Make Your Voice Heard

TBAIMPACT is the perfect tool for you to make your voice heard in Congress and the General Assembly.

On TBAIMPACT, you will find issues of interest to Tennessee lawyers that are before the legislature. You can use this tool to track action on these issues and make your voice heard in the halls of Congress or the Tennessee General Assembly.

It's Time to Eliminate the Professional Privilege Tax!

The Tennessee Bar Association is joining with the National Federation of Independent Businesses (NFIB), the Tennessee Medical Association (TMA), and other organizations to ask Governor Lee and the Tennessee General Assembly to eliminate the Professional Privilege Tax

We believe that owning and operating a business should be a right in Tennessee – not a privilege.  Tennessee has more than 100 licensed professions; yet only seven, including attorneys, are still being singled out to pay this discriminatory tax.  It is time to eliminate a double tax on attorneys who already are paying licensing fees. 

Currently, there are 22,956 attorneys licensed to practice law in Tennessee; all of whom must pay the $400 professional privilege tax, regardless of their income, employment status or whether practicing law is their main profession. 

82 % of the lawyers that pay the tax are Tennessee residents. They live and raise families here, pay sales tax here, and many run small businesses. Alternatively only 6% of the 122,000 stockbroker agents who pay the tax live in Tennessee.

The TBA conducted a survey of the licensed attorneys in Tennessee, and over 4,000 attorneys participated in the survey. 49% of the attorneys who participated in our survey make less than $80,000 per year. Additionally, 80% of the attorneys who participated in our survey live in urban areas where the cost of living is higher. 

We need to tell our legislators our personal stories and help them understand that the salaries of attorneys in Tennessee vary significantly across the state; in fact, 32% of the attorneys we surveyed are sole practitioners and small business owners. Requiring all attorneys to pay $400 a year, on top of other licensing fees, is a huge financial burden, in addition to being discriminatory. 

Please act now and ask your elected representative to eliminate the professional privilege tax in 2020. A $400 yearly tax that only applies to a small sliver of Tennessee professions is both burdensome and discriminatory. It needs to be repealed. 

Background

The TBA has a long-standing public policy position, voted on by the Board of Governors, that the TBA opposes any tax on professionals, including attorneys.  The TBA also opposes the extension of the Tennessee sales tax to legal services with collections to be made by the attorney.

Tennessee enacted the professional privilege tax in 1992 as part of a $276 million tax increase to restore cuts that were made after a recession in the early 1990s and to help pay for the Basic Education Program, the state’s then debuting education funding formula.

When it was originally passed, the tax was applied to 21 professions. Four years later, agents of athletes had to pay the tax as well.  In the early 2000s, the tax was increased from $200 to $400.

Last year, the Tennessee General Assembly voted to remove fifteen professions from having to pay the professional privilege tax beginning June 1, 2020, including: Accountants, Optometrists, Architects, Pharmacists, Audiologists, Podiatrists, Chiropractors, Psychologists, Dentists, Real Estate Principal Brokers, Engineers, Speech Pathologists, Sports Agents, Landscape Architects, and Veterinarians.

Yet seven professions, including attorneys, are required to continue to pay the tax due on June 1, 2020 and thereafter: Attorneys, Agents (Securities), Broker-Dealers, Investment Advisers, Lobbyists, Osteopathic Physicians, and Physicians.

Today

At the end of the Fiscal Year 2018-2019, the state of Tennessee had a $600 million-plus surplus. On November 15, 2019, Tennessee Department of Finance and Administration Commissioner Stuart McWhorter announced that Tennessee tax revenues exceeded budgeted estimates in October. Overall October revenues were $1.1 billion, which is $82.3 million more than October of last year and $49.8 million more than the budgeted estimate.  

On an accrual basis, October is the third month in the 2019-2020 fiscal year.

Year-to-date revenues for three months are $217.4 million more than the budgeted estimate. The general fund has exceeded estimates by $172.2 million and the four other funds that share in state tax revenues exceeded estimates by $45.2 million. 

Tennessee annually has received more revenue from the professional privilege tax than any other state with the tax, according to a report from the Tennessee Advisory Commission on Intergovernmental Relations (TACIR).  

It is past time to eliminate this tax today!