California Lawyers Association

Sales Tax on Legal and Other Professional Services

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We are deeply engaged in the policy debate to resist a movement to tax legal and other professional services in California.  Imposition of such a tax would increase the cost of legal services, decrease access to justice, put California law firms at a competitive disadvantage as compared to out-of-state law firms, and disfavor California offices of national law firms because clients might opt to use offices in other states that do not impose such a tax. In 2018, CLA opposed SB  993, which would have imposed such a tax.  That legislation did not advance. In 2019, SB 522 was introduced.  While the details of this bill are still being developed, CLA continues to work in opposition to this or any other legislation that would impose a sales tax on legal services.

Senate Bill 933 (Hertzberg) – Oppose

April 13, 2018

Hon. Robert Hertzberg
Member of the Senate
State Capitol, Room 4038
Sacramento, CA 95814

Dear Senator Hertzberg:

The California Lawyers Association (“CLA”) respectfully opposes Senate Bill 993, which would expand the Sales and Use Tax Law to impose a new tax on the purchase of services by businesses in California.

By way of background, CLA launched on January 1, 2018 as a nonprofit, voluntary organization, and the new home of what were the Sections of the State Bar of California and the California Young Lawyers Association. The mission of CLA is promoting excellence, diversity and inclusion in the legal profession and fairness in the administration of justice and the rule of law. CLA represents the vast diversity of California’s legal community and the various areas of law practiced throughout the state.

CLA is opposed to SB 993 because it would have an adverse impact on California consumers, access to justice, and affordable legal services.

Sales and use taxes are “consumption taxes” that target consumers who choose to make certain purchases. The purchase of legal services is rarely a choice. The proposed new tax, which would apply to legal services, among other services, would increase costs and diminished access to justice for businesses that are confronted with a wide array of circumstances requiring the services of a lawyer. These legal services can range from advice concerning essential functions of running the business, including remaining in compliance with California’s numerous laws that apply to businesses, to representation when difficult and unforeseen business situations arise.

SB 993 would have a disproportionate impact on, and discriminate against, small and medium sized business. We recognize the bill contains a $100,000 gross receipts threshold, for businesses that qualify. However, there are numerous sole proprietorships and small or medium sized businesses that exceed the $100,00 gross receipts threshold. These businesses often operate under very tight margins. Under SB 993, they would be required to absorb the added tax on any legal services they purchase, or pass that cost on their own consumers, which may not be feasible in a highly competitive market. Although the same would be true for large businesses, they would more likely be able to avoid paying a tax on these same services simply by hiring in-house attorneys for legal services, instead of using outside service providers.

SB 993 would also result in a regressive tax, insofar as the tax would require small business to pay a larger portion of their income than large businesses.

Finally, under SB 993 California businesses would be at a competitive disadvantage, as they would be subject to a tax that would not apply to out-of-state competitors who are not subject to a sales and use tax for services. This added tax burden would therefore be detrimental to California businesses.

We appreciate your consideration of our concerns. If you have any questions, please feel free to contact me at (619) 239-8131 or


Heather Linn Rosing, President
California Lawyers Association

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