Jan 18, 2013

Sales Tax And Social Security Representation

     There is a serious threat that the N.C. General Assembly will extend the state's sales tax to services, including legal services, which would include the representation of Social Security claimants. My recollection was that this issue has come up in a few other states and that Social Security's position has been that it's up to the attorney to collect the sales tax as a cost, in the same way that the costs of obtaining medical records are collected. However, I don't see where this has been done in any state other than South Dakota. Has it been done in other states? How has it worked out where it has been done?

14 comments:

Anonymous said...

This idea was proposed a few years ago in MI. There was such an uproar that fortunately it never came to fruition. It was one of those rare times that trial lawyers and doctors argued for the same cause!

Anonymous said...

Most state legislatures are full of lawyers, so for some strange reason LOL exclude attorney services from sales tax. Same thing happen here in Maryland. Raised the sales tax, and applied it to more things, but excluded attorney services. Still like the old joke, what do you call a 1000 attorneys at the bottom of the ocean? A start. LOL

Anonymous said...

It's not an issue of attorneys protecting their own: a service tax for any professional makes no sense. The fees we obtain are taxed on so many different levels, including Social Security's wonderful "user fee." Adding another layer of taxes is just punitive.

Anonymous said...

Mr Hall has no problem raise the FICA tax, or soaking the "rich", but the sky is falling if they want to tax my service. LOL

Anonymous said...

I believe New Mexico has the same tax on professional services and it's usually stipulated in the Fee Agreement on how the attorney will collect it.

I do not see how this is a problem, though. There are quite a few times that the attorney collects the $6,000 but the itemized services -on times where it is disapproved because the claimant had a prior attorney that did not waive a fee- there are fewer than 10 hours worth of services involved.

Besides, it's a fair share, just like increase taxes on the rich, correct?

FYI, this gets proposed in a lot of states (Utah recently) and it usually dies in committee because of special interests.

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Anonymous said...

Why is a sales tax on lawyer services so wrong? Any other name for it would not sound any sweeter! Let's just name it a Lawyer License Fee collected at the rate of 5% of payments received, payable to the State within 10 days of receipt of payment made by the client and/or receipt of payment of the lawyer's award for representation and call it a day. Or do lawyers not want to contribute their fair share to pay for the costs of educating and providing medical care for the children, housing for the homeless, green energy, and birth control pills?

Anonymous said...

Excuse me, I do not know a lawyer that doesn't pay his/her fair share. It's called income tax. And if they are "rich" enough, they pay at a higher tax rate than those less fortunate. Let's try to stop corruption and pork in the government and pet projects like solar power so tax money can be used properly. Stop stupid spending. There is enough tax already collected..

Anonymous said...

Appologize if I sound ignorant, but what is the fundamental difference between services (e.g legal services) and things that are traditionally taxes via sales taxes (e.g. a cup of coffee)

When I purchase a cup of coffee, I'm accuiring a "good". If I aquire the help of an attorney I'm still purchasing a good.

What differintiates the two goods so that one is excluded from sales tax?

Anonymous said...

Sales tax is paid by the purchaser. Do you really want legal fees to increase to cover the sales tax if so charged? My question is, why does anyone think we need more taxes instead of a more responsible government??

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Social Security News said...

I have deleted one irrelevant comment and two comments that appeared to be the beginning of a flame war.

For goodness sake, the original post was only a request for information!

Anonymous said...

The problem that Michigan attorney thought they had was the fact that the tax cannot be passed onto a consumer when any fee has to be approved by SSA. Most of them considered it analogous to the user fee, which SSA forbids passing along to the client. It's like the government setting the price of a candy bar then instituting a tax on the candy bar.

In a price-controlled environment, the merchant cannot pass on the cost of the tax and we get what economists call a deadweight loss.