The ABA is continuing its efforts to oppose draft tax reform legislation that would have negative consequences for many lawyers and law firms.
The association is urging Congress to remove certain key provisions from draft tax reform bills proposed by the House Ways and Means Committee and the Senate Finance Committee that would require all law firms and other personal service businesses with annual gross receipts over $10 million to use the accrual method of accounting rather than the traditional cash receipts and disbursement methods.
An April 8 meeting hosted by the ABA Governmental Affairs Office, in conjunction with the association’s senior leadership and its ABA Membership and Marketing Department, brought representatives from 35 law firms together to discuss the impact of the provisions. ABA President James R. Silkenat and President-elect William C. Hubbard emphasized to the group that the provisions would cause substantial hardship for law firms and other personal services businesses by requiring them to pay tax on income they have not yet received and may never receive.
ABA Associate Governmental Affairs Director Larson Frisby explained the ABA’s extensive lobbying efforts to defeat the provisions, which the Joint Committee on Taxation has estimated would generate $23.6 billion in additional revenue over 10 years that could be used to pay for a variety of unrelated spending or tax reduction proposals. He also noted that the accrual issue was a focus of this year’s ABA Day in Washington event, which brought more than 350 bar leaders to Washington for Capitol Hill visits, and that at least 21 state and local bars now formally oppose the mandatory accrual accounting proposal.
In addition, the Governmental Affairs Office and several of its coalition partners briefed 50 House staff members April 21 on the harmful effects the accrual accounting legislation would have on the legal, accounting and medical professions as well as on the overall economy.
*Additional information regarding the proposed legislation and the ABA's ongoing efforts to defeat it is available on the Association's Mandatory Accrual Accounting for Law Firms web page.