Oklahoma Bar Association Views Proposed Sales Tax With a Critical Eye

(Feb. 9, 2017)  “Regardless of what individuals may be saying, the Oklahoma Bar Association has no position on sales taxes on legal services,” said OBA President Linda S. Thomas of Bartlesville. Thomas said there are many unknowns on the real effect a sales tax on legal services may have. Only three states currently tax legal services. Florida attempted this and among other reasons the administrative cost appeared to be greater than the revenue, and the tax was repealed.  “Certainly, increasing the costs on legal services will have a negative impact on businesses and low-income people in a significant way,” said Thomas.  The OBA does oppose any legislation that would negatively impact access to legal services.  A sales tax on legal services may very well have that impact.

“We are beginning to hear from our members,” said Thomas, “so far the reaction has been entirely in opposition to the tax.  The reactions are from the largest firms in the state to solo practitioners.  Across the board lawyers are concerned about increased costs to their clients.  With a sales tax, it's the consumer who pays the tax.  In addition, the administrative cost will either be absorbed by the lawyer or passed on to the client.  So, the real costs here are not just the tax, but all the other administrative expenses and the loss of revenue by people not buying the services.  When you factor all that in, I would not be surprised that this actually has a negative cash flow.  Businesses easily can go across the border to Texas and get an Oklahoma-licensed attorney -- resulting in not only losing the sales tax but also the income taxes Oklahoma lawyers already pay on the fees collected.”