Sunday, February 08, 2009

Who's In My Wallet Now?


CT State Government
Looks To Tax Services
By Docs, Lawyers, Accountants ...

Do the bright lights who sponsored this bill actually believe it would benefit their constituents to tax medical services?

By RICHARD MEEHAN

The Cool Justice Report
www.cooljustice.blogspot.com
Feb. 8, 2009

EDITOR'S NOTE: This column is available for reprint courtesy of The Cool Justice Report, http://cooljustice.blogspot.com

On Mon., Feb. 9, the Finance Bonding & Revenue Committee of the Connecticut General Assembly will conduct a public hearing on HB 6349, An Act Concerning Sales Tax on Services.

The bill would eliminate the current exemption from sales tax on "professional, insurance, occupational or personal service transactions, . ." If approved the bill would be effective as of April 1, 2009 and apply to "sales" occurring on or after that date. At a time when average citizens are reeling from the decisions and practices of greedy, predatory corporations and our governor claims she wishes to avoid tax increases to close the state deficit, this hidden tax has been proposed.

Currently, legal services are exempt from the sales tax. This bill would now tax legal services. As a group, we lawyers are not the most popular profession. Why should you care if we are subject to another tax? Simple -- it is a tax on you, the consumers of legal services, not the lawyers themselves. When you buy a television or a car you, not the merchant, pays the sales tax. It would be no different with legal services.

The state's Public Defenders in most of our cities represent 70-80 percent of people accused of crimes. Increasing the cost of private legal services increases will drive more people to those already overburdened public defenders. The problem is further exacerbated because of impending layoffs and job eliminations affecting public defender lawyers and support staff. There are constitutional mandates requiring adequate legal representation to persons accused of crimes that will be impacted by the proposed tax change.

The Connecticut Bar Association is rallying its members to protest this bill with their representatives. The association notes that the clients who are already experiencing great economic hardships will be affected adversely when they and their struggling businesses are most in need of an attorney's aid.

Sales tax audits of attorneys will be difficult given the confidential nature of the attorney client relationship.

Like our public defender counterparts, lawyers in all aspects of our profession have been impacted, in general, by the recent economic meltdown. Every day stories circulate about staff reductions and lawyers closing their offices. At a time when the legislature should be looking to help remedy the devastation being experienced by all of us, including members of the bar, this tax is unwise and destructive.

The state's regulations on sales tax define "excluded service providers" or "professional service providers" as those whose services " . . . are rendered by a member of a profession, acting in such member's professional capacity, and that are commonly associated with such profession. The term "profession" means any generally acknowledged professional occupation requiring a degree, license or specialized training, including, but not limited to, the medical, legal, accounting and actuarial professions."

The exemption change being proposed by the House bill will not only affect the cost to you of legal services but the services of your accountant and doctor as well. The cost of medical care and the lack of health insurance to many are at the crisis stage in this country. Do the bright lights who sponsored this bill actually believe it would benefit their constituents to tax medical services? Doctors bill at one rate and health carriers pay a reduced price. What will be the amount the tax is based on? Insurance co-pays will now be higher because of the tax imposed. No wonder our business economy is shrinking in this state.

Do something to protect yourself! Contact your state representative and oppose this burdensome tax proposal.

Bridgeport attorney Richard Meehan Jr. was the lead defense counsel for former Bridgeport Mayor Joseph Ganim's corruption trial. Meehan is certified as a criminal trial specialist by the National Board of Trial Advocacy since 1994 and serves on the organizations Board of Examiners. He is a Charter Fellow, Litigation Counsel of America -- Trial Lawyer Honorary Society. Meehan has also obtained multi-million dollar verdicts and settlements in complex medical and dental malpractice and personal injury litigation. He is a past president of the Greater Bridgeport Bar Association and appears regularly on Court TV. His column also appears in the Sunday Norwich, CT Bulletin. Website, www.meehanlaw.com


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