It has been noted that one large group is notable for not filing comments in opposition to the Code Section 120 and the Proposed Regulation Section 1.120. There is a reason. The largest present users of legal service plans in this City, the labor unions, are exempt from the limitations established by Code Section 120 and its companion Regulations. There is no logical reason to exempt such plans, merely because they are "bargained for", while at the same time severely restricting similar plans, just because they are "offered" by employers to all employees equally. Finally, we wish to focus attention on a provision that should be included in the new Code Section. The Section should prescribe a maximum period of one year from the date of commencing employment that a new employee may be placed on a probationary period and excluded from participation in the company's legal services' plan. Some period is necessary for a probationary status, just as with insurance companies, to preclude someone from using the new employer as a means of taking care of personal matters. Also, the pre-paid, or employer paid legal services' plan is a major investment on the part of the employer, and should not be mandated for coverage of a transient employee, or one who is not committed to a long term relationship with the company. A one year period for this purpose is a reasonable period of time. Thank you for permitting me to present our views regarding this important piece of legislation. BANKERS LIFE & CASUALTY, Re: Senate bill 1039. SENATOR ROBERT PACKWOOD, DEAR SENATOR PACKWOOD: Bar association surveys have indicated that the great majority of Americans are not using the legal system to their best advantage, even though lawyers are not in short supply. Most of the barriers between the average American and the legal system have a common element, the fear of the unknown: Do I really have a legal problem? Do I need a lawyer? How do I find the right one? What can a lawyer do for me? What will he charge? Pre-paid access to legal services and legal insurance will, in our opinion, help reduce the frequency with which these questions go unanswered in the minds of average Americans, with the result that more Americans will seek timely legal advice, avoid legal problems, and keep minor problems from becoming major problems. We anticipate that the benefits to be derived from the growth of pre-paid legal services and legal insurance will parallel the benefits wrought by the growth of medical insurance. Through our affiliate, Bankers Multiple Line Insurance Company, we have taken some bold initiatives in marketing individual legal insurance, and are considering entry into the group legal insurance market. We believe that the growth of legal insurance and pre-paid legal services will require the same favorable tax climate which has been afforded medical insurance. We therefore support and urge passage of Senate Bill 1039 which seeks to make permanent Section 120 of the Internal Revenue Code. Very truly yours, DUANE W. CHAPMAN, Senior Vice President. Hon. ROBERT PACKWOOD, AFSCME, OHIO COUNCIL 8, U.S. Senator, Chairman of Finance Committee, Taxation and Debt Management, Senate Office Building, Washington, D.C. DEAR SIR: It is with extreme good pleasure we note your zealous and persistent effort through sponsorship of S. B. 1039 which maintains the continuity of programs which ar uniquely qualified and conferred with a taxation exempt status. The Columbus Pre Paid Legal Service Plan is one such program with tax exempt status. Debasement of our tax exempt status would seriously destroy some credibility of virtue respecting the Legal Service Plans programatic viability. Specifically the plan is designed to assist those who can ill afford to pay the cost of providing vitally needed legal services thus required. Taxation of payment for legal fees as provided by the plan would reflect a callous indifference to the urgency of the plan motivation as it relates toward enhancement of purchasing power in this era of inflation with repression. Be encouraged to continue the struggle; for your cause is right, just and proper. You can be assured our support is positive. Very truly yours, Rev. WARREN H. JENNINGS, Treasurer, Ohio Legal Services Fund Inc., Board of Trustees. Hon. ROBERT PACKWOOD, VIRGINIA STATE BAR, Richmond Va., May 26, 1981. Chairman Subcommittee on Taxation and Debt Management, Committee on Finance, U.S. Senate Washington, D.C. DEAR SENATOR PACKWOOD: The Virginia State Bar has been supportive of the development of prepaid legal services for many years and I write to express this State Bar's support of Senate Bill 1039 which deals with the taxation of prepaid legal services plans. If enacted, S. 1039 would provide that amounts received by employees under a qualified group legal services plan would not be taxable as income to employees. Hence, employers would be encouraged to provide legal services to employees as a fringe benefit because of the favorable tax treatment. The Virginia State Bar believes that the favorable tax treatment which would be provided By S. 1039 will serve the public interest by encouraging the expanded use of legal services. The potential loss of revenue to the Treasury Department would be more than offset by the potential benefit to the public. Sincerely, JAMES C. ROBERTS, President. TRI-STATE LEGAL SERVICES TRUST FUND, Senator ROBERT PACKWOOD, DEAR SENATOR: We urge that the Congress pass Senate Bill 1039 to remove the expiration date of December 31, 1981 from Section 120 of the Internal Revenue Code in order to make permanent the tax exempt status of qualified group legal service plans. We are writing to you as Co-Chairmen of the Tri-State Legal Services Trust Fund. This Fund provides the security of a comprehensive legal benefits program to more than 7,000 Teamster members and their families in the states of Connecticut and Massachusetts, for a covered population of approximately 20,000 persons. These members, together with their participating contributing employers-who number in the hundreds-and the participating attorneys in Connecticut and Massachusetts have all expressed their satisfaction with this new program which has been in operation since the fall of 1980. We enclose a copy of the booklet which explains this legal services plan, and we offer to provide whatever additional information you and the Senate Committee on Finance may find helpful in your consideration of S. 1039. Respectfully, FRED J. ROBERTO. Hon. ALBERT PACKWOOD, THE CUYAHOGA COUNTY BAR ASSOCIATION, Chairman, Subcommittee on Taxation and Debt Management, Committee on Finance, U.S. Senate, Washington, D.C. DEAR MR. CHAIRMAN: This letter will express to you the support of the Cuyohoga County Bar Association for your Bill S. 1039, which is intended to make Section 120 of the Internal Revenue Code permanent, and thereby preserve the deductible feature of employer contributions for legal service plans. This Bar and its 2,000 members have for many years stood firmly behind the adoption of Group Prepaid Legal Service programs. These programs have been instituted by the Cuyahoga County Bar Association, and I have had the opportunity of chairing the Prepaid Legal Services Committee for the past two years, as well as directing the efforts of the Committee through my services as President of this association in the year previous to my first year as chairman. Our efforts to date have shown a plan adopted in conjunction with Medical Mutual of Cleveland, Inc., whereby it is the unique privilege of this Bar to be involved in the only Medical Mutual-Bar Association Group Prepaid Legal Service Plan that we know to be in existence in the United States. The offices of the Bar and those of Medical Mutual have been in the process of working with several labor organizations with the anticipation that there will soon be in effect many employer funded plans that will rely upon the current state of the law for their continued existence. If the deductible features of Section 120 of the Code were to be eliminated, the efforts of this Bar, as well as the efforts of all other Bars in the United States that have been attempting to bring Group Prepaid Legal Service Plans to the consumer, would be thwarted. Though the success of these plans cannot be shown by numbers at this time, they nonetheless will grow in the future as the need for legal services is brought forward to the members of the consuming public. A new project takes many years before the fruits of its labors come to bear. This Bar feels confident that with the efforts being placed at this time, results will begin to show shortly. For these reasons, your proposal to extend the life of Section 120 of the Internal Revenue Code in perpetuity is ardently and enthusiastically supported. Very truly yours, STANLEY D. GOTTSEGEN. THE STATE Bar of CaliforNIA, Re S. 1039, Tax exempt status of group legal services plans. Chairman, Subcommittee on Taxation and Debt Management, Committee on Finance, U.S. Senate, Washington, D.C. DEAR SENATOR PACKWOOD: On May 28, 1981 the Board of Governors of the State Bar of California adopted the following resolution: "Resolved, That the Board of Governors authorizes the President of the State Bar to forward a statement of support to Congress endorsing the appropriateness of bill S. 1039 which, if adopted, will make Section 120 of the Internal Revenue Code permanent.' In behalf of the State Bar of California, I want to indicate our strong support for the above legislation which we understand is intended to make permanent Section 120 of the Internal Revenue Code. We agree that adoption of this legislation will help assure the continued existence and growth of legal services provided by employers for employees. Considering the large number of employees who now benefit from these plans, continuation of the tax exemption will facilitate increased access to legal services for people of limited means. Yours sincerely, ROBERT D. RAVEN. Re Prepaid legal services tax amendment. THE MISSOURI Bar, Jefferson City, Mo., May 28, 1981. Chairman, Subcommittee on Taxation and Debt Management, Committee on Finance, U.S. Senate, Washington, D.C. DEAR MR. CHAIRMAN: In my capacity as President of The Missouri Bar I am writing to express The Missouri Bar's support for the extension of Section 120 of the Internal Revenue Code, which permits employer contributions to and the value of legal services received from employer-funded "qualified" legal service plans not to be taxable to the employee. The Missouri Bar supports the concept of prepaid legal services and believes that the tax treatment afforded by Section 120 is crucial to the further development of this form of delivery of legal services. Very sincerely yours, JOSEPH E. STEVENS, Jr., President. UNITED FOOD & COMMERCIAL WORKERS INTERNATIONAL UNION, Hon. ROBERT PACKWOOD, Chairman, Subcommittee on Taxation and Debt Management, Senate Committee on Finance, U.S. Senate, Washington, D.C. DEAR MR. CHAIRMAN: The UFCW strongly supports S. 1039 legislation to make permanent the income tax exclusion for the value of legal services provided by qualified group legal service plans. Since the enactment of legislation authorizing the establishment of group legal service plans, 400 plans covering more than one-million workers have been formed. Our goal of affordable, quality legal services, for workers is just now beginning to be realized. The enactment of S. 1039 is essential to the attainment of that goal. In enacting the original temporary tax exclusion, Congress felt that a tax incentive would not only encourage the establishment and use of the legal service programs but would also grant workers some relief from the high cost of legal services. Although the present temporary tax exclusion has clearly been an asset to the group legal services program, the uncertainty associated with its temporary status has occasionally adversely affected the establishment of the very program it was designed to enhance. We believe the enactment of S. 1039 will encourage employers to provide legal services for their employees, as well as encouraging the utilization of this benefit by employees. We urge its speedy adoption. In closing, we request that this letter be included in the hearing record on S. 1039. Sincerely, ARNOLD MAYER, International Vice President, Director of Government Affairs. DETROIT BAR ASSOCIATION, Hon. ROBERT PACKWOOD, Chairman, Subcommittee on Taxation_and_Debt Management, Committee on Finance, U.S. Senate, Washington, D.C. DEAR MR. CHAIRMAN: I am writing on behalf of the Detroit Bar Association in support of Senate Bill S. 1039 which if passed into law would make permanent the inclusion of Section 120 in the Internal Revenue Code. As proponents of prepaid legal service plans, we believe Section 120 should remain as part of the Code so that contributions to and the value of prepaid legal services will not be taxable to an employee under such a plan, thus placing group legal plans roughly on the same basis as group medical plans. We appreciate your efforts in this matter and we will be happy to assist or provide any information we can concerning prepaid legal services in the Detroit area. Sincerely yours, ROBERT G. RUSSELL, President. WESTCHESTER COUNTY BAR ASSOCIATION, Hon. ROBERT PACKWOOD, Chairman, Subcommittee on Taxation and Debt Management, Committee on Finance, U.S. Senate, Washington, D.C. DEAR SENATOR PACKWOOD: Our County Bar Association for many years has been interested in the concept of prepaid legal services. We have adopted our own plan which calls for an open panel. Due to the technicalities in the New York State law, which all of the bar associations have been trying to change, insurance companies have not been able to underwrite such plans in this State. We are about to launch our own plan in a modest fashion. We believe it is essential for the future viability of such plans that Section 120 of the Internal Revenue Code be extended beyond the present expiration period. This letter is to indicate our strong support of S. 1039 to make Section 120 permanent. Sincerely yours, MARTIN DRAZEN, President. Re Senate bill 1039. Hon. ROBERT PACKWOOD, ALASKA BAR ASSOCIATION, Anchorage, Alaska, June 10, 1981. Chairman, Subcommittee on Taxation and Debt Management, Committee on Finance, U.S. Senate, Washington, D.C. DEAR MR. CHAIRMAN: The Alaska Bar Association supported the legislative effort in 1976 to secure congressional adoption of an amendment to the Internal Revenue Code to facilitate the growth of pre-paid legal service plans. We realize that in order to secure the adoption of the provision, it was given only a five (5) year life during which Congress was to review the impact of this provision and determine whether to extend it further. The provision will expire December 31, 1981 unless Congress acts affirmatively to extend the life of Section 120 of the Tax Code. The Alaska Bar Association is appreciative to you as the principal proponent of the 1976 amendment for introducing S. 1039 to make section 120 a permanent section of the Tax Code. At the Board of Governors meeting in June, 1981, the Alaska Bar Association again passed a resolution urging that section 120 of the Tax Code be a permanent provision. We urge a passage of S. 1039 and by carbon copy of this correspondence are so advising our congressional delegation from the State of Alaska. Very truly yours, KAREN L. HUNT, President. CITY OF COLUMBUS, OHIO, Re S. 1039 prepaid legal benefits. Hon. ROBERT PACKWOOD, Chairman, Subcommittee on Taxation and Debt Management, Committee on Finance, Russell Senate Office Building, Washington, D.C. DEAR MR. CHAIRMAN: Please accept these comments as an endorsement of your efforts to re-enact Internal Revenue Code Section 120(c). The City of Columbus has provided Ohio Legal Services Fund prepaid legal benefits to its employees since 1975. In the judgment of this Administration, these low cost benefits have provided an outstanding return in increased productivity and employee retention. One of the most heart breaking and frustrating problems faced by today's supervisors is the loss of services from trained workers who, while otherwise capable, are unable to financially or emotionally cope with demands of legal problems. We have found that the availability of legal services has allowed employees to survive the distress of domestic relations problems, debtor/creditor situations, consumer contract disputes and a wide range of non-civil defense needs. In addition to keeping many of these trained employees on the job, productivity losses from preoccupation with their families' legal problems has been minimized by having legal representation available. There is no way, of course, to assess the impact of preventive legal work in the writing of wills, the advice of counsel in real estate transaction and the availability of legal consultation. We surmise from benefit utilization data that these services have allowed many employees to address potential legal problems before incurring substantial liabilities. Retention of Internal Revenue Code Sections 501(c)(20) and 120(c), Senator Packwood, would be a service to American workers and the industries in which they work. Prepaid legal benefits, in my opinion, should be encouraged because of their positive effect on productivity and the current need to protect employee income. Sincerely, TOM MOODY, Mayor. |