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The Kentucky Attorney General has put an ordinance amending the City of La Grange’s business licensing tax into question.
After the city council approved the changes 5-4 in their March meeting, the Kentucky Bar Association asked the Attorney General for a legal opinion on the constitutionality of the law.
The changes made in March include language requiring attorneys to apply for a business license tax at the end of each year, but doesn’t allow stop work orders if the fee is not paid. Attorneys also don’t have to display their business license, according to the new language.
Critics of the ordinance say the changes unfairly single out lawyers when it comes to the city’s business tax and the new language is unconstitutional and a precondition to practicing law, which local legislative bodies cannot do.
And now, the Attorney General appears to agree with the critics of the law. In a four-page opinion, the AG calls into question whether the city can tax attorneys who don’t reside in the city or do lots of business in its city limits. It doesn’t limit the city on taxing those deemed “residents” though.
City Councilman Jason Taylor, an attorney who has been the most vocal critic of the ordinance, said the AG’s opinion showed the city should have listened to the council members who had concerns before passing the changes to the business license ordinance.
“I’m certainly happy they clarified some issues,” Taylor said. “I had concerns about the constitutionality of the issue in the first place. It seems (the AG) is in agreement on that. But I wish the city would have listened to me, Lee Phillips, Tom Goldsmith and Jean Knight about our concerns and getting an opinion from the KBA or the AG. I wish they would have listened sooner.”
In response to the opinion, which was made public Monday, City Attorney Steve Emery said he will draft an amendment to the ordinance to comply with the AG opinion.
The amendment will create an exemption for any business that doesn’t reside in La Grange or do a lot of work in the city limits, Emery said. The tentative dividing line to determine whether a business, attorney or otherwise, has to pay the tax is currently set at 10 jobs within the city limits, Emery said, but that number is up for debate for the city council to decide.
The burden of proof will be on those wanting exemptions to prove they deserve one with a sworn affidavid, Emery said.
“We’ll only tax those regularly doing business,” Emery said. “Right now that’s 10 times or more in a 12-month period. But that’s an item for discussion. And this is for everyone. We didn’t use the term attorney because it’s used for all businesses.”
Emery said the amendment, if approved, shouldn’t have a budgetary impact on the city for loss of license fees. He noted 91 attorneys had already applied for a license with the city, a significant rise from last year.
Emery said the AG’s opinion seemed “well thought out” and makes an effort to not just single out attorneys as problematic for the charges.
He noted several attorneys have already sent a request for an exemption before the AG’s opinion was released and that the city hasn’t enforced the license on those individuals.
But Taylor said the city should view the AG’s opinion and actually take its time on a response, instead of quickly drafting an amendment in one day.
“I don’t want to get another Attorney General opinion on this or have others get involved,” Taylor said. “My suggestion is we run any amendment through the AG or KBA before we vote on this again.”
Taylor said he believes the burden of proof to grant or dismiss an exemption is on the city, not the individual.
“If the city wants to collect the money, they need to monitor it,” he said. “But I don’t expect them to go along with what I say.”
Taylor said his issues reside with the city trying to tax or legislate lawyers, which isn’t under their jurisdiction and with imposing another tax. He said he has heard complaints from attorneys against the state who handled one or two cases a year in La Grange but don’t want to have to pay a $55 business license fee.
“The ones who live outside the community, they are the ones that have problems with this,” he said.
Taylor said he hopes the city’s response, while appreciative of their speed to address the issues, needs to be measured.
“I appreciate the efforts of those in City Hall to get on this, but I think they’ve just thrown something together,” Taylor said.
As it stands, the amendment to the ordinance will likely receive its first reading at the council’s next meeting in July. Its final reading and possible passage could come in August, Emery said.
“I felt like we’ve done what we needed to do,” Emery said.
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