PROFESSIONS FACE MORE TAXES: More states imposing sales, occupational taxes on lawyersAuthor(s): Paul MarcotteSource: ABA Journal, Vol. 73, No. 1 (JANUARY 1, 1987), p. 22Published by: American Bar AssociationStable URL: http://www.jstor.org/stable/20759088 .

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News

PROFESSIONS FACE MORE TAXES More states imposing sales, occupational taxes on lawyers

In a search for tax dollars, state and local lawmakers are taking a fresh look at lawyers and their fees.

In Louisiana, a new law now per mits local communities to levy an oc

cupational license tax on lawyers and other professions. In Florida, profes sional services will lose their exemption from the state's 5 percent sales tax in July.

Also, Texas legislators this spring are expected to consider a proposal to cut the state sales tax by roughly 1 percent but expand it to include legal and other professional services.

Both the Florida and Texas state bars are fighting attempts to tax law yer services. "We don't think the state of Florida should make money off of people's legal misfortunes, especially when they are involuntarily drawn into the legal system," said Rayford Taylor, general counsel and a lobbyist for the Florida Bar.

Legislators argue that broaden ing the tax base eases the pressure to raise taxes. Florida is heavily depen dent upon its sales tax because it has no state income tax. Ending the ex emptions for professional services is expected to raise $951 million, includ ing $156 million from lawyers.

But Taylor noted that the tax will raise the costs of legal services. "It's not a tax on lawyers; it's a tax on law yers' clients," he said.

Texas is facing an estimated $3.5 billion budget shortfall, largely be cause of problems in the oil industry. The state's comptroller has suggested placing roughly a 3 percent tax on

professional services, which would raise an estimated $70 million from lawyers. The proposal would exempt

medical services.

Although a bill has not yet been introduced, Texas state bar spokes

man Larry Fitzgerald said the propo sal has received a lot of support from state legislators.

The Louisiana law enables mu

nicipalities and parishes to enact an

occupational license tax on profes sions based on one tenth of a percent of receipts. It permits a minimum $50 and maximum $2,000 tax on lawyers. Financially hard-pressed New Orleans

U

and other communities are consider ing adopting the tax.

Under the new law, communities could audit attorney records, accord ing to Mary Zervigon, a legislative spe cialist for the city of New Orleans.

She said that, in amending the | occupational license tax, the Louisi ana legislature removed a provision that had previously allowed munici palities to padlock the doors of busi nesses that refused to pay the tax.

Lawyers would likely challenge any new city occupational tax, and

probably would object to opening their books to city officials.

New Mexico, Hawaii and South Dakota also tax professional services. In recent years, similar bills have sur faced in Mississippi and Tennessee. Although attempts to tax lawyers in those two states have been defeated, bar officials say the issue may resur face this year.

"As the funding process gets tighter, I think it's something that could come up again," said Larry Houchins, executive director of the Mississippi State Bar. "It's something lawyers in every state could eventu ally face."

?Paul Marcotte

22 ABA JOURNAL / JANUARY 1,1987

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