BILL ANALYSIS �
AB 2415
Page 1
Date of Hearing: April 28, 2014
ASSEMBLY COMMITTEE ON REVENUE AND TAXATION
Raul Bocanegra, Chair
AB 2415 (Ting) - As Amended: April 3, 2014
REVISED
Majority vote. Fiscal committee.
SUBJECT : Property Tax Agents
SUMMARY : Requires property 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 Property Tax Agent, within 30 days of becoming a
Property Tax Agent, to file with the Secretary of State (SOS)
an application for a registration containing all of the
following:
a) The Property Tax Agent's full name, business address,
business telephone number, and business email address, if
applicable;
b) The name of the Property Tax Agent's employing tax Agent
firm, if applicable; and,
c) A statement that the Property Tax Agent has read and
understands the duties and prohibitions contained in this
bill's provisions.
2)Requires a Property Tax Agent to pay the SOS a registration
fee in the amount of $250.
3)Requires the SOS to issue a Property Tax Agent registration
number to the Property Tax Agent within five business days, if
a Property Tax Agent has registered and paid the fee as
specified above.
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4)Prohibits, beginning September 1, 2015, any Property 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 or the registration is revoked pursuant to this
bill's provisions. An expired registration may be renewed
biennially if the registrant pays an annual renewal
registration fee of $250 to the SOS.
6)Prohibits a person from registering, renewing a registration,
or providing services as a Property 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
involving dishonesty, breach of trust, or moral turpitude;
or,
c) Has had his or her professional license to practice as
an attorney, certified public accountant, public
accountant, or actuary revoked 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 the SOS to conduct a background check on each
Property Tax Agent applicant in accordance with rules and
regulations developed by the SOS.
8)Requires registration fees collected pursuant to this bill to
be deposited in the SOS Business Fees Fund.
9)Prohibits any county supervisor or member of a county
assessment appeals board from acting as a Property Tax Agent
in the county in which they currently serve as a county
supervisor or as a member of a county assessment appeals
board.
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10)Requires a Property 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.
11)Requires, when a Property Tax Agent ceases all activities
related to influencing official action, this fact to be
reported to the SOS.
12)Provides that it shall be a violation of this bill for any
person to act as a Property Tax Agent if that person is not
registered as a Property Tax Agent pursuant to this bill, or
if that person was previously registered as a Property Tax
Agent pursuant to this bill but is no longer registered as a
Property Tax Agent.
13)Provides that nothing in this bill shall be construed to
prohibit a county from, by ordinance, enacting Property Tax
Agent reporting requirements for campaign contributions to
elected officials in that county.
14)Requires the SOS to develop a list of registered Property Tax
Agents and make that list available to the public on its
Internet Web site (website).
15)Requires the SOS to develop a list of registered Property Tax
Agents who, after exhausting their administrative remedies,
have been fined or whose license has been revoked, and post
the names and business addresses of those Property Tax Agents
on the SOS website.
16)Prohibits a Property Tax Agent from engaging in any of the
following activities:
a) Use, or participate in the use of, any public
communication or private solicitation containing false,
misleading, fraudulent, or deceptive representations, or
intimate that the Property Tax Agent is able to improperly
obtain special consideration or action from the county of
any county official;
b) Act as or attempt to act as, or claim to be the Property
Tax Agent of a taxpayer, or represent a taxpayer before a
county or any county official, without the authorization
of that taxpayer;
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c) Violate provisions of current law governing business
advertising activities, as specified;
d) Knowingly aid and abet another person to practice as a
Property Tax Agent before the county or a county official
during a period when the other person has been deregistered
as a Property Tax Agent or otherwise is ineligible to
lawfully act as a Property Tax Agent;
e) Directly or indirectly attempt to influence, or offer or
agree to attempt to influence, the official action of any
county official by the use of threats, false accusations,
duress, or coercion, by the offer of any special inducement
or promise of an advantage or by bestowing any gift,
campaign contribution, favor, or thing of value;
f) Do anything with the purpose of placing any county
official under personal obligation to the Property Tax
Agent or another;
g) Represent, either directly or indirectly, that the
Property Tax Agent can control the official action of any
county official; or,
h) Make a gift or gifts of any monetary value to a county
official. A Property Tax Agent shall not act as an agent
or intermediary in the making of any gift or arrange for
the making of any gift from any other person.
17)Provides that, after investigation, if it is determined by
the SOS that any Property Tax Agent fails to comply with, or
is in violation of, this bill, the SOS shall send the Property
Tax Agent a written notice of the Property Tax Agent's
noncompliance or violation.
18)Allows any person to file a complaint with the SOS that any
Property Tax Agent has not complied with, or has violated,
this bill.
19)Vests the SOS with the discretion to pursue civil penalties
for noncompliance with, or violation of, this bill. The SOS
shall be designated as the enforcement officer for
determination and imposition of the civil penalties.
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20)Prohibits a civil penalty from being imposed if the first
noncompliance with, or violation
of, this bill is cured within 30 days of the date on which the
SOS sends written notice of the noncompliance or violation to
the Property Tax Agent.
21) Provides that any noncompliance with, or violation of,
this bill is punishable by a civil penalty not to exceed
$1,500.
22) Allows the civil penalty to be imposed by the SOS if a
hearing is not requested pursuant to the provisions of this
bill. If a hearing is requested, the hearing officer shall
make the determination.
23) Requires any civil penalties collected pursuant to this
bill to be transferred to the General Fund.
24) Provides that if the SOS determines, after
investigation, that any Property Tax Agent, subsequent to
his or her registration, is ineligible to renew his or her
registration or is unable to provide services as a Property
Tax Agent due to any of the specified reasons, the SOS
shall send a Property Tax Agent a written notice of intent
to revoke that Property Tax Agent's registration within 30
days of the issuance of the notice of intent to revoke.
25) Allows any person to file a complaint with the SOS that
any Property Tax Agent has violated the specified
provisions, as provided.
26) Vests the SOS with the discretion to revoke any Property
Tax Agent's registration if a Property Tax Agent is
ineligible to renew his or her registration or is unable to
provide services as a Property Tax Agent due to any of the
specified reasons. The SOS shall be designated as the
enforcement officer for determination of revocation of a
Property Tax Agent's registration.
27) Allows the registration to be revoked by the SOS if a
hearing is not requested pursuant to this bill. If a
hearing is requested, the hearing officer shall make the
determination.
28) Provides that, prior to the imposition of a civil
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penalty or the revocation of a registration pursuant to
this bill, the person affected shall have a right to a
hearing on the matter. The request for a hearing shall be
submitted in writing within 15 days of the issuance of the
notice of noncompliance or violation or the notice of
intent to revoke. The hearing shall be conducted in
accordance with current law governing administrative
adjudication hearings for state departments and agencies.
29)Allows the SOS to develop rules and regulations for the
administration of this bill, subject to the Administrative
Procedure Act.
30)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) "Gift" shall be defined as set forth in the Political
Reform Act of 1974 and the regulations adopted thereunder.
c) "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;
d) "Official action" means establishing a taxable value for
any property subject to property taxation, including
initial value, declines in value, corrections to values and
any other changes in the taxable value set; completing an
assessment roll showing the assessed values of all
property; applying all legal exemptions to assessments;
issuing refunds; and deciding all property assessment
disputes between taxpayers and a county official;
e) "Public official" and "public employee" mean any
government official or employee
of any state or local government agency;
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f) "Property 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 Property 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.
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 board of equalization, 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 (DCA), and regulates attorneys
through the State Bar of California.
5)Provides a registration program for notaries public through
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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)Author's statement . The author provided the following
statement in support of this bill:
"AB 2415 is a balanced measure that seeks to strengthen public
confidence in the property tax appeal process without creating
unreasonable burdens on property tax consultants or their
clients. It establishes a uniform statewide property tax
agent registration system and makes public the identity of tax
agents who represent taxpayers in property tax appeal cases.
"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 investigation was prompted by complaints from assessor's
office employees who claimed they were pressured to lower
property taxes for politically-connected individuals. In
October 2012, the investigations led to multiple arrests and
indictments, which included charges of bribery and corruption.
This incident cast an ethical cloud over the property tax
appeals process which AB 2415 seeks to remedy.
"Other states, such as Texas and Tennessee, have enacted similar
statewide registration for property tax agents in their
states.
"AB 2415 will establish transparency and restore public trust in
the tax appeals system. By establishing uniform statewide
registration, it alleviates the need for a county-by-county
system that would pose a costly regulatory burden on county
government. It also does not create unreasonable burdens on
property tax consultants or their property taxpayer clients."
2)Arguments in support . Supporters argue that this bill will
provide statewide uniformity in the regulation of Property Tax
Agents, improve services provided to taxpayers, and improve
the reliability and quality of tax representation for the
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state's citizens, particularly homeowners and owners of small
and medium-sized businesses.
3)Arguments in opposition . Opponents argue that AB 2415 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 Property Tax Agents already
practice under the oversight of state and/or federal agencies,
that this bill pre-empts local control to oversee the property
tax assessment process, and that this bill imposes a redundant
and needlessly burdensome layer of regulation. The opponents
also assert that this bill creates a new act for property tax
agents without specifying any minimum qualifications or
standards for entrance, practice, enforcement, or liability
obligations.
4)What Does this Bill Do ? This bill establishes a registration
program for Property Tax Agents at the SOS and requires all
Property Tax Agents to register and pay initial and renewal
fees. This bill does not require completion of any specified
education, nor does it require bonding. This bill would also
exempt from the registration requirements an individual who is
an elected or appointed public official or public employee
acting in his/her official capacity, as well as any person
representing himself or herself, an immediate family member,
or an entity in which the person owns 10% or more.
This bill's registration requirements are broad; and in the
case of the registration requirement applicable to lobbyists,
this bill will apply to attorneys, certified public
accountants, public accountants, actuaries and other licensed
professionals. Those individuals would have to register as
Property Tax Agents, even if they are otherwise licensed by
the State of California or the Federal Government.
This bill prohibits any person from registering if he/she has
been convicted of a felony or any other offense involving
dishonesty, breach of trust, or moral turpitude. A person
also cannot register if his/her license to practice as an
attorney, certified public accountant, public accountant, or
actuary has been revoked 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.
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5)Property Tax Agents . Property 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 Property 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 statements and abusive practices.
Property Tax Agents come from a variety of disciplines,
including attorneys, realtors, mortgage brokers and former
employees of a county assessor's office. Some Property 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
Property Tax Agent in order to request a reassessment.
Private individuals can represent themselves and even other
family members. However, if a Property Tax Agent is retained
for this purpose, the client is required by law to sign an
affidavit or form specifying that that Property Tax Agent is
representing that client.
6)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 Mr. Noguez himself had directed staff to
illegally reduce certain tax assessments in exchange for
campaign contributions. In June 2012, Mr. Noguez took an
indefinite paid leave of absence from office, while continuing
to receive an annual salary of $192,000. He was arrested in
October for allegedly taking $185,000 in bribes from a
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particular tax consultant and campaign contributor, Ramin
Salari. In March 2013, Mr. Noguez posted the $1.16 million
bail set for his release after nearly five months in jail.
Mr. Noguez was charged with additional felony counts of
embezzlement and grand theft in October 2013.
7)Would this Bill Help ? This bill 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. This bill is, in part, a response to
the scandal with the LA County Assessor's Office, where
allegedly campaign contributions 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. While this bill does not
prohibit counties from enacting Property Tax Agent reporting
requirements for campaign contributions to elected officials
in that county, it is unclear how many counties will actually
require such a reporting. Thus, campaign contributions may
still go unnoticed even if the provisions of this bill were to
become operative.
8)Implementation Concerns . The SOS, in opposition to this bill,
has raised a number of concerns, suggesting that the bill's
enforcement provisions would be better housed at the State
Board of Equalization, which already has a process for tax
appeals and existing expertise in tax law. The SOS also notes
that the requirement to issue a registration number in five
business days contradicts the requirement to complete a
background check on each applicant, as similar background
checks on notary public applicants take significantly longer
than five days to complete. The SOS also states that this
bill should require applicants to provide fingerprints and
other statutory changes to ensure an adequate background check
can be completed. The SOS is also concerned about conflicting
priorities for information technology projects, the timeline
for implementation of this bill, a grace period for completing
registrations, the bill's lack of an appropriation, and other
issues related to violations and implementation.
9)Related Legislation . AB 1151 (Ting) was substantially similar
to this bill. AB 1151 was held in the Assembly Appropriations
Committee.
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10)Previous Legislation .
a) AB 404 (Gatto), of the 2011-12 Legislative Session,
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. AB 404 died on the
Senate Floor.
b) AB 2183 (Smyth), of the 2011-12 Legislative Session,
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. AB 2183 died in Senate
Appropriations Committee.
c) AB 2210 (Smyth), of the 2011-12 Legislative Session,
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.
AB 2210 died in the Senate Governance and Finance
Committee.
d) SB 342 (Wolk) of 2011-12 Legislative Session, would have
prohibited a person from charging a contingency fee for
services rendered in connection with any matter before the
BOE, Franchise Tax Board, or an assessment appeals board,
or for any other tax imposed under state law. SB 342 died
in the Senate Judiciary Committee.
e) 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. AB 992 also required written
authorization from a property owner before a request or
application for reduction in assessment is filed, and
required a copy of the authorization to be submitted with
any request or application for reduction in assessment.
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11)Double-referral . This bill was double-referred to the
Assembly Committee on Local Government and passed out of that
committee on a 6-2 vote.
REGISTERED SUPPORT / OPPOSITION :
Support
Assessment Counselling Services
California Alliance of Taxpayer Advocates
California Association of Clerks and Election Officials
Easley, McCaleb & Associates, Inc.
Gangloff & Gangloff, Attorneys at Law
Independent Tax Representatives, LLC
Lawrence E. Stone, Santa Clara County Assessor
Marvin F. Poer and Company
Multifamily Utility
Paradigm Tax Group
Paramount Property Tax Appeal
Patrick J. Chambers Property Tax Consulting Services
Property Tax Assistance Co., Inc.
Property Tax Resource
Property Tax Solutions, Inc.
Rural County Representatives of California
Ryan
Santa Clara County Assessor Lawrence E. Stone
Versatax Consulting
Numerous individuals
Opposition
California Chamber of Commerce (unless amended)
California Society of CPAs
Howard Jarvis Taxpayers Association
National Federation of Independent Business (unless amended)
Secretary of State Debra Bowen (unless amended)
David L. Welch, CPA
Analysis Prepared by : Oksana Jaffe / REV. & TAX. / (916)
319-2098
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