The ABA has long supported prepaid legal services plans as a way to increase access to the justice system for low- and middle-income Americans. These plans allow individuals and families to address legal issues before they become significant problems, reducing demands on already overburdened court systems and instilling confidence in our justice system. From 1976 until 1992, these types of legal plans enjoyed pre-tax status under Section 120 of the Internal Revenue code. The pre-tax status was extended on seven separate occasions between 1981 and 1991. The plans' tax-favored status expired in 1992, not because of any opposition, but because of the need for revenue offsets in the 1992 deficit reduction act.

Representative Pete Stark (D-CA), along with Representative Dave Camp (R-MI) on March 29, 2007 introduced (PDF) H.R. 1840, legislation to reinstate the tax exclusion for group legal services benefits. Twelve additional original cosponsors included Ways and Means Committee Chairman Charles Rangel (D-NY) and Judiciary Committee Chairman John Conyers (D-MI). H.R. 1840 was referred to the House Ways and Means Committee for consideration.

Senators Gordon Smith (R-OR) and Blanche Lincoln (D-AR) on April 17, 2007 introduced a Senate companion measure, S. 1130. S. 1130 was referred to the Senate Finance Committee.

Legislation to restore the tax exclusion of group legal services benefits has received positive consideration, short of enactment, in the previous 108th and 109th Congresses. During the 108th Congress, the group legal services bill, H.R. 973, was included in H.R. 1776, the Pension Preservation and Savings Expansion Act of 2003, introduced by then-Representatives Rob Portman (R-OH) and Ben Cardin (D-MD). The Ways and Means Committee marked up H.R. 1776, but the group legal services provision was eliminated along with many others. (Rob Portman today is Director of the Office of Management and Budget(OMB); Ben Cardin is now the junior Senator from Maryland.)

Also during the 108th Congress, Senators Gordon Smith (R-OR) and Blanche Lincoln (D-AR) in introduced S. 1556, the Group Legal Services Benefit Act of 2003. With the bipartisan support of seven committee members, then-Senate Finance Committee Chairman Charles Grassley (R-IA) included S. 1556 in his pension reform bill, S. 2424, the National Employee Savings and Trust Equity Guarantee Act (NESTEG.) The Finance Committee reported S.2424, including the group legal services provision, to the Senate. The Senate did not act on S. 2424 before adjourning.

In the 109th Congress, the legislation was reintroduced in both the House (H.R. 897) and the Senate (S. 1160) by Representatives Camp and Rangel and by Senators Smith and Lincoln, respectively. The House provision was also included in H.R.1961, then-Representative Cardin's pension reform package.

• Group legal plans are important to maintaining confidence in our justice system and the rule of law.
• Group legal plans efficiently and inexpensively provide preventative legal services to low and middle income Americans.
• Group legal services help ease the burden on overtaxed government programs.
• Group legal plans enhance productivity by allowing employees to focus on their jobs, not their legal troubles.

The ABA supports the reinstatement of the tax-preferred status of Section 120 group legal services benefits as an effective way to provide access to the justice system for lower and middle-income workers.