Maryland Legislature Considers Expanding Sales Tax

This legislative session, the Ways and Means Committee of the Maryland House of Delegates considered House Bill 1051, a Bill entitled, “Sales and Use Tax – Services.”

Its purpose is to alter the definition of “taxable service” under the sales and use tax section of Maryland law in order to impose a tax on services which had not been taxed in the past.

If enacted, the bill would expand the definition of “taxable service” to include 29 additional services, requiring those 29 services to collect and remit sales tax for the first time. The full text of the proposed bill, including all 29 additional services can be found here.

Those additional services are varied and diverse in nature, and impact every level of the state economy, from individual households to businesses, and even entire industries. For example:

• Patrons would have to pay sales tax every time they get haircuts, manicures, and massages.  
• Cable television service would carry a sales tax, in addition to the regulatory fees and taxes already collected.  
• Individuals trying to better their lives through dating or dieting services would have to pay sales tax.
• Auto services, including towing, repairs, car washes, and even warranty contracts, would be subject to sales tax as well.

While individuals and families certainly would be impacted as a result of the expanded sales tax, the brunt of the burden would fall on businesses, particularly small businesses. Not only will their services become more expensive to consumers, businesses also will be tasked with collecting, accounting for and remitting sales tax to the State.

Most of the services which will be forced to collect sales taxes are organized as small or family owned businesses. In addition to the administrative burdens of handling the sales tax, businesses would have to pay sales tax for tasks such as engaging an employment agency, speaking with a public relations advisor or engaging a business consultant.

Tax preparation services would become more expensive for businesses as a result of collecting sales tax, and they too would carry a sales tax.

While several steps remain in order for this bill to become law, it is important for everyone to be aware of these proposed changes because of the breadth of the bill. If enacted, the Bill would take effect on January 1, 2013.

Is it a violation of the Americans with Disabilities Act (ADA) to require employees to have a high school diploma?

On November 17, 2011, the EEOC issued an informal discussion letter about how the ADA applies to qualification standards for jobs. The letter can be found at http://www.eeoc.gov/eeoc/foia/letters/2011/ada_qualification_standards.html. There has been significant commentary and conjecture about the meaning and scope of the letter.


To quell such speculation, the EEOC has provided the following answers to common questions:

Question: Have you just made it illegal for businesses to require a high school diploma?

Answer: No. Nothing in the letter prohibits employers from adopting a requirement that a job applicant have a high school diploma. However, an employer may have to allow someone who says that a disability has prevented him from obtaining a high school diploma to demonstrate qualification for the job in some other way.

Question: Are you telling people that they are protected by the ADA if they decide not to graduate from high school? Wouldn’t this create a disincentive to finish high school?

Answer: No. The ADA only protects someone whose disability makes it impossible for him or her to get a diploma. It would not protect someone who simply decided not to get a high school diploma.

Employers may continue to have high school diploma requirements and, in the vast majority of cases, they will not have to make exceptions to them. However, if an applicant tells an employer she cannot meet the requirement because of a disability, an employer may have to allow her to demonstrate the ability to do the job in some other way. This may include considering work experience in the same or similar jobs, or allowing her to demonstrate performance of the job’s essential functions. The employer can require the applicant to demonstrate, perhaps through appropriate documentation, that she has a disability and that the disability actually prevents her from meeting the high school diploma requirement.

Question: So, does that mean the employer must hire the person with a disability?

Answer: No. Even if the applicant with a disability can demonstrate the ability to do the job through some means other than possession of a high school diploma, the employer may still choose the best qualified person for the job. The employer does not have to prefer the applicant with a disability over someone who can perform the job better.

Question: Is the informal discussion letter a new interpretation of the law?

Answer: No. Like all of EEOC’s informal discussion letters, the letter simply applies the existing standards under the ADA and the EEOC's regulations. The EEOC’s informal discussion letters are meant to provide assistance for employers in complying with the laws. In this case the letter was intended to explain how the ADA applies when any job requirement (although a high school diploma was the specific example that we were asked about) excludes someone with a disability from a job.

Question: Is this the first time that a high school diploma requirement has been questioned as a possible violation of employment discrimination law?

Answer: No. The U.S. Supreme Court decided in 1971 that a high school diploma requirement was discriminatory because it had a disparate impact on African Americans who had high school diploma rates far lower than whites in the relevant geographical area, and because the requirement was not job related for the position in question and consistent with business necessity. Griggs v. Duke Power Co., 401 U.S. 424 (1971). The courts and the EEOC have consistently applied the Supreme Court’s interpretation of the law ever since, and Congress confirmed it in the Civil Rights Act of 1991.

Additionally, in 2003, EEOC brought a lawsuit on behalf of an employee with an intellectual disability who was fired from her job as a nursing assistant in a residential care facility when the employer adopted a requirement that nursing assistants have high school diplomas. She had worked successfully in the job for four years and had several times tried to obtain her GED, but could not do so because of her disability. Her GED instructors offered to work with the employer to find an alternative way to assess the employee’s ability to do the job, but the employer refused. The employer settled the case with EEOC.

Legal Drama

It’s a New Year with new seasons of our favorite TV shows. Too bad the legal dramas haven’t resolved to use realism in their scripts.

The Good Wife just gets worse and worse. In one episode, a divorce lawyer framed a client’s husband to look like he was cheating. If that weren’t enough, the firm lied about having a copy of a signed document from the divorce case. After a frantic search, the lead divorce attorney surprised the rest of the firm by magically producing the document in the 11th hour to present to opposing counsel.

In the following week’s episode, the law firm took tens of thousands of dollars in fees…by cashier’s check rather than cash.  Any lawyer knows that the cashier’s check is the equivalent of cash and must be reported.

We then have the client who is being hounded for representing an unknown business owner and refusing to tell our heroes who his client is.  He bases this refusal on attorney-client privilege. Of course, he has the same privilege with his lawyers and they could not have revealed the information. AND, as it turns out, he was lying. He actually was one of the three clients.

As usual, they make the judge look like a jerk.

Then, we have the state’s attorney co-opting a law firm employee to steal information (or the whole file), which she turns it over to the prosecutors.  Part of the basis is that “the good wife” forged a signature which is a felony for which she could be disbarred. 

Of course, she would have to be prosecuted by her husband. The employee turns over the file to hurt the partner who is being investigated-who actually did nothing wrong, except for introducing a bookie to his judge friends. That’s their problem not his.

If that weren’t enough, this show also makes the federal agents look like jerks and puts them down-primarily for being efficient.

I took a break from blogging about The Good Wife because the drama, in many ways, outweighed the legalities-but no more.  Sadly, even the drama parts (i.e. relationships) have gotten silly. 

Stay tuned for my next blog about the new TV version of The Firm.  Let’s hope it doesn’t disgrace Grisham’s classic legal thriller.