Lawyers Sue In Miami-Dade To Get Out From Under County, City Of Miami Occupational License Fees
Free for all?
July 02, 2003 By: Matthew Haggman
Inspired by a recent Georgia Supreme Court ruling that invalidated occupational taxes levied on attorneys in that state, lawyers in South Florida and on the Gulf Coast have launched an effort to eliminate such taxes in Miami-Dade County and throughout Florida.
In separate lawsuits filed against Miami-Dade County and the city of Miami in Miami-Dade Circuit Court, and against the city of Tampa in Hillsborough Circuit Court, the attorneys are demanding that the defendant governments abolish their occupational license taxes on attorneys and refund millions in past taxes paid.
The Miami-Dade suits, which were filed in May and June and which name several Miami-area lawyers as plaintiffs, seek class action status to represent every attorney in the city and county.
In addition, last month, a similar lawsuit seeking a class action status was filed against Tampa on behalf of all attorneys in Florida. That suit also seeks class action status for similarly situated defendant municipalities. If class status is granted, the defendant class would include nearly 400 municipalities across the state and could potentially subsume the two lawsuits in Miami-Dade County.
Brett A. Panter, a partner at Panter, Panter & Sampedro in Pinecrest who is behind the two suits in Miami-Dade, argues that attorneys are exempt from such taxes because the Florida Constitution gives the state Supreme Court exclusive jurisdiction to regulate the practice of law. The fact that only the high court can regulate attorneys, according to the lawsuits, means that local and county government have no authority to tax lawyers.
The “ordinance, although denominated as an occupational tax, is in effect a precondition for a license to engage in the practice of law and impermissibly seeks to discipline lawyers admitted to practice law,” the complaints in both cases assert.
It is unknown how much attorneys have paid in occupational taxes over the years. But Panter said that there are about 11,000 attorneys in Miami-Dade, and each attorney has to pay an annual occupation tax of $40 and each firm must annually pay $110. Added to that, the city of Miami levies a $110 occupational tax on individual attorneys and another $110 tax on law firms, Panter said.
“There will be some interesting questions as to how far you can go back to get a refund and when the tax was first implemented. That will need to be litigated,” Panter said. “But I have been paying an occupational license tax since I started practicing law in 1984. So, it’s a lot of money.”
Miami-Dade County, which can ill afford to lose the revenue, is fighting back. Last week, County Attorney Robert A. Ginsburg’s office filed a motion to dismiss the case.
“It is our position that the Florida courts have upheld the authority of local government to impose occupational license taxes on attorneys,” said Melinda S. Thornton, an assistant county attorney who is representing the county.
Miami City Attorney Alejandro Vilarello declined comment, saying he had not yet reviewed the lawsuit against the city, which is identical to the one filed against the county.
The lawsuits face resistance from other governments as well. “The Florida Association of Counties is opposed to any effort to undo, whether legislatively or by judicial fiat, any longstanding revenue source, which this clearly is,” said Ginger Delegal, general counsel for the association.
According to Delegal, in 2001-2002, counties collected a total of $48 million from all occupational license fees, while cities took in $102 million. She said assessments on lawyers make up a significant percentage of the total amount of occupational license taxes collected.
Panter said he is considering filing additional suits to invalidate and win refunds for occupational taxes levied by Florida’s 66 other counties.
“To my knowledge, every single governmental entity in the state — in both county and city government — has an occupational license tax on lawyers,” said Panter’s law partner David Sampedro, who also is working on the lawsuits. “The numbers may be different but the language is similar.”
But Panter and Sampedro’s plans may have competition from the Hillsborough Circuit Court suit, Michael C. Addison and Richard T. Petitt et al v. City of Tampa et al., which is based on the same legal theory that only the judiciary can regulate lawyers.
The four attorneys who filed the Tampa suit are F. Wallace Pope in Clearwater, Stephen A. Scott in Gainesville, David L. Woodward in Pensacola and Herbert Schwartz in Houston.
“This distinction in this lawsuit is that it seeks class status on behalf of all lawyers and would arguably subsume lawyers situated in Miami-Dade, Miami, and all other lawyers,” said Jerry Gerwitz, an assistant city attorney for Tampa.
Tampa’s response to the lawsuit is not due until the end of this month.
Encroaching on judiciary?
Occupational license taxes are applied to many types of businesses and professionals across the county, ranging from accountants to veterinarians.
“The occupational license is a tax imposed for the privilege of doing business,” according to the county’s Internet site. “Anyone providing merchandise, entertainment or service directly or indirectly to the public, even through a one-person company or home-based occupation, must obtain a license to operate.”
But the lawsuits cite Article 5, Section 15 of the state constitution, which says that only the Supreme Court can regulate the “admission of persons to the practice of law and the discipline of persons admitted.”
“There are three separate but equal branches of government and the legislative branch is encroaching upon the judicial branch by attempting to regulate the practice of law,” Sampedro said.
The two Miami-Dade attorneys are joined in the suit by Joseph Moffa, of Moffa & Gainor in Fort Lauderdale. Moffa came up with the idea of filing suit in Miami-Dade Circuit Court to collect the back taxes after reading about the Georgia Supreme Court decision in March that invalidated Atlanta’s occupational license tax on attorneys.
In that case, City of Atlanta v. Barnes, et al., attorneys demanded a refund of occupational license taxes going back to 1996. As in the Miami-Dade suits, they argued that the tax was an impermissible precondition to the practice of law under the state constitution.
The Georgia Supreme Court unanimously ruled that Atlanta’s annual $400 per lawyer occupation tax must be paid back. “Atlanta has had the use of the money it collected under the occupation tax ordinance and the lawyers from whom it was collected have lost that use,” wrote Justice Robert Benham, who authored the opinion granting the refund.
According to court documents in the litigation, Atlanta collects about $2 million annually from the tax.
But Miami-Dade County’s Thornton said the Georgia ruling has no precedential value in Florida because Florida courts “have already looked at the issue.”
In her motion to dismiss, Thornton cites a 2nd District Court of Appeal ruling in 1961, Sandstrom v. City of Fort Lauderdale, which held that the “judicial department’s power to control admission and regulation of attorneys in the practice of law does not preclude the exacting by a city of a municipal license tax upon attorneys.”
Since neither the Florida Supreme Court nor the 3rd District Court of Appeal, which has jurisdiction over Miami-Dade, has ruled on the issue, her motion says, “this court is obligated to follow Sandstrom.”
The Miami-Dade County lawsuit is before Circuit Judge Margarita Esquiroz. The city of Miami case is before Circuit Judge Norman Gersten.
Matthew Haggman can be reached at mhaggman@floridabiz.com or at 305-347-6649
Harris Meyer contributed to this story.
