Wednesday, February 7, 2018
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Bill Introduced Imposing Sales Tax on Legal Services Received by Businesses
By a MetNews Staff Writer
A tax on the sale of legal services and other services to businesses would be imposed under a bill introduced in the state Senate.
The bill, SB 993, was put forth on Monday by state Sen. Robert Hertzberg, D-Van Nuys. A press statement from Hertzberg’s office says:
“SB 993 places a modest tax aimed at high-end business services, such as those provided by lawyers, consultants, and accountants for corporations and other high-income businesses.”
The tax would be imposed on a business receiving the services but collected by the firm providing the services. There would be an exemption for businesses with gross receipts falling below $100,000 “in the previous four quarters.”
The bill declares:
“In order to mitigate the negative impacts in California of the recently enacted federal tax bill…, California needs to reform the state’s tax system to more equitably share responsibility for supporting critical public programs.”
Among the stated purposes are to “[p]rovide tax relief to middle-income and low-income Californians to make up in part for tax increases and reductions to federal programs recently enacted or proposed by the federal government” and “[b]roaden the tax base by imposing a modest sales tax on services used by businesses in California.”
The rate of the tax is left blank. The bill states:
“On and after January 1, 2019, in addition to the other taxes imposed by this part, a sales tax is hereby imposed the purchase of services by businesses in California at the rate of percent of the sales price of the service.”
Hertzberg commented:
“The federal tax reform plan is disastrous for California. Working class Californians will pay more taxes under the plan, and it will only exacerbate the volatility of our state budget.”
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