatively, for PF licensure there
is a $400 application fee, a $600 initial licensure fee, and a
$250 examination fee. This represents a difference of $828
between the EA and PF initial licensure cost. In addition, EAs
operating as PFs would be able to avoid regulation by the
state and federal government. The author and the committee may
wish to consider limiting this exemption to CPAs.
6)Related Legislation . SB 1550 (Figueroa; Chapter 491, Statutes
of 2006) established the Professional Fiduciary Board within
the Department of Consumer Affairs for the purpose of
licensing and regulating professional fiduciaries.
Analysis Prepared by : Julie Salley-Gray / APPR. / (916)
319-2081