BILL ANALYSIS �
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|SENATE RULES COMMITTEE | AB 2415|
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THIRD READING
Bill No: AB 2415
Author: Ting (D), et al.
Amended: 8/21/14 in Senate
Vote: 21
SENATE GOVERNANCE & FINANCE COMMITTEE : 5-0, 6/18/14
AYES: Wolk, Beall, DeSaulnier, Hernandez, Liu
NO VOTE RECORDED: Knight, Walters
SENATE APPROPRIATIONS COMMITTEE : 5-2, 8/11/14
AYES: De Le�n, Hill, Lara, Padilla, Steinberg
NOES: Walters, Gaines
ASSEMBLY FLOOR : 48-26, 5/29/14 - See last page for vote
SUBJECT : Property tax agents
SOURCE : Author
DIGEST : This bill enacts a registration process for property
tax agents, prohibits property tax agents from engaging in
specified activities, and provides enforcement mechanisms for
property tax agents engaging in barred acts. This bill preempts
and supersedes 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, but counties can enact an
ordinance providing reporting requirements for campaign
contributions for property tax agents.
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Senate Floor Amendments of 8/21/14 (1) require as part of the
application for registration as a Property Tax Agent, that the
statement affirming that the person applying has not been
convicted of a felony or a specified act involving moral
turpitude, or had his/her professional license revoked, also
include misdemeanors under state or federal laws applicable to
acts or omissions occurring during his/her representation of any
client, (2) that the affirmation in the application only apply
to acts on the list within the last ten years, (3) that the
Secretary of State (SOS) may issue a cease and desist order upon
discovering that the applicant committed any of the list of
barred acts only for those barred acts that occurred in the last
ten years, (4) correct a cross reference and make a conforming
change.
ANALYSIS : Section One of Article XIII of the California
Constitution provides that all property is taxable unless
explicitly exempted by the Constitution or federal law. The
Constitution limits the maximum amount of any ad valorem tax on
real property at 1% of full cash value, usually the purchase
price, plus any locally-authorized bonded indebtedness.
Assessors reappraise property whenever it is purchased, newly
constructed, or when ownership changes. When a taxpayer wants
to appeal an assessor's valuation of a property, Section 16 of
Article XIII the California Constitution provides that each
county board of supervisors, or an assessment appeals board of
its own creation to consider the appeal. Taxpayers and
assessors may appeal decisions of these boards to the Superior
Court.
The term "tax agents" refers to individuals who represent
taxpayers in property tax appeals. The conduct of property 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
agents. The Secretary of the Treasury may suspend, disbar from
practice, censure or impose a monetary penalty a representative
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who violates its provisions.
This bill enacts a registration process for property tax agents,
prohibits property tax agents from engaging in specific acts,
and provides enforcement mechanisms for property tax agents
engaging in barred acts. This bill preempts and supersedes 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, but counties can enact an ordinance providing
reporting requirements for campaign contributions for property
tax agents.
This bill applies to individuals seeking to influence official
action by a county official regarding establishing taxable value
in any way, but not to individuals contacting county officials
to ascertain a property's value, a refund, or an exemption
application. This bill also does 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 property tax agent.
4.Persons acting on behalf of entity in which they own more than
10%, by value.
This bill enacts a registration system for property tax agents,
directing the SOS to begin accepting applications by January 1,
2016:
1.First, property tax agents must pay a $100 fee, the proceeds
of which must be deposited in the Business Fees Fund, and file
an application for registration with the SOS under penalty of
perjury that includes:
A. The property tax agent's full name, business address,
business telephone number, business email address, date of
birth, and any applicable previous property tax agent
number issued by the SOS. If any of this information
changes, the property tax agent must update registration
information to be accurate within 10 days.
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B. The name of the property tax agent's employing firm, if
applicable.
C. A statement affirming that the person has not, within
the past 10 years, been convicted of any felony or
misdemeanor under state or federal laws occurring during
his/her representation of any client; any criminal offense
involving dishonesty, breach of trust, or moral turpitude;
or had his/her professional license as an attorney,
certified public accountant, public accountant, or actuary
revoked.
D. A statement that the property tax agent has read and
understands the duties and prohibitions created by this
bill.
1.Second, the SOS must issue a registration number to the
property tax agent.
2.The SOS 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 does not pay,
the SOS must send a second notice and cancel the registration,
within specified timelines.
3.The SOS must develop a list of registered property tax agents,
with their business name and address who have been fined under
this bill, issued a cease and desist order, or had their
license revoked, and publish both on the its Internet Web
site.
4.Lastly, the property tax agent must notify the SOS that he/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 by the courts
or the SOS or terminated by the property tax agent. The SOS
must issue the same number to a property tax agent who
reregisters on a subsequent date, and send the property tax
agent a notice of expiration within at least 30 days, but no
more than 90 days, from the end of the two-year period.
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This bill prohibits property tax agents from:
Using, or participating in the use of, any public
communication or private solicitation containing false,
misleading, fraudulent, or deceptive representations.
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 property
tax agent when they are not currently 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 property tax agent in a county where he/she is a
county supervisor or member of the assessment appeals board.
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Making a campaign contribution to a county assessor, candidate
for office of county assessor or member of the State Board of
Equalization.
This bill provides three different forms of sanctions for
property tax agents or individuals acting as property tax
agents, based on the act:
1.The SOS shall issue a cease and desist order to a person
acting as a property 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/her professional license as an attorney, certified
public accountant, public accountant, or actuary revoked. The
SOS shall first notify the property tax agent with written
notice and an opportunity to demonstrate that the grounds for
the cease and desist order do not exist. The SOS shall also
issue a cease and desist order and disqualify from
registration an individual who intentionally provides false
information on the application.
2.The 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 property
tax agent is also subject to a civil penalty, the SOS shall
provide the property tax agent with written notice and an
opportunity to demonstrate that grounds for deregistration do
not exist.
3.The SOS must also issue a cease and desist to an individual
who is employed, received compensation, or is under contract
to act as a property tax agent but does not register, and must
provide a copy of the notice to the Attorney General.
4.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 determine if a property
tax agent in violation shall remain eligible to be a property
tax agent or if eligibility shall be suspended or permanently
terminated. In assessing the penalty, the Court may consider:
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A. The nature and seriousness of the misconduct.
B. The number of violations.
C. The persistence of the misconduct.
D. The length of time over which the misconduct occurred.
E. The willfulness of the defendant's misconduct.
F. The defendant's assets, liabilities, and net worth.
1.Any person who is not registered but acts as a property tax
agent is guilty of a misdemeanor.
Whichever entity prosecutes or brings an action must notify the
SOS of any misdemeanor conviction, or civil action.
This bill divides revenues from penalties according to who
brought the action:
1.One-half to the treasurer of the county in which the judgment
was entered for distribution into the county's general fund,
and one half to the state's General Fund if initiated by the
Attorney General.
2.The entire amount to the treasurer of the county in which the
judgment was entered for distribution into the county's
general fund, if brought by the district attorney.
3.One-half to the treasurer of the county in which the judgment
was entered for distribution into the county's general fund,
and one half to the city's general fund if initiated by the
city attorney.
This bill defines several terms, and provides that local
agencies can seek mandate reimbursement by applying to the
Commission on State Mandates.
Background
On January 4, 2011, an appraiser at the Los Angeles County
Assessor's Office spotted discrepancies in property assessments
of affluent homes. A month later, the Los Angeles County
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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. 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 Los
Angeles 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 plead not guilty to all counts and is
currently awaiting trial.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
According to the Senate Appropriations Committee:
The SOS indicates that it will incur costs of $70,000 in
2015-16 and $220,000 in 2016-17 to implement the provisions of
this bill (Business Fees Fund). Costs to SOS thereafter will
be under $100,000 annually.
This bill specifies a $100 fee and will generate increased fee
revenue of 300,000 to $500,000 biannually (Business Fees
Fund).
The Department of Justice will incur minor and absorbable
costs.
SUPPORT : (Verified 8/22/14)
Assessment Consulting Services
California Alliance of Taxpayer Advocates
California Assessors Association
California Association of Clerks and Election Officials
Counties of Los Angeles and Santa Clara
Easley, McCaleb and Associates, Inc.
Ernst & Young, LLP
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Fresno County Assessor, Paul Dictos
Gangloff and Gangloff, Attorneys at Law
Independent Tax Representatives, LLC
Mark Poer and Company
Moss Adams, LLP
Paradigm Tax Group
Paramount Property Tax Appeal
Property Tax Assistance Company, Inc.
Property Tax Resources
Property Tax Solutions
Rural County Representative of California
RYAN, Inc.
Santa Clara County Assessor, Lawrence E. Stone
Santa Cruz County Treasurer-Tax Collector, Fred Keeley
Versatax Consulting
OPPOSITION : (Verified 8/22/14)
California Board of Accountancy
Howard Jarvis Taxpayers Association
ARGUMENTS IN SUPPORT : According to the author, "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. Although property taxation is administered and
collected on a county basis, property tax and assessment
policies are set at the state level. AB 2415 establishes a
statewide tax agent system that is essential for providing a
transparent and reliable system throughout California. This
bill also alleviates the need for a county-by-county system that
would pose a costly regulatory burden on county government. It
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also does not create unreasonable burdens on property tax
consultants or their property taxpayer clients.
ARGUMENTS IN OPPOSITION : The California Board of Accountancy
(CBA) opposes AB 2415, arguing that "Property Tax Agents come
from a variety of disciplines, including attorneys, certified
public accountants (CPA), realtors, mortgage brokers and former
employees of the county assessor's office.
"The CBA's mission is consumer protection which it accomplishes
through its licensing and enforcement functions. This bill
would impose a second state registration requirement on CPAs
performing property tax agent work regardless of the fact that
they are already licensed and regulated by the CBA for any work
they perform while using the CPA designation."
ASSEMBLY FLOOR : 48-26, 5/29/14
AYES: Ammiano, Bloom, Bocanegra, Bonilla, Bonta, Bradford,
Brown, Buchanan, Ian Calderon, Campos, Chau, Chesbro, Cooley,
Daly, Dickinson, Eggman, Fong, Frazier, Garcia, Gomez,
Gonzalez, Gordon, Gray, Hall, Roger Hern�ndez, Holden,
Jones-Sawyer, Levine, Lowenthal, Medina, Mullin, Muratsuchi,
Nazarian, Pan, Perea, John A. P�rez, Quirk, Rendon,
Ridley-Thomas, Rodriguez, Skinner, Stone, Ting, Weber,
Wieckowski, Williams, Yamada, Atkins
NOES: Achadjian, Allen, Bigelow, Ch�vez, Conway, Dahle,
Donnelly, Fox, Beth Gaines, Gatto, Gorell, Grove, Hagman,
Jones, Linder, Logue, Maienschein, Mansoor, Nestande, Olsen,
Patterson, Quirk-Silva, Salas, Wagner, Waldron, Wilk
NO VOTE RECORDED: Alejo, Dababneh, Harkey, Melendez, V. Manuel
P�rez, Vacancy
AB:e 8/22/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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