New Jersey’s biggest purveyor of legal education has notified 15,000 customers that they may owe years of back taxes, according to the New Jersey Law Journal. The Institute of Continuing Legal Education, a joint venture of the New Jersey Bar Association, Rutgers University, and Seton Hall University, recently learned it should have been charging sales tax on the books, CDs, videotapes, and audiotapes it sells and is working with the state to try to collect the money. Under an agreement negotiated with tax authorities, ICLE began collecting sales tax on those items as of July 1.
ICLE executive director Lawrence Maron also sent a letter on June 30 to those who bought the products between January 1, 2003, and June 30 of this year, advising them they must go back and calculate the tax on a quarterly basis, and send a check to ICLE by July 31. ICLE will send the money on to the Division of Taxation, which will match the payment against ICLE’s customer list and bill buyers for any interest owed.
The tax does not apply to materials supplied by ICLE for use in seminars, only to items purchased separately. The tax, known as a use tax, is payable by a buyer in the event the seller fails to collect sales tax. Maron says ICLE was operating on the basis of a legal opinion, which turned out to be wrong, that, as a nonprofit entity, it did not have to collect sales tax.
A contentious and vocal group, lawyers are not planning to pay the tax without, at the least, a good discussion of the matter. The Law Journal reports, for example, that tax lawyer Robert Kenny, who operates an office at 212 Carnegie Center, has stated that “the primary person that should be paying over the sales tax is ICLE, as the seller.” Kenny says he sees the letter as a bluff, meant to induce some people to pay and to the extent that they do, let ICLE off the hook.
Ann Kiernan, a sole practitioner in New Brunswick, tells the Law Journal that she is not happy about paying the tax either, especially because there has been “no explanation as to how an organization run by the state Bar Association and our two law schools could have screwed this up so royally” while offering “no breath of apology” for the inconvenience.
Kiernan says she particularly resents that ICLE plans to turn over a list of who bought what to the state but has not offered to give lawyers information about their own past purchases.
ICLE has offered its assistance to attorneys in the matter.
Institute for Continuing Legal Education, 1 Constitution Square, New Brunswick 08901; 732-214-8500; fax, 732-249-0383. Lawrence Maron, executive director. www.njicle.com.