As you are well aware, Governor Lamont’s budget included a line item of $107 million in revenue for Fiscal Years 2020 and 2021 through the expansion of sales tax on legal services. Business to business will remain exempt from sales tax. I believe we all agree this will be damaging to our clients and our businesses. A hearing on the proposed tax has been scheduled for Friday, March 15, 2019 at the legislature. This proposal affects us all and we are asking for your assistance in opposing this tax.
We are asking you to contact your State Representative or State Senator to voice your opposition to this proposal. You can find your legislators HERE. PLEASE take ten minutes to communicate with your legislators by Wednesday of this week. Since a number of professions are having their exempt status challenged, our goal is to express why legal services are unique from other taxable goods and services.
Here are talking points you can use when you contact your State Representative or State Senator to voice your opposition to this proposal. Please do not just copy and paste. Please choose 2-3 issues and expand. If you are interested in testifying in opposition to the proposal, please contact Bill Chapman at firstname.lastname@example.org so we can coordinate our efforts.
- 47 states do NOT have a tax on legal services; only New Mexico, South Dakota and Hawaii do—Connecticut should not be the fourth.
- Two other states, Florida and Massachusetts, passed a sales tax on legal services and within six months that was withdrawn because, as you can imagine, it was both unpopular and an administrative nightmare.
- It is a “misery” tax. Unlike other goods and services, the purchase of legal services is rarely a choice, but arises out of necessity. Most people seek legal services during times of misery, misfortune, hardship and vulnerability when facing eviction, foreclosure, divorce, domestic violence, end-of-life care, the death of a loved one, bankruptcy, discrimination, criminal charges or injury.
- It would punish people for taking responsible steps in managing their affairs.
- A sales tax on legal services will place another barrier to access to justice, and punish 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.
- It will violate the attorney-client privilege.
- It will interfere with a person’s financial ability to defend himself/herself in a criminal case resulting in the Public Defender Offices facing increased demand and increased costs to Connecticut.
- Any sales tax on legal services would be disproportionately born by our small businesses and our citizens in need.
- Large multi-state and multi-national businesses doing business in Connecticut will be able to avoid such sales tax by hiring in-house attorneys providing large companies with a competitive advantage in any litigation over our citizens and small businesses.
- A sales tax on legal services will drive up the cost of legal fees in Connecticut, making Connecticut firms less competitive with firms in other states where a sales tax on legal services does not exist. It would encourage our citizens and businesses to seek legal services from neighboring jurisdictions where the exemption remains and avoid selecting Connecticut as a venue in forum selection clauses resulting in a decline in work for Connecticut lawyers, and, in turn, a loss of jobs for Connecticut lawyers, support staff and support services.
- It will have a negative effect on the Connecticut legal community creating an administrative burden on law firms, particularly solo and small firm attorneys which represents almost fifty percent (50%) of our attorneys.
- Attorneys, who already provide extensive pro bono and low bono services to help our citizens access justice, may absorb the costs of the sales tax resulting in lower income tax revenue for Connecticut.
- The projected tax line item for the governor’s budget is over zealous.
Please identify yourself as a constituent and take a few of these points and share your concerns with your State Representative and State Senator.
Thanks you for your support of our profession.
Jonathan M. Shapiro