The Legislature Adjourns!

Posted on October 13, 2017 · Posted in Breaking News, Industry News, Latest Updates, Legislative Updates

10/13/17 — The Legislature met the September 15 deadline to pass bills and wrap up business for 2017. As always, there was a flurry of activity in the last days of Session.

Budget

Proposition 25, passed by voters in 2010, requires the Legislature to pass the state budget by the constitutional deadline of June 16 or forfeit their pay. In addition, the measure allows the Legislature to pass a budget with a simple majority vote rather than the two-thirds vote historically required.

As a result, the Legislature now passes the main budget bill and some budget trailer bills – budget bills specific to education, health, taxes etc. – by the June 16 deadline.

The Legislature has gotten in the habit of additionally passing a handful of budget trailer bills at the end of the Legislative Session each year. Often these bills are omnibus in nature, some are technical clean up and some make policy, as well as budget changes.

Aaron Read & Associates (ARA) keeps a specific eye out for these trailer bills, looking for language that could significantly impact the EA practice or enact significant policy changes that relate to CSEA’s Legislative Platform.

New 72 Hour Rule

The Legislature has long been criticized for gutting and amending and passing bills at the end of Session without those bills receiving adequate public scrutiny. Last year, voters passed Proposition 54. Proposition 54 requires a bill to be in print 72 hours prior to the Legislature voting on the measure. Again this year, the budget trailer bills were gutted and amended at the end of Session.

Assembly Bill 131 and Senate Bill 116 were the twin Budget Committee trailer bills amended specific to tax issues. Traditionally, the Legislature amends two bills, one in each house and then chooses, depending on timing, to pass one of the bills to the Governor. This year, AB 131 is the bill that passed.

AB 131 is omnibus in nature and includes language enabling the new Office of Tax Appeals to begin regulations to get the agency up and running by January 1, 2018.

The Legislature included intent language in AB 131 to ensure taxpayers would continue to have representation of their choosing under the new Office of Tax Appeals as they did under the Board of Equalization (BOE).

(b) Because the tax appeals panels within the Office of Tax Appeals are an administrative body and are not part of the judicial branch, it is the intent of the Legislature for taxpayers to choose by whom they are represented, consistent with Section 15676 of the Government Code. Further, the Legislature specifically intends, consistent with Section 15676.5 of the Government Code, that taxpayers continue to be able to choose to be represented by certified public accountants and others at every stage of the hearings and proceedings before a tax appeals panel, as was previously the case in matters before the State Board of Equalization prior to the transfer of duties described in Section 15672 of the Government Code.

AB 131 amends Section 15676 of Government Code with the following language:

A person may be represented on an appeal by any authorized person or persons, at least 18 years of age, of the person’s choosing, including, but not limited to, an attorney, appraiser, certified public accountant, public accountant, bookkeeper, employee, business associate, or any other person.

ARA expressed CSEA’s interest in amendments specifically naming EAs in that section of the statute as well.

Budget Committees made it clear they would not entertain new amendments to the bill for two reasons.

1) New amendments could cause the bill to miss the 72 hour deadline. Any amendments to a bill must first be drafted and approved by the Legislative Counsel attorneys. The bill is then amended and must be in print for three days before the legislature can vote on it. The bill was amended on 9/11 and the deadline for the legislature to vote on bills was 9/15. No changes to the bill can be made in the 72 hour window.

2) Enrolled Agent representation rights have not changed. EA rights will remain the same under the Office of Tax Appeals as written in AB 131 as they are currently under the BOE. Since the language of the bill includes EAs, and EAs are clearly not prohibited from representing clients before the Office Tax Appeals under this language, amendments are not necessary. Even if CSEA had requested amendments to name EAs in the bill earlier, the amendments would not have been accepted. Opening the bill up to new amendments from one group could bring other groups out of the woodwork requesting more amendments, endangering the passage of the bill by the deadline.

While the bill was not amended, we’re pleased EAs were protected again this year in the Legislature and will be able to represent their clients at the new Office of Tax Appeals as they have under the BOE.

Governor’s Action

The Governor’s deadline to sign or veto bills is October 15. AB 131 was already signed by the Governor. Stay tuned for an update from ARA regarding outcomes of CSEA’s priority bills and general bills of interest.