NEW YORK STATE BAR ASSOCIATION, Senator ROBERT PACKWOOD, DEAR SENATOR PACKWOOD: Average Americans have not secured equal justice under law. One reason has been the cost or fear of the cost. Employer-paid legal services plans are an important part of the solution to that problem. Accordingly, we strongly support your S. 1039, which will make permanent the provision by which legal services benefits under a qualified plan are not treated as income to employees. This is an important step in making into a reality the promise of our national heritage. Very truly yours, ALEXANDER D. FORGER, President. CONSUMER SERVICE CASUALTY INSURANCE CO., Re Senate bill 1039. Senator ROBERT PACKWOOD, DEAR SENATOR PACKWOOD: You have my full support in your efforts to remove the expiration date of December 31, 1981 from Section 120 of the Internal Revenue Code. This action making the tax exemption for employer-paid group legal plans permanent is most important. Through Consumer Service Casualty Insurance Company (CONSERV), a wholly owned subsidiary of Blue Cross of Western Pennsylvania, I have been personally involved with employer-paid group legal plans since 1977 and have seen first-hand the positive impact of group legal plans for lower and middle income people. With the availability of employer-paid group legal plans, there is better access to attorneys. Many people don't seek the services of an attorney when they really need to because they don't think there are legal solutions to their problems; don't know an Attorney; don't know how to find an Attorney or fear the cost may be too high. Employer-paid group legal plans remove these barriers. If the tax exemption for employer-paid group legal plans is not made permanent through Senate Bill 1039, progress made since 1976 in providing access to Attorney services will be lost. Thank you for your efforts on behalf of legal service plans. Sincerely, CHARLES J. SCHNEIDER, Financial/Operations Director. CARR & BLACKWOOD, Senator ROBERT PACKWOOD, Washington, D.C. DEAR SENATOR PACKWOOD: I understand you are sponsoring a Bill to make the employer-group legal plan tax exemption permanent. As a small, private practitioner, I find a great amount of my time spent in discouraging middle class clients from asserting their rights, because of the cost and expense of the process. The only citizens who can "afford justice" in America today are either the extremely poor or the extremely rich. Everyone in between either has to go into hock up to their eyeballs or forget it. Perhaps an even worse problem is that almost none of these people will even consult a lawyer before entering into important transactions, such as buying a house, signing a contract, dealing with family problems, etc. If they could do this, it might well prevent the later, serious legal problems that require major investment. This would also, of course, relieve the pressure on our Court systems by reducing the number of lawsuits. I believe there is major social benefit to be derived from expansion of all pre-paid legal systems. Generally-available legal consultation at a reasonable cost (along the lines of group health insurance) would make the motto-"Government of laws, not of men"-meaningful for the great middle class majority. Sincerely, M. L. CARR. Hon. ROBERT PACKWOOD, THE FLORIDA Bar, Tampa, Fla., May 22, 1981. Chairman, Subcommittee on Taxation and Debt Management, Committee on Finance, U.S. Senate, Washington, D.C. DEAR SENATOR PACKWOOD: The Florida Bar has actively promoted the development of group and prepaid plans for many years. We firmly believe that this system of delivering legal services provides access to attorneys that otherwise would not be available to a majority of the participants in group plans. The Florida Bar strongly supports the continuation of qualified plans as a tax-free benefit to employees. The rapid growth in the number of plans and covered employees has been due, in part, to the tax benefits in force. By copy of this letter, I am requesting the full support of Senators Hawkins and Chiles in the passage of Statute 1030. Sincerely, LEONARD H. GILBERT, President. NORTH CAROLINA PREPAID LEGAL SERVICES CORP., Re legal services tax provisions: Internal Revenue Code sections 120 and 501(c)(20). Dirksen Senate Office Building, DEAR SENATOR PACKWOOD: We are writing to express our support for the reenactment of Sections 120 and 501(c)(20) of the Internal Revenue Code relating to the tax treatment of group legal services plans and administrators. We understand that you are planning to introduce legislation which would clarify and make permanent these provisions. The Sections are of tremendous importance to the future growth and existence of group legal services programs in the United States. As you know, a coalition of organizations worked for the original passage of the measures. During these four years, plans have begun to develop throughout the country and are now at an important threshold of growth. The failure to extend these tax provisions may serve as the death knell for organizations such as ours. Many of the companies with which we are working have expressed concern about the continuation of these important tax provisions. It is our belief that most, if not all, of these companies will elect not to participate without these tax incentives. North Carolina Prepaid Legal Services is a nonprofit corporation sponsored by the North Carolina State Bar pursuant to legislation passed in the 1975 General Assembly. The North Carolina State Bar is a state agency which regulates and licenses attorneys. NCPLS is not an insurance company but an administrative service for group legal service plans for employee groups throughout the state. NCPLS seeks to reduce the cost of legal services and at the same time to help educate the public about the law and the importance of legal services for adequate family protection. In four years NCPLS has provided legal services coverage to thousands of North Carolina families and paid out more than one half of a million dollars in fees to attorneys throughout the state. Most of the plans which we presently have are employee paid plans where the employee is paying all or a large part of the premium. Because we are nonprofit, none of the income inures to the benefit of the organization. All premiums, less the administrative overhead of 15 percent or less, is paid to the servicing attorneys, who are themselves taxpayers. Most of the plans which will be developing in the future, however, will be paid for by employers. The legal service tax sections provide a significant benefit to the subscriber who is participating in a qualified plan as defined under Section 120. Legal plans are placed on a par with the tax benefits available to group health plans presently administered by almost all employers. Cost conscious employers, seeking to reduce their own tax burden and to protect employee benefits, are looking for programs offering the highest tax incentives. Section 120 and IRS regulations are very unclear as to what the parameters of "qualified" plans are. Proposed IRS regulations have only confused the providers and purchasers of group legal plans. We urge your support of a clarified tax bill which will rectify the strained interpretation taken by the Service in its proposed regulations on Sections 120 and 501(c)(20), which took almost four years to complete. Several provisions of the proposed regulations are in direct violation of the letter and spirit of the law. For example, the proposed regulations state that a qualified plan must be funded by the employer. Section 120 states that plans may be qualified if the premium is paid in whole or in part by the employer. Such a narrow interpretation of the tax law will eliminate many prospective group plans in which the employer as a matter of policy does not fully fund any employee benefit. A hearing was held on the proposed regulations at which NCPLS testified in opposition to many of its provisions. The Service promised that the revised regulations would be promulgated by the first of January 1981. Our efforts to obtain a tax exempt status under 501(c)(20) have been totally frustrating. We believe that bar-sponsored nonprofit legal plans such as NCPLS were clearly contemplated by Congress in 501(c)(20). We have been denied a tax exempt status, however, on three separate occasions, the last of which is enclosed for your review. NCPLS offers both qualified and nonqualified plans and the Internal Revenue Service has taken the position that because NCPLS offers any nonqualifying plans, it is not entitled to tax exempt status under 501(c)(20). The proposed regulations do not clarify whether organizations such as NCPLS would ever be entitled to a tax exempt status. We also write to offer our assistance in anyway possible to further this legislation. We shall be happy to testify before any hearing or prepare any written report about our plan that may be helpful to you. Thank you for your interest. We look forward to working with you on this very important matter. Sincerely, R. W. HUTCHINS, President. B. E. JAMES, Secretary-Treasurer. JOSEPH C. DELK, III, Executive Director. Form 2848 (Rev. July 1976) Department of the Treasury Internal Revenue Service Power of Attorney (See the separate Instructions for Forms 2848 and 2848-D.) Name, identifying number, and address including ZIP code of taxpayer(s) 56-1140121 hereby appoints (Name, address including ZIP code, and telephone number of appointee(s)) (See Treasury Department Circular No. 230 as amended (31 C.F.R. Part 10), Regulations Governing the Practice of Attorneys, Certified Public Accountants, and Enrolled Agents before the Internal Revenue Service, for persons recognized to practice before the Internal Revenue Service.) as attorney(s)-in-fact to represent the taxpayer(s) before any office of the Internal Revenue Service for the following Internal Revenue tax matters (specify the type(s) of tax and year(s) or period(s) (date of death if estate tax)): Obtaining exemption from federal taxation under Code §120 and 501 (c) (20) The attorney(s)-in-fact (or either of them) are authorized, subject to revocation, to receive confidential information and to perform on behalf of the taxpayer(s) the following acts for the above tax matters: (Strike through any of the following which are not granted.) To receive, but not to endorse and collect, checks in payment of any refund of Internal Revenue taxes, penalties, or interest. (See "Refund checks" on page 2 of the separate instructions.) To execute waivers (including offers of waivers) of restrictions on assessment or collection of deficiencies in tax and waivers of notice of disallowance of a claim for credit or refund. To execute consents extending the statutory period for assessment or collection of taxes. To execute closing agreements under section 7121 of the Internal Revenue Code. To delegate authority or to substitute another representative. Other acts (specify) .any other acts necessary Send copies of notices and other written communications addressed to the taxpayer(s) in proceedings involving the above matters to (Name, address including ZIP code, and telephone number): North Carolina Prepaid Legal Corporatio 27611 This power of attorney revokes all earlier powers of attorney and tax information authorizations on file with the same Internal Revenue Service office for the same matters and years or periods covered by this form, except the following: (Specify to whom granted, date, and address including ZIP code, or refer to attached copies of earlier powers and authorizations.) Signature of or for taxpayer(s) If signed by a corporate officer, partner, or fiduciary on behalf of the taxpayer, I certify that I have the authority to execute this power of attorney on behalf of the taxpayer. Signature) (Signature) (The applicable portion of the back page must also be completed.) Form 1024 (Rev. 10-77) Schedule L Qualified Group Legal Services Plans (Section 120) Page 13 1 (a) Name of plan ▶ North Carolina Prepaid Legal Services Corporation Master Plan (b) Plan number (see instructions) If you check (a), please submit a copy of the documents establishing the plan, including a copy of the plan and any related trust instrument. If the plan was subject to collective bargaining, include a copy of the collective bargaining agreement pertaining to it. If you check (b), submit a copy of the amendment. Note: Once a plan has qualified you need not file a new Form 1024 with each amendment. However, the Service is to be notified of any subsequent amendments. .December 31 3 Describe the legal services covered by the plan, if they are not described in the plan or collective bargaining agreement. 4 Please give the following information (as of the first day of the first plan year for which you are filing this application): enter that date here (Give date). (a) Total number of employees covered by the plan who are shareholders, officers, self-employed persons, or highly compensated. (b) Number of other employees covered by the plan. (c) Number of employees not covered by the plan. (d) Total number employed. *Should equal the total of (a), (b), and (c)-if not, explain. Describe the eligibility requirements that prevent those employees not covered by the plan from participating. 5 Are all eligible employees entitled to the same benefits? If not, explain the differences. 6 Manner of funding the plan: (c) Payments to organizations described in section 501(c), which are to pay or credit your payments (b) If so, was it created or organized to form part of a group legal services plan or plans qualified under section 120? . If "Yes," enter plan name. (c) If (b) is "Yes," has this plan (or plans) qualified under section 120? . Yes No (d) if (c) is "Yes," please submit a copy of the ruling or determination letter(s). If "No," attach explanation. 2 If the trust or organization provides legal services or indemnification against the cost of legal services unassociated with a qualified group legal services plan, describe the nature and extent of these services. The Corporation will provide services under a Group Contract identical to th Master Group Plan to groups of 10 or more persons even if they are not employed and the contract is not entered into by an employer. 3 Please attach copies of all organizational documents. |