Final weeks: 2013 legislative session closes this month.

• Author: Allen, Bruce C.
• Position: Capitol Beat

The 2013 legislative session will, come to a close Sept. 13 as the California Legislature will adjourn for the year and begin its interim recess. Any bill that is not passed by the Legislature and sent to the governor by this date will have to wait until the Legislature reconvenes in January. As the Legislature heads into its final weeks of the year, CalCPA will continue to watch for any issues that could emerge at the last minute.

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Proposal to Prohibit Use of Contingency Fees Surfaces

One legislative issue that emerged just before the Legislature left for summer recess relates to the prohibition on the use of contingency fees. As introduced, Assembly Bill 1412, authored by the Assembly Revenue and Taxation Committee, seeks to streamline and expedite the process for a consumer to seek a refund for an overpayment of sales and use tax. The introduced version of the bill moved through the legislative process without any opposition. However, in the Senate, it was amended to insert a section that prohibited the use of contingency fees during the refund process.

The new section banned the use of contingency fees in connection with the election, assignment or claim for the refund. It also referred to the use of contingency fees as "inherently contrary to public policy."

As result, CalCPA, along with the large accounting firms, is opposing AB 1412 unless the exclusion on the use of contingency fees is removed from the bill. The California Board of Accountancy is also opposing the bill unless it is amended to exempt CPAs from the contingency lee ban.

Banning the use of contingency lees needlessly undermines the effort to simplify the sales and use tax refund process by unfairly limiting a taxpayer's options in seeking professional representation to support their interests in from a a taxing entity, especially for taxpayers unable to afford an upfront lee or an hourly rate for tax services.

Additionally, the characterization of contingency lees as "inherently contrary public policy" is misguided. Contingency lees are a regulated and valid means of payment for taxpayers to engage consultants in helping secure tax refunds that they are entitled to. CPAs, who are already regulated by the CBA, follow comprehensive professional standards including an ethical duty and responsibility to both the tax system and the taxpayer.

CalCPA met with the author of the bill and expressed our strong opposition. Legislative action on the bill is...