The public hearing on LB 1126 was held this afternoon before the Revenue Committee. Following the introduction of the bill by Senator Tom White, Omaha, proponents were given a chance to speak. Bill Mueller, lobbyist for us and for the State Bar Assoc., went first.
Some of his points were as follows: He believes the reporters bill for a service and not a product. Since the implementation of sales tax in this state (I believe he said in 1967), reporters have never been told to charge sales tax on anything. In addition, several years ago when the State was considering a sales tax on services, the State was looking at court reporting as a service that should be taxed. The sales tax on services legislation did not pass.
Bill explained that two attorneys may decide to take a deposition in a case but only one of them calls and makes the arrangements for the reporter. He explained that the attorney that arranged for the deposition pays for and receives the original deposition and the other attorney receives and pays for a copy. However, the value of the transcript may be equal to both of them in terms of the pending suit.
Bill provided the analogy of hiring an architect to design a house and you pay the architect for their service. Later, when the architect provides you with a blueprint that will be used, the Revenue Dept. doesn't consider that a taxable product; and the transcript from the reporter is the same thing, an extension of the service provided.
Bill told the committee that as far as he knew, no court reporter has a sales tax certificate because they have never been told to collect sales tax. Therefore, if the Rev. Comm. should conclude that the Revenue Dept. can require reporters to collect and remit a sales tax on transcript copies (if the bill doesn't pass), that in fairness the Revenue Dept. should be precluded from requiring reporters to go back through the last five years of their records and pay in the tax of all copies sold.
I followed Bill. I brought along a copy of a short appeal transcript and copies were handed out to the committee members so they could see what a transcript might look like. I described my background of reporting in Nebraska for 28 years, in state court, freelancing, and now in federal court and told them I have never been told to collect a sales tax on any transcript copies. I described the difference between a freelance reporter and an official reporter. I described the per-page charge history and that the Supreme Court sets the page rate for state appeals and the Judicial Conference in Washington sets the page rate for federal appeals. I also explained that the rules provide for a different rate for the copy. I told them that I didn't know rates freelancers were charging but that they were independent contractors and would decide for themselves what rates to charge. I gave them the number of state officials, federal officials, and an approximate number of freelancers.
I explained that the reporter was an impartial, unbiased individual in the deposition setting and the courtroom setting and that I had always believed I was providing a service to both counsel. I told them we followed the Professional Code of Ethics of NCRA and did not work on a case where we have a potential conflict.
Finally, John Lindsay (attorney, former state senator and friend of reporters) testified on behalf of the Bar Association. He began by asking the committee members to look at the transcript in front of them and then explained that even if someone in the Rev. Dept. thinks that's a product, it is worthless to almost everyone except the parties to that particular case. I thought that came across well.
John reiterated the neutral status of the reporter and that the transcript is a reflection of what was said in the deposition/court hearing that is used by the attorneys to represent their client. He also talked about the medical records issue.
Doug Ewald, Tax Commissioner, testified on behalf of the people that were neutral to the bill. He said the law firm that was audited was randomly selected and that the Revenue Dept. was mainly looking at medical records. He explained that law firms are getting a lot of medical records from private companies that compile them. The Rev. Dept. believes the law firms should be paying a use tax for those records pursuant to a 1975 law.
QUESTIONS: Sen. Abbie Cornett, Omaha, seemed disgusted with the Revenue Dept. She asked Mr. Ewald how this issue came up and who in the dept. wanted transcripts taxed. She didn't get a straight answer which didn't sit well with her. Mr. Ewald stated the audit had been done before he came to the dept. At this point Mr. Ewald stated that he believed the dept. could handle the medical records issue through a regulation and that therefore the bill may need to be clarified.
Sen. Ron Raikes, Lincoln, asked why the reporter couldn't bill the entire deposition to the taking party and that that would alleviate the problem. At first I thought he was on our side, helping us figure out a way to not pay up. But further comments from him revealed he's on the side that will bring more money into the State's coffers. You may recall, Sen. Raikes chaired the Education Committee that was very active on the school issues. Bill told me that Sen. Raikes will always go for the side that collects more money. Sen. Abbie Cornett brought up the issue of hostile witnesses, that one side definitely wants the deposition of that person and the other side may not. Therefore requiring the taking party to pay the whole bill is not feasible. She also commented that on appeal transcripts, reporters couldn't bill the entire amount to one side.
Prior to the hearing, Bill introduced me to Mr. Ewald and Catherine Lang, Deputy Commissioner. They asked me questions about whether reporters were licensed, that perhaps an exemption could be tied to a license. I told them we weren't and explained the lack of state certification and how the voluntary NCRA certification works. They both seemed genuinely interested in the situation. After the hearing, I was approached by Catherine Lang and she again commented that she thought something could be worked out. She did, however, make a comment that she thought that official reporters definitely should be exempted because they're required by statute or Supreme Court rule to produce the transcripts. That's as far as she went on that.
At this point, Bill Mueller asked that we stop sending e-mails to the senators. He told me he heard from several of them concerning the large number of e-mails from reporters (THANK YOU!!) and that they asked that they stop. However, he then told me that it's always good when the senators get so many e-mails on a certain bill that they ask that they stop <G>.
Bill will be in contact with Ms. Lang and will let us know what the next step will be. I think the hearing went well.
I will let you know what I hear from Bill after he has a chance to talk to Sen. Tom White to see how the committee discussion went after the hearing.
Brenda
