ILLINOIS STATE BAR ASSOCIATION, Re SB 1039/tax-exemption for employer-paid group legal services plans. Hon. ALAN J. DIXON, Washington, D.C. DEAR SENATOR DIXON: You may recall that when Illinois State Bar Association President Robert Heckenkamp and Messrs. Feirich, Dickason and I visited you recently, one of our legislative concerns upon which we provided you with a position statement (another copy attached) related to making permanent the tax-exemption for employer-paid group legal plans. Senate Bill 1039, introduced by Senator Packwood, would accomplish this end and we urge your affirmative vote when the bill reaches the floor. Meanwhile, we hope that you will express our sentiments to any colleagues who solicit your opinion. Respectfully yours, H. H. BRAVERMAN. ILLINOIS STATE BAR ASSOCIATION, Re SB 1039/tax-exemption for employer-paid group legal services plans. Washington, D.C. DEAR SENATOR PERCY: You may recall that when Illinois State Bar Association President Robert Heckenkamp and Messrs. Feirich, Dickason and I visited you recently, one of our legislative concerns upon which we provided you with a position statement (another copy attached) related to making permanent the tax-exemption for employer-paid group legal plans. Senate Bill 1039, introduced by Senator Packwood, would accomplish this end and we urge your affirmative vote when the bill reaches the floor. Meanwhile, we hope that you will express our sentiments to any colleagues who solicit your opinion. Respectfully yours, H. H. BRAVERMAN. CONNECTICUT GENERAL LIFE INSURANCE CO., Hon. ROBERT J. DOLE, U.S. Senate, Washington, D.C. DEAR SENATOR DOLE: We urge you to support Senate Bill 1039, introduced on April 29, 1981 by Senator Bob Packwood. This bill would amend Internal Revenue Code Section 120 by continuing to make tax-free the value of legal services benefits provided by employers for employees. The section, which currently allows for such treatment, would otherwise expire on December 31, 1981. As Senator Packwood has pointed out, the estimated number of employer-related legal services plans grew from 75 in 1975 to 400 in 1980. Approximately one million employees now benefit from these plans, with their numbers rapidly increasing. As with medical insurance, dental insurance, life insurance and other benefits provided on a group basis, group legal services can provide for people of moderate means, fundamental benefits which would otherwise be foreclosed to them because of cost. Legal planning, advice and counsel are truly important to a vital democracy and economy. They are as important as providing through insurance, for the health care of workers and for the hardships encountered at the death of a family member. For these reasons, we encourage that the provisions already incorporated in Internal Revenue Code Section 120 be extended. Your support of Senate Bill 1039 will assist American citizens and employers in responsibly planning on their own initiative for benefits which will have a strengthening effect on the entire nation. Sincerely, G. ROBERT O'BRIEN, PRE-PAID LEGAL INSURANCE CO., INC., Re Senate bill 1039. Senator ROBERT PACKWOOD, Russell Senate Office Building, DEAR SENATOR PACKWOOD: This letter is written to voice our support of your Senate Bill 1039 and to urge Congress to make Internal Revenue Code, Section 120, which expires on December 31, 1981, a permanent tax provision of the Internal Revenue Code. You are to be congratulated for your efforts in attempting to create legislation which would tax exempt individuals who participate in employer paid group legal plans. We, too, feel as you do that the Tax Reform Act of 1976 is an important part of obtaining the goal of helping people of modest means have fair access to lawyers. We wholeheartedly support your efforts. Yours very truly, WILLIAM J. VAN DE ROSTYNE, President. GOUDIE & ASSOCIATES, Sacramento, Calif., May 11, 1981. Senator ROBERT PACKWOOD, DEAR SENATOR PACKWOOD: I am the managing partner in GOUDIE AND ASSOCIATES, we administer a prepaid legal plan. The A.P.I. informed me that you were doing some good work on S. 1039. I would like to congratulate you on your sense of responsibility. A reform in the delivery of legal services is long overdue. You are serving all Americans in your efforts. I wish you all the encouragement in the world. Sincerely, DAVID M. GOUDIE. MACKELL & ROBERTSON, Forest Hills, N. Y., May 12, 1981. Re S. 1039 by Packwood Senator ROBERT PACKWOOD, Russell Senate Office Building, DEAR SENATOR: The above captioned bill will make the exclusion of amounts received under a qualified group legal services plan permanent. In 1976 Congress enacted two tax provisions to encourage employers to provide group legal services for their employees. Those changes were enacted with the Tax Reform Act of 1976. One of the provisions, IRC Sec. 120, expires on December 31, 1981. This section makes the value of legal services benefits provided by an employer, as it should be, tax-free for employees, just the same as health benefits, etc. The bill makes this section permanent. I have been a legal provider in this field of group legal services since their inception. It's a real opportunity for plans to expand and grow so that more and more people who can least afford attorneys, "the working stiff," may now say, "I'll see my lawyer about that." Best wishes: THOMAS J. MACKELL. RIDDELL, WILLIAMS, IVIE, BULLITT & WALKINSHAW, Re Senate Bill 1039 Senator ROBERT PACKWOOD, Russell Senate Office Building, DEAR SENATOR PACKWOOD: I am writing in support of Senate Bill 1039 which you have introduced to make a tax exemption for employer-paid group legal plans permanent. I apreciate your introduction and support of this sensible legislation. Sincerely, GORDON W. WILCOX. NEW JERSEY STATE BAR ASSOCIATION, Hon. ROBERT PACKWOOD, Dear Senator PACKWOOD: I am writing to you on behalf of the New Jersey State Bar Association to express our support for Senate Bill 1039, making permanent the tax exemption for employer-paid group legal plans, under Section 120 of the Internal Revenue Code. The New Jersey State Bar Association is committed to making legal services readily available to all citizens of the State of New Jersey. Making Section 120 permanent will promote the continued existence and growth of legal services plans provided by employers for their employees. Thank you for your consideration of our views. We have communicated our support of S-1039 to our Congressional Delegation. If the New Jersey State Bar Association can assist you further, please do not hesitate to contact us. Very truly yours, WALTER N. READ, President. THE BAR ASSOCIATION OF METROPOLITAN ST. LOUIS, Re S. 1039 Hon. ROBERT PACKWOOD, Chairman, Subcommittee on Taxation and Debt Management, Committee on Finance, U.S. Senate, Washington, D.C. DEAR MR. CHAIRMAN: I am taking this opportunity to write to you as the President of the Bar Association of Metropolitan St. Louis on your proposal to make the provisions of Section 120 of the Internal Revenue Code permanent. We endorse and support the provisions of S. 1039 as strongly and as enthusiastically as possible. Our Association has been laboring in the vineyards of prepaid legal services for several years, with mixed success. We were convinced that the enactment of the Packwood Amendment to the 1976 Tax Amendments would finally give the same treatment to legal services that most of the other employee benefits had received years ago. However, as you pointed out in your statement on the Senate Floor on April 27, 1981, for some reason the Internal Revenue Service has consistently drug its feet in carrying out the mandates of the 1976 Act, to the extent of obviously discouraging any qualification of a prepaid plan. We feel that the permanent extension of Section 120 of the Code is vital to the maintenance of plans and methods to make adequate and competent legal services available to the vast majority of working Americans. The expiration of Section 120 would work to the distinct disadvantage of the working Americans who are just now being given the benefits of affordable legal services. We sincerely support your efforts to make the provisions of Section 120 permanent. Sincerely, ANTHONY J. SESTRIC, President. STATE BAR OF WISCONSIN, Hon. ROBERT PACKWOOD,. Chairman, Subcommittee on Taxation and Debt Management, Committee on nance, U.S. Senate, Washington, D.C. Fi DEAR MR. CHAIRMAN: We are writing in support of S. 1039 which would continue Section 1200 of the Tax Reform Act of 1976 in effect under which group legal plan benefits are placed on roughly the same footing as group medical plan benefits. Prepaid legal services plans are an important vehicle for delivering affordable legal services to Americans of modest means. Therefore, it is critical to the growth of such plans that employer contributions to and the value of legal service rendered from employer-funded "qualified" legal services plans shall not be taxable to the employee. We commend you for your sponsorship of S. 1039 and would urge the Congress to support its passage. Very truly yours, LAWRENCE J. BUGGE, ESQ., President. Chairman, Committee on Group and Prepaid Legal Services. AMERICAN PREPAID LEGAL SERVICES INSTITUTE, Chicago, Ill., May 28, 1981. Senator ROBERT PACKWOOD, Washington, D.C. DEAR SENATOR PACKWOOD: The American Prepaid Legal Services Institute ardently supports passage of S. 1039 to make permanent Section 120 of the Internal Revenue Code. As you may know, the American Prepaid Legal Services Institute is a non-profit technical assistance and educational organization devoted to the growth and development of prepaid legal service plans. In the course of our work, we have had occasion to consult with many hundreds of lawyers, consumer groups, labor organizations, insurance carriers and others involved in setting up legal service plans as an employee benefit. From our first-hand experience in dealing with the subject area, we believe that we can state unequivocally that Section 120 has fulfilled its purpose in providing an incentive for employers to make legal services available to middle income employees on an efficient and cost effective basis. Public employees in New York, Pennsylvania, Ohio and Alaska; laborers in Louisiana, Connecticut, Massachusetts, and many other states; auto workers in 44 states across the country and teachers in Michigan, Pennsylvania and Minnesota are now able to seek needed personal legal services under plans established by their employers-plans which would not be in operation today but for the existence of Section 120. Our discussions with employers considering the implementation of a plan for their employees indicate that the permanence of Section 120 is upper-most in their minds in considering whether and when to start the programs which they are contemplating. We are therefore convinced that the establishment of Section 120 as a permanent part of the tax code will remove the last remaining barrier to the growth of these plans, thereby enabling millions of employees to seek legal services on a preventive basis and gain access to the American system of justice to which they are entitled. While wholeheartedly in support of S. 1039, our position is qualified, based upon issuance of final regulations by the Internal Revenue Service for the administration of Section 120. It is our position that the regulations as proposed thwart the original intent of Congress which was to provide a liberal atmosphere for gaining qualified status. The proposed regulations are overly restrictive and unrealistic in view of the wording contained within Section 120. The Institute has submitted extensive comments on the proposed regulations and has provided testimony based upon these comments. In the absence of modifications to the proposed regulations to bring them into conformity with the comments submitted, we would urge consideration be given to amending S. 1039 to incorporate our primary concerns regarding the interpretation placed upon the definition of personal legal services, the limitations placed upon initial consultations with an attorney, limitations on the amount of permissible employee contributions and the lack of reasonable penalties for violations of the Section. We commend you for your interest in this issue and pledge whatever support we can lend you. Sincerely, LAWRENCE M. WOOD, President. STATEMENT BY JULIUS TOPOL ON BEHALF OF DISTRICT COUNCIL 37 MUNICIPAL Mr. Chairman, my name is Julius Topol. I am the Administrator and Chief Counsel of the DC 37 Municipal Employees Legal Services Plan, which is known as MELS. The Internal Revenue Service has determined that MELS is a qualified group legal services plan under Section 501(c) 20 and that MELS otherwise complies with the requirements of Section 120 of the Code. In lieu of testimony, I am submitting this statement today in support of S. 1039, which would make permanent Section 120 of the Internal Revenue Code. MELS is operated by a trust fund established pursuant to a collective bargaining agreement between the City of New York and the largest union of municipal workers in New York City: District Council 37 of the American Federation of State, County and Municipal Employees, AFL-CIO. MELS opened for clients in September, 1977. The trust receives prepayments from New York City and a number of other public employers for the support of this plan. MELS employs more than 50 lawyers on a full-time, salaried basis to provide a substantial range of personal legal services to covered public employees, their spouses and dependents. No fees are charged for these professional services. The MELS plan serves 125,000 city workers and their families. The city's police, firefighters, teachers, and transit workers are represented by other unions and not included in MELS. Many of the covered persons are the "working poor"; the rest are modestly paid. The bulk of them earn between seven and thirteen thousand dollars a year. They are the clerical persons in all the City agencies, the school lunchroom workers, school aides and paraprofessionals; the non-professional City hospital workers; the blue collar workers who maintain the highways, the water system, the sewers, the parks and the zoos; and a small number of professionals on the City payroll who work as social workers, accountants, public health nurses and computer program mers. Many of these workers have legal problems stemming from the difficulties of making out in this inflationary period with a low or middle-income-difficulties such as debt problems and threatened evictions or cutoff of services. They also have consumer problems of all kinds, and problems securing government benefits. A good number have marital problems that require legal representation for their solution. And many find the need for help in providing for the disposition of their property after death. MELS provides them with legal advice and representation for all these matters. Before MELS opened its doors in September, 1977, these workers had nowhere to turn for help with their personal legal problems: they made too much for legal services which were available to the poor, and not enough to pay private lawyers. The Union was aware of their plight, because many workers with legal problems stopped in at the Union's legal department to ask for help. This department, which I then headed, was staffed with labor lawyers, equipped to handle job-related problems only. We tried referral, but this was highly unsatisfactory. The members made too much to be referred to offices giving legal services to the poor. Referral to bar association panels usually did not work out: either the workers did not have enough money to pay private fees or the private lawyers could not or would not take on small cases. The Union decided to find out the dimensions of the members' need for personal legal services, and to explore ways of meeting that need. With the assistance of a consultant from Columbia University, we conducted a survey of the membership. Over half the replies to the survey, including many from people who had used lawyers, indicated they still needed legal help. Of these, nearly two thirds said they hadn't retained a lawyer because they thought it would cost too much; more than one-third said they did not know how to go about finding or choosing a competent lawyer; others said they did not have the time to hunt for one, or just did not trust lawyers. The Union next set up a pilot program to deliver a wide range of civil legal services to a sample of DC 37 members. This Union project was co-sponsored by the Columbia School of Law and Social Work, and jointly underwritten by the Union and the Ford Foundation. The idea was to see what kinds of legal needs the members had, and how many, so that predictions could be made about setting up a permanent legal services |