Pennsylvania Governor Tom Wolf’s budget has proposed a tax on the legal services that we provide for our clients. Wolf announced the tax at the end of February as part of his plan to drastically cut corporate taxes in the state. If Wolf’s plan to collect sales taxes on professional services is approved, our clients would be required to pay an 8 percent sales tax on our legal fees while the businesses that we challenge in court would get a significant tax cut.
Professional services are currently exempt from the sales tax in PA. If the exemption is lifted, individuals in Philadelphia would have to pay 6 percent to the state and 2 percent to the City of Philadelphia.
The tax would cover many other kinds of professional services. The types of businesses that would be forced to collect sales tax under the proposal include transportation services, real estate agents, home health care services, nursing facilities, museums, accountants, dry-cleaning and the recreation industry.
Many states have examined whether a tax on professional services is appropriate. Three of the states that decided to adopt such a tax (Michigan, Florida and Iowa) ended up reversing that decision. Only three states currently have a broad tax on services such as this one. Those states are South Dakota, Hawaii and New Mexico.
The proposal would continue to allow professional services purchased by businesses to be exempt from the sales tax. The impact of this change would not be felt by the businesses that commit fraud or deny individuals adequate compensation for their injuries. This bill would be another benefit for the people that need
The proposal would also extend the sales tax to a few personal items currently exempt. These items include flags, newspapers, magazines, textbooks, caskets and candy.
This is not the first proposal to charge sales tax on professional services in our state. Last year, PA Senate Bill 76 also proposed changes to the tax structure which included a tax on our services. With your help, we can defeat this proposal again.
We hope you will write to Governor Wolf as well as your representatives in the Pennsylvania legislature concerning this important issue. Tell them that you oppose Wolf’s plan to charge sales tax on professional services and specifically mention the impact that a tax on legal services would have on your life.
Submit your feedback to Governor Wolf about this important issue via his online contact form available at http://www.governor.pa.gov/contact/Pages/contact.aspx .
Governor Wolf will need the approval of our representatives in the Pennsylvania General Assembly in order to adopt this measure. Please write to them as well. If you are not familiar with the name of your representative in the Pennsylvania State Senate or the House of Representatives, you may look up this information on the Pennsylvania General Assembly website here: http://www.legis.state.pa.us/cfdocs/legis/home/findyourlegislator/index.cfm . From the results, you should be able to navigate to the website to find their contact information. If you need assistance locating this information, please contact us and we will help you find it.