03/12/2019
Now the State wants to tax legal services! PLEASE CONTACT YOUR LEGISLATORS TO OPPOSE LEGAL SERVICES TAX PROPOSAL IN SB877 AS IT IS A NEW TAX ON FAMILIES AND SMALL BUSINESSES SEEKING JUSTICE
The tax would constitute a barrier to fair access to justice: the tax would punish responsible citizens who seek counsel, and those seeking to exercise their right to counsel. Our citizens may choose to forego legal representation and self-represent themselves thereby burdening our courts further. Taxing legal services needed to access justice will also raise constitutional issues.
This is not a tax on attorneys, it is a tax on those who hire attorneys: For families of Connecticut, this is a misery tax—a tax on those involved in family matters, estate planning, bankruptcy, or end of life decisions. It specifically targets those who have suffered misfortune or are vulnerable—including those wrongfully accused of a crime or those who have suffered injury or financial ruin because of someone else’s wrongful and harmful actions. For small businesses, this is a tax on growing their business that large companies can avoid by hiring in-house counsel or working with out of state attorneys.
This tax will harm Connecticut’s legal community by making in-state lawyers more expensive: In-state businesses can easily obtain all manner of counsel from out of state lawyers and law firms, including advice on intellectual property, federal taxes, corporate structure, and international business. Further, individuals can circumvent the tax by obtaining estate planning and other advice from out-of-state attorneys over the phone or internet. This would encourage in-state firms to relocate or expand to neighboring states.
This tax proposal might prove to be revenue neutral, or even decrease overall tax receipts: Pushing in-state businesses and residents to spend their money outside of the state borders has a knock-on effect of reducing sales and income taxes across the state. Further, sales taxes are not deductible by individuals.
Collecting this tax will likely violate client confidentiality: In order to collect the tax on legal services, the Department of Revenue Services would need access to attorney records (including client identification) that an attorney is required to keep confidential. Beyond the ethical concern, this could further harm an attorney’s ability to compete for clients against out of state firms.
Imposing this tax will lead to double taxation: Many of the services attorneys provide are already taxed once and would now be subject to a second tax. Examples include filing fees, estate administration and property transfers.
Collecting this tax will be an administrative nightmare: Determining which services were performed in-state and subject to the tax would be difficult to determine, and impossible to police. What fee percentage is subject to an in-state sales tax if the project had attorneys from multiple states involved? Whose records will be subject to audit? These questions could lead to a further loss of business to the state as foreign companies look elsewhere simply to avoid the added transaction costs of doing business in our state.
TAKE ACTION NOW!! STOP THE MADNESS!!
