BerksBarristerSpring2017 - 6

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Naturalization Ceremony: The Honorable Jill Gehman
Koestel presided over the April 5 Naturalization Ceremony
during which 52 individuals from 19 countries became
American citizens. President Althouse shared with them
that his ancestor, "Jost Althouse, came to these shores in 1738,
something that is still remembered in our family. I hope this
important day will long be remembered in your families."

Legal services are not just another commodity. When
someone comes to a lawyer, it is because they have a problem
and need an attorney. It is rarely a luxury and is actually a
necessity that brings them to your office. Legal services are being
sought to obtain justice, protect personal or property rights, and
protect liberty. Access to justice is a constitutional right that
should not be taxed.
Legal services are needed by all voters and voters of
all means. Implementing a sales tax on legal services will
disproportionately and adversely affect the poorest and most
needy of our clients, as well as many in the middle class and
clients with local businesses who need and use legal services.
The planned proposal, if enacted, will have an adverse impact
on the neediest taxpayers and taxpayers with modest means who
will disproportionately be harmed by the additional tax even
though legal services are often necessary to protect their basic
rights and ability to conduct business.
Essential legal services are provided every day by
Pennsylvania lawyers. The services are provided to those who are
small business owners, veterans, elderly, on fixed incomes, injured
or otherwise of limited means. Services include obtaining
workers' compensation or social security benefits that have
been wrongly denied; avoiding foreclosure on a home; gaining
Court-ordered protection from an abusive spouse, parent or
child; dealing with a hostile landlord or tenant; appealing a
property assessment action by a local government; forming a
small business; acquiring a home; having a simple Will written
or probating the Will of a loved one; and otherwise obtaining
fair and equal access to fundamental and legally protected rights.
The potential exists that each and every one of these
services will now be subject to sales tax. However, a sales tax on
legal services is a rare bird indeed. Other states have tried to
implement such a tax. In 1987, Florida, which has a population
in many ways similar to that of Pennsylvania, enacted a sales
tax on services similar to that being discussed in Pennsylvania.
Florida's sales tax proved so unpopular that it was repealed
6 | Berks Barrister

within nine months. There are a few states with a gross receipts
tax but none with a sales tax on legal services.
If Pennsylvania enacts a tax on legal services, it will be the
only state in the nation with such a tax. There is a reason why
no other state has a sales tax on legal services. That reason is
that the fundamental rights of citizens to have access to redress
legal grievances, protect individual liberties, transact peaceful
and orderly property transfers and business transactions, and to
seek defense against private and government actions and injuries
is so fundamental that no government action has infringed
upon or otherwise hampered the free exercise of the citizens to
pursue and protect those rights unfettered by governmental tax
imposition.
We must also consider that a large class of corporate clients
can do business in many jurisdictions, not just Pennsylvania.
Taxing legal services in Pennsylvania may well mean that this
work will migrate to a more tax friendly environment. For
example, a business with a presence in both Pennsylvania and
New Jersey can choose to have their legal work performed by
a firm in New Jersey and avoid paying the tax. A law firm with
multi-state offices can do the same. Taxes on legal services will
make Pennsylvania a less attractive place to conduct business.
In addition, all attorneys should consider the fact that
administrative burdens, not currently in place, will be placed
on all of our offices and practices. Lawyers will now become
responsible for collection and remittance of sales tax. New
reporting requirements will be required. These additional burdens
will also lead to potential liabilities on attorneys for failure to
collect and remit sales tax. The Commonwealth will have the
right to come in and audit the books and records in order to
ensure that sales tax was properly collected and remitted. Ask any
of your clients who have been through a sales tax audit if they
can share their experiences with you. Confidentiality of client
information may also be of concern.
The Pennsylvania Bar Association is following this issue
very closely. Fred Cabell, Director of Legislative Affairs for
the Pennsylvania Bar Association, is cued up. He can be
reached at his office (717-238-6715, ext. 2232) or perhaps
more conveniently by E-mail at Fred.Cabell@pabar.com. In
addition, PBA regularly sends its members E-mails and other
communications itemizing the status of these efforts and tries to
keep all of us informed. Please take advantage of these resources
and don't ignore what may look like just another routine E-mail
from PBA.
I ask that all of you consider making a contribution to
the PBA PAC. We need to help finance efforts to inform our
Senators and Representatives in order that we, as lawyers,
and their constituency, as a whole, face significant adverse
consequences from imposition of taxes on legal services under
ill-concerned legislation.
More importantly, I ask that you make your voices heard
on this issue. Educate your friends, neighbors and clients. Call
your state senator or legislative representative and express your
concerns over the unfairness of this proposal and the adverse
impact it will have on all of their constituents.
This expansion of the tax man's reach needs to be stopped.
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