BILL ANALYSIS �
AB 2415
Page 1
Date of Hearing: April 23, 2014
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
K.H. "Katcho" Achadjian, Chair
AB 2415 (Ting) - As Amended: April 3, 2014
SUBJECT : Property Tax Agents.
SUMMARY : Establishes a statewide structure for the regulation
of Property 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 the following:
the Property Tax Agent's full name, business address, business
telephone number, and business email address, if applicable;
the name of the Property Tax Agent's employing tax Agent firm,
if applicable; and, 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.
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:
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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 established
pursuant to current law.
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.
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 that person is no longer registered
as a Property Tax Agent.
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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;
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,
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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.
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.
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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 reasons specified in 6), above,
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 provisions of 6),
above.
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
reasons specified in 6), above. 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
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
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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;
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,
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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 equalize the valuation of taxable property
within the county for the purpose of taxation.
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
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 : This bill is keyed fiscal.
COMMENTS :
1)Purpose of this bill . 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. It does not require completion of any specified
education, nor does it require bonding.
This bill prohibits anyone from registering if they have been
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convicted of a felony or any other offense involving
dishonesty, breach of trust, or moral turpitude. A person
also cannot register if their 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.
This bill is sponsored by the author.
2)Author's statement . According to the author, "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."
3)County Assessors . County assessors are governed by the
California Constitution, the laws passed by the Legislature,
and the rules adopted by the Board of Equalization (BOE). The
county assessor must annually assess all taxable property in
the county, except for state-assessed property, to the person,
business, or legal entity owning, claiming, possessing, or
controlling the property on January 1. The duties of the
county assessor are to discover all assessable property, to
inventory and list all taxable property, and to enroll the
property on the local assessment roll. The assessor's primary
responsibility is to annually determine the proper taxable
value for each property so the owner is assured of paying the
correct amount of property tax for the support of local
government.
The assessor must reassess real property to current market
value whenever there is a change in ownership or completed new
construction. In addition, the assessor may change the
assessed value of a property to recognize a decrease in value,
to correct an error, or to enroll an escaped (previously
overlooked) assessment. Property owners can appeal the value
of the property by filing an application for a changed
assessment with the clerk of the board of supervisors (sitting
as a local board of equalization) or the assessment appeals
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board. If the county board denies the appeal, the taxpayer
may file an action in superior court, but only under certain
circumstances.
4)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.
5)Noguez investigation . In February 2012, the Los Angeles
County District Attorney's Office announced it had launched an
inquiry into allegations of influence peddling in the office
of Los Angeles County Assessor John Noguez, who was elected in
2010. While a lower-level employee was charged with fraud in
May of 2012, the investigation ultimately focused 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 was formally
charged with 60 felonies and took an indefinite, paid leave of
absence from the office. He was arrested in October 2012 for
allegedly taking $185,000 in bribes from a particular tax
consultant and campaign contributor, Ramin Salari, who has
also been charged with corruption. Noguez posted the $1.16
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million bail set for his release after nearly five months in
jail. Noguez was charged with additional felony counts of
embezzlement and grand theft in October 2013.
On November 6, 2012, Los Angeles County voters rejected
(78-22%) an advisory measure asking if the county charter
should be changed to make the County Assessor an appointed
position instead of elected.
6)Joint Oversight Hearing on Property Tax Agents . On June 20,
2012, this Committee held a joint oversight hearing with the
Assembly Revenue and Taxation Committee on Property Tax Agents
and their interactions with local governments. The members
heard testimony and recommendations from the Legislative
Analyst's Office, the Assessors of three counties, and various
representatives of the Property Tax Agent community.
7)Policy concerns . The Secretary of State's office, (SOS) in
opposition, has raised a number of concerns with this bill,
suggesting that the bill's enforcement provisions would be
better housed at the 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 the bill, a grace
period for completing registrations, the bill's lack of an
appropriation, and other issues related to violations and
implementation.
8)Previous legislation . AB 1151 (Ting) of 2013 was
substantially similar to this bill. AB 1151 was held in the
Assembly Appropriations Committee.
AB 404 (Gatto) of 2012 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
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prohibited registrants from making campaign contributions to
an elected county assessor or candidate. AB 404 died on the
Senate Floor.
AB 2183 (Smyth) of 2012 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.
AB 2210 (Smyth) of 2012 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.
SB 342 (Wolk) of 2011 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.
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. The bill
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.
9)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
state's citizens, particularly homeowners and owners of small
and medium-sized businesses.
10)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
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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.
11)Double-referral . This bill is double-referred to the Revenue
and Taxation Committee.
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
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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)
Analysis Prepared by : Angela Mapp / L. GOV. / (916) 319-3958