A bill introduced in the House of Delegates seeks to expand the sales and use tax to include legal services. House Bill 1628, Sales and Use Tax – Rate Reduction and Services, has not been assigned to a standing Committee yet, but is expected to be assigned very quickly to the Ways & Means Committee, which handles taxation matters. It is very likely that the bill will have a public hearing as early as next week! While there is no Senate version of the bill, it is possible that one may be introduced in the coming days. We must assume that the bill is on a fast track, as an effort to fund the Kirwan education initiative.
Paramount among MSBA core issues is opposition to taxation of legal services. As stated in the MSBA State Legislative Program:
“A legal services tax is a disincentive for citizens to seek legal advice and falls on the clients—not the lawyers. The MSBA places a high value upon access to justice for all citizens. Clients seeking legal advice on dissolution of marriage, bankruptcy, child support, debt collection and similar matters would pay the tax, but are those who can least afford to pay an additional charge. Moreover, an audit of client fund accounts in order to administer the tax may violate the attorney/client privilege. In some instances, a legal services tax could be a tax on tax advice. And taxing a person’s ability to defend himself or herself in a criminal proceeding could be challenged as unconstitutional.”