March 15, 2025
This week, MSATP Executive Director Giavante’ Hawkins testified before both the House Ways and Means Committee and the Senate Budget and Taxation Committee in opposition to House Bill 1554 and Senate Bill 1045, which would impose a new 2.5% sales tax on accounting and tax services provided to business entities.
Our Message to Legislators
In testimony before both committees, Hawkins emphasized the devastating impact this legislation would have on Maryland’s accounting professionals and the businesses they serve.
“This legislation would devastate small accounting practices throughout Maryland, most of which are small businesses themselves operating on thin margins,” Hawkins testified. “These firms would face an impossible choice: absorb the tax and further reduce already slim profit margins, or pass the tax to clients and risk losing them to larger firms or out-of-state providers.”
A key point in our testimony was the cross-border disadvantage this would create for Maryland accounting professionals. As Hawkins explained to the committees, “A business in Western Maryland could easily drive 20 minutes to Pennsylvania and establish a relationship with an accountant there, completely bypassing this tax. This places Maryland accounting professionals at a severe competitive disadvantage.”
Inequitable Treatment
Our testimony also highlighted the inexplicable disparity in how the bill treats different professional services.
“While accounting services under NAICS code 5412 are specifically targeted, legal services under NAICS code 5411 are conspicuously absent from the list of taxable services,” noted Hawkins. “This selective approach would apply the tax to approximately 188,917 accounting, tax preparation, and bookkeeping businesses while exempting approximately 359,026 legal service businesses.”
This inequitable treatment is particularly problematic since some legal service providers also offer tax services but would remain exempt under the proposed legislation.
Taxing Mandatory Compliance
Perhaps most concerning is that this bill would create a “tax on a tax” by increasing costs for services that are essential for compliance with mandatory tax filing requirements.
“Filing tax returns is not optional – it is required by law,” Hawkins emphasized. “We should not be increasing fees for those who choose to hire a tax preparer to ensure they are in compliance with tax laws.”
The Fight Continues
While we appreciate the opportunity to testify, the fight is far from over. MSATP is continuing our advocacy efforts by reaching out to individual legislators and committee members.
“We are asking that if this bill moves forward, tax and accounting services be removed from the list of taxable services,” says Hawkins. “None of our neighboring states – Pennsylvania, Delaware, West Virginia, or Virginia – impose sales tax on accounting and tax preparation services. This would place Maryland tax professionals at a severe competitive disadvantage.”
How Members Can Help
MSATP members can support our efforts by:
- Contacting your local representatives to express your concerns
- Sharing the potential impact on your practice and clients
- Emphasizing that this tax would harm compliance efforts and potentially reduce state revenue
We have prepared template letters that members can use when contacting legislators. These are available in the members-only section of our website.
We will continue to keep members updated as these bills progress through the legislative process. Your voice matters in this important fight for our profession and the businesses we serve throughout Maryland.
The Maryland Society of Accounting and Tax Professionals represents over 2,000 tax and accounting professional members who serve more than 700,000 Maryland residents.
