BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Kevin de Le�n, Chair
AB 2415 (Ting) - Property Tax Agents
Amended: August 5, 2014 Policy Vote: G&F 5-0
Urgency: No Mandate: Yes
Hearing Date: August 11, 2014
Consultant: Robert Ingenito
This bill does not meet the criteria for referral to the
Suspense File.
Bill Summary: AB 2415 would (1) establish a statewide framework
to regulate property tax agents, and (2) require the Secretary
of State's Office (SOS) to publish a list of property tax agents
on its internet site, as specified.
Fiscal Impact:
SOS indicates that it would incur costs of $70,000 in
2015-16 and $220,000 in 2016-17 to implement the provisions
of the bill (Business Fees Fund). Costs to the department
thereafter would be under $100,000 annually.
The bill specifies a $100 fee and would generate
increased fee revenue of 300,000 to $500,000 biannually
(Business Fees Fund).
The Department of Justice would incur minor and
absorbable costs.
Background: The term "tax agents" refers to individuals who
represent taxpayers in property tax appeals. The conduct of tax
agents, individuals who represent taxpayers before assessors and
assessment appeals boards, is largely unregulated unless the
individual is an attorney licensed by the State Bar, or an
accountant regulated by the California Board of Accountancy.
One section of the Business and Professions Code regulates
representations made by firms that file assessment appeals on
behalf of taxpayers. At the federal level, Internal Revenue
Service (IRS) Circular 230 regulates the conduct of anyone
providing tax advice or preparing tax returns for compensation,
including attorneys, certified public accountants, and enrolled
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agents. The Secretary of the Treasury may suspend, disbar from
practice, censure or impose a monetary penalty a representative
who violates its provisions.
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 Noguez himself had
directed staff to illegally reduce certain tax assessments in
exchange for campaign contributions. In June 2012, Noguez took
an indefinite paid leave of absence from office, but was
arrested in October for allegedly taking $185,000 in bribes from
a particular tax consultant and campaign contributor, Ramin
Salari. In March 2013, Noguez posted bail after nearly five
months in jail. Noguez was charged with additional felony
counts of embezzlement and grand theft in October 2013, but has
pleaded not guilty to all counts and is currently awaiting
trial.
In response, the County of Los Angeles adopted an ordinance in
April 2013 requiring all property tax agents to be registered in
that county and to be subject to enforcement actions for
violating that ordinance. Other counties are also considering
adopting their own similar ordinances.
Proposed Law: This bill would (1) enact a registration process
for tax agents, (2) prohibit tax agents from engaging in
specified acts, and (3) provide enforcement mechanisms for tax
agents engaging in barred acts. The bill would preempt and
supersede any local ordinance regarding the registration of an
individual who communicates directly or indirectly with any
county official for the purpose of influencing official action
regarding a property tax assessment; however, counties can enact
an ordinance providing reporting requirements for campaign
contributions for tax agents.
The bill would apply to individuals seeking to influence
official action by a county official regarding establishing
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taxable value in any way, but not to individuals contacting
county officials to ascertain a property's value, a refund, or
an exemption application. The measure would not apply to (1)
elected officials acting in an official capacity, (2) persons
representing themselves or an immediate family member, (3)
persons providing an expert opinion to a county official who
accompanies the taxpayer or a tax agent, or (4) persons acting
on behalf of entity in which they own more than 10 percent, by
value.
The measure enacts a registration system for property tax
agents, directing SOS to begin accepting applications by January
1, 2016. Property tax agents must pay a $100 fee (to be
deposited into the Business Fees Fund), and file an application
for registration with SOS under penalty of perjury that includes
specified information. SOS must issue a registration number to
the agent, may cancel the registration of a property tax agent
if the check for the application fee bounces, and may require
the property tax agent to pay by cashier's check or equivalent
upon first written notice. If the individual doesn't pay, SOS
must send a second notice and cancel the registration, within
specified timelines. The bill would require SOS to develop a
list of registered property tax agents, who after exhausting
their administrative remedies, have been issued a cease and
desist order, fined for or convicted of a violation, or whose
license as an attorney, certified public accountant, public
accountant, or actuary has been revoked, and shall post the
names and business addresses of those agents on its internet
site.
Lastly, the agent must notify SOS that he or she is no longer
acting to influence official action.
After April 1, 2016, property tax agents cannot represent
taxpayers before county officials without a registration number.
Registration lasts for two years unless revoked or terminated
by the agent. SOS must issue the same number to an agent who
reregisters on a subsequent date, and send the agent a notice of
expiration within at least 30 days, but no more than 90 days,
from the end of the two-year period.
AB 2415 prohibits tax agents from the following activity:
Using, or participating in the use of, any public
communication or private solicitation containing false,
misleading, fraudulent, or deceptive representations.
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Intimating that the property tax agent is able to
improperly obtain special consideration or action from any
county official.
Acting, attempting to act as a property tax agent for,
or representing a taxpayer before a county official without
the taxpayer's authorization.
Using a government seal, emblem, insignia, trade or
brand name, or other content.
Making untrue or misleading statements in connection
with offering or performing assessment reduction services.
Knowingly aiding or abetting another person to act a tax
agent when they aren't registered as one.
Directly or indirectly attempting to influence, or
offering or agreeing to attempt to influence, the official
action of any county official by use of threats, false
accusations, duress, or coercion, by offer of any special
inducement or promise of any advantage or by bestowing any
gift, campaign contribution, favor, or thing of value.
Doing anything with the purpose of placing any county
official under personal obligation to the property tax
agent or another.
Representing, directly or indirectly, that the Property
Tax Agent can control the official action of any county
official.
Making a gift or gifts of any monetary value to a county
official, or act as an intermediary to make or arrange for
a gift.
Acting as a tax agent in a county where he or she is a
county supervisor or member of the assessment appeals
board.
Make a campaign contribution to a member of the Board of
Equalization.
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The measure provides three different forms of sanctions for tax
agents or persons acting as tax agents, based on the act:
First, SOS shall issue a cease and desist order to a
person acting as a tax agent who has been convicted of any
felony under state or federal laws; any criminal offense
involving dishonesty, breach of trust, or moral turpitude;
or had his or her professional license as an attorney,
certified public accountant, public accountant, or actuary
revoked. The Secretary shall first notify the person with
written notice and an opportunity to demonstrate that the
grounds for the cease and desist order do not exist. The
Secretary shall also issue a cease and desist order and
disqualify from registration an individual who
intentionally provides false information on the
application.
Second, SOS shall issue a cease and desist order to a
property tax agent that commits any of the barred acts
listed above, and provide a copy to the Attorney General.
Unless the agent is also subject to a civil penalty, the
Secretary shall provide the agent with written notice and
an opportunity to demonstrate that grounds for
deregistration don't exist,
Third, the Secretary must also issue a cease and desist
to an individual who is employed, received compensation, or
is under contract to act as a tax agent but doesn't
register, and must provide a copy of the notice to the
Attorney General,
Any violation of the bill's requirements is subject to a
$1,500 civil penalty for each violation. The Attorney
General, a district attorney, or a city attorney may bring
an action to assess the penalty. The Court shall impose a
penalty for each violation, and may consider specified
information.
Any person who isn't registered but acts as a tax agent
is guilty of a misdemeanor.
Whichever entity prosecutes or brings an action must notify the
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Secretary of State of any misdemeanor conviction, or civil
action.
Related Legislation:
AB 1151 (Ting, 2013), similar to this bill, required
property tax agents to register with the SOS. Among other
provisions, the bill did not include the gift prohibition,
the duties and prohibitions statement, or the local
ordinance preemptive provision. In addition, the Attorney
General was the enforcement officer. The bill was held in
the Assembly Appropriations Committee. This staff analysis
is provided to address various administrative, cost,
revenue and policy issues; it is not to be construed to
reflect or suggest the BOE's formal position.
AB 404 (Gatto, 2012) required those counties that
regulate lobbying before its Board of Supervisors to
require annual registration and quarterly reporting by any
individual representing a taxpayer for compensation before
county assessment or equalization officials. The bill also
prohibited registrants from making campaign contributions
to elected county assessors or candidates for the office.
The bill did not pass from the Senate Floor.
AB 2183 (Smyth, 2012) 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. This bill
was held in the Senate Appropriations Committee.
Staff Comments: SOS has estimated that, stateside, there could
be 5,000 property tax agents who would be subject to register
under the provisions of the bill. This figure is based on the
number of property tax agents currently registered in Los
Angeles County; that figure is then extrapolated to determine a
statewide estimate. Alternatively, as a lower bound, 3,000
agents could register with SOS. At the $100 fee level, biannual
revenues would be between $300,000 and $500,000, which would
offset SOS's administrative costs resulting from the bill.
Current law (Government Code section 12176) requires fees and
interest in the Business Fee Fund excess of $1 million to be
transferred to the General Fund annually. However, the bill
would give SOS the authority to adjust the fee, and the
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department has indicated it would attempt to set the fee at
whatever rate would be necessary to administer this program;
consequently, a sweep of the fund would not be likely.