Legislative Alert: Senate Bill 76 Would Impose a Sales Tax on Most Legal Services in Pennsylvania

Metzger Wickersham has been closely following Senate Bill 76, a “tax reform” bill which passed the Senate Finance Committee on Tuesday, September 16, 2014. SB 76, known as the Property Tax Independence Act, proposes to eliminate school property taxes in Pennsylvania. However, the elimination of school tax would be replaced by increased state personal income tax, increased sales tax, and new sales tax on certain services and products that are not currently taxed.

Among other items, Senate Bill 76 would impose a sales tax on most legal services, including legal services provided on a contingency fee basis. Legal services provided in relation to family law matters and criminal matters would be the only services excluded from this tax.

This kind of bill seems to get proposed every few years, but this is the furthest this type of legislation has ever progressed in the Senate. As lawyers who represent injured workers, disabled individuals, and accident victims hurt as a result of negligence, we are strongly opposed to SB 76. We are working to let legislators know that we oppose this tax for the following reasons:

• For most folks, hiring a lawyer is a necessity and not a non-essential service.
• Access to justice is a basic constitutional right, and justice should not be treated as a commodity.
• Legal representation is often needed most by those with lower and moderate incomes, including seniors on fixed incomes. For example, representation is often necessary to obtain wrongly denied workers’ compensation or Social Security benefits, have a will written, or avoid a home foreclosure.

The biggest impact of this tax would be felt by our clients, because the state would ultimately be taking money out of a client’s settlement or award. Please help us protect the interests of our clients and the legal profession. Take a moment to email your state Senator and express your opposition of SB 76. Even a short message is effective. Click here to find your senator. Click here to find your senator’s email or mailing address.

Source: Pennsylvania Bar Association

UPDATE 10/16/14: The bill died one vote shy in the Senate Appropriations Committee and must be introduced next session as a new bill.