Can a lawyer add Washington's business and occupation (B&O) tax to a client's bill as part of the fee?

Plain-English summary

A lawyer asked about charging Washington State business and occupation (B&O) tax on the lawyer's billing and including that tax as part of the fee. The committee was of the opinion that the lawyer is prohibited from charging the B&O tax as part of the fee.

The committee's reasoning was that the B&O tax is not a sales tax, so a charge presenting it as one (a separately passed-through tax like a sales tax) would be misleading.

Currency note

This opinion was issued in 1995, before the Washington State Bar Association's adoption of the 2006 revisions to the Rules of Professional Conduct. Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule, deadline, or requirement mentioned here. RPC 1.5 corresponds to ABA Model Rule 1.5 on fees.

Common questions

Q: Can a lawyer pass the B&O tax through to the client as a separate charge?

A: No. The committee said the lawyer is prohibited from charging the B&O tax as part of the fee because it is not a sales tax and the charge would be misleading.

Q: Why does it matter that the B&O tax is not a sales tax?

A: The committee tied the prohibition to that distinction: presenting the B&O tax as a pass-through charge like a sales tax would mislead the client.

Background and rules framework

The opinion applied RPC 1.5 (fees, corresponding to ABA Model Rule 1.5). The committee treated billing the B&O tax to the client as a separate fee component as a misleading characterization, since the B&O tax is a tax on the lawyer's business rather than a sales tax on the client's purchase.

Citations and references

Rules of Professional Conduct:

• ABA Model Rule 1.5 (fees); Washington RPC 1.5

See also

• WA Ethics Op. 1039: Billing a Contract Lawyer's Time at a Higher Rate
• WA Ethics Op. 1605: Fee Sharing With a Nonlawyer and Solicitation

Source

• Landing page: https://ao.wsba.org/print.aspx?ID=686

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

Advisory Opinion: 1604
Year Issued: 1995
RPC(s): RPC 1.5
Subject: Charging B&O tax as part of fee

The Committee discussed your inquiry regarding the ethical propriety of charging Washington State B&O tax on your billing and including that tax as part of your fee. It was the Committee's opinion that you are prohibited from charging the B&O tax as part of your fee because this is not a sales tax and such a charge would be misleading.