Over the past few years, the idea of expanding the state sales tax to include professional legal services has been advanced by a bipartisan group of members in the House of Representatives called the Commonwealth Caucus. Their proposal is being advanced as a means of eliminating school property taxes.

As part of the continuing attempts to address property tax reform, Gov. Ed Rendell convened the House and Senate in a special session on Sept. 28, 2005, to address the issues of school property tax reform. On Nov. 21, the House began discussion on the Commonwealth Caucus� proposal to lower and expand the state sales tax to various items such as food, clothing and professional services, including professional legal services. After two days of deliberations and a series of amendments that would exclude clothing and other items from the sales tax, the House recessed without voting on the legislation. When the House and Senate returned to session, both chambers produced their own reform plans. On Dec. 20, the House amended its plan into Senate Bill 854 prior to rejecting the Senate proposal embodied in special session SB 30. Click here to visit our special session Web page. Debate on school property tax reform, including the use of the sales tax as an alternative revenue source, will continue when the House and Senate return from the holiday break in January.

In the spring, the Commonwealth Caucus introduced their property tax reform package, consisting of HBs 116-120. This package, specifically HB 120, intends to replace property taxes with a lowered sales tax that would be expanded to include food, clothing and many professional services. Professional legal services would be subject to a 5 percent sales tax under this legislation. After multiple meetings of the House Finance Committee, HBs 116-119 were voted out of committee, while HB 120 failed to be voted out. The Commonwealth Caucus then introduced HB 1920 to replace HB 120, which remained in the House Finance Committee. HB 1920 received first consideration by the House on Sept. 27 and then was placed on the House Tabled Calendar, where it remains. The rest of the bill package was referred to the House Appropriations Committee.

There also has been action in the Senate. Sen. Jeffrey Piccola (R-Dauphin) has introduced his property tax reform plan in SB 892. This bill, as with the Commonwealth Caucus� HB 1920, would extend a lowered sales tax to clothing, food and professional services. Professional legal services would be subject to a 5.7 percent sales tax under this plan. This legislation was referred to the Senate Finance Committee on Sept. 29. Sen. Piccola also has introduced this legislation in the special session. SB 19 is identical to SB 892 and is expected to be considered during the special session.

There are three basic arguments against the sales tax on professional legal fees: 1) a tax on professional legal fees is a tax on the basic, constitutional right of citizens to have access to justice and the courts; 2) the sales tax is a regressive tax that is made more so by its application to basic goods and services; and 3) the sales tax is bad for business. We are asking all of our members to contact their legislators to voice their opposition to a sales tax on legal professional services.

Please visit the PBA�s Legislative Action Center and Compose a Message to Your Legislator Opposing a Sales Tax on Professional Legal Services. Simply complete your Contact Information, and the Legislative Action Center will help you through an easy step-by-step process to edit and send an e-mail message or to download a letter for mailing to your state senator and state representative. Please try to personalize the form message before you send the e-mail or letter. The PBA has prepared bullet-point arguments against a tax on legal fees to help you present your opposition. The PBA will need the assistance of all its members to defeat these expanded sales tax proposals.

Click here for bullet-point arguments against a tax on professional legal services.

Click here for the PBA House of Delegates resolution against transaction taxes on professional legal services.

Click here for a detailed summary of SB 892.

Click here for a detailed summary of HB 1920.

Click here for a detailed summary of HB 120.

Click here for short summaries of all the bills included in this tax reform package (HBs 116-120).

Click here for the testimony of then-PBA President-Elect William P. Carlucci before the Pennsylvania Business Tax Reform Commission on May 17, 2004.