Report to the Congress on Certain Employee Benefits Not Subject to Federal Income Tax

摘要

The study evaluates the special exclusions for employer-provided educational assistance and group legal services in the context of tax treatment of fringe benefits in general. The Revenue Act of 1978 enacted section 127 of the Internal Revenue Code, which provided that educational assistance provided by an employer through an employer educational assistance program was excluded from taxable income of employees. The Tax Reform Act of 1976 excluded from employees' taxable income the value of certain employer-provided group legal service plans. The study concludes that the exclusions for employer educational assistance plans and for group legal services plans should not be reinstated. Neither employer educational assistance plans for group legal services plans meet any of the criteria justifying federal intervention in the private economy. The two benefits also fail to meet most of the objectives of the enacting legislation.