A bill to extend for 5 years a tax provision to encourage employers to provide legal services for their employees.

(Senate agreed to House amendment to Senate amendment with an amendment)

Amends the Internal Revenue Code to extend for one year, until December 31, 1985: (1) the exclusion from gross income of amounts received by an employee from a group legal services plan provided by an employer; and (2) the tax exemption for group legal services organizations.

Requires any employer maintaining a group legal services plan or a cafeteria plan to file an information return with respect to such plan. Specifies the information which must be included in such return. Requires an employer maintaining such a plan to keep records to demonstrate that the plan meets all legal requirements. Provides that the Secretary of the Treasury may require an employer to file an additional return for any year in addition to the information return.

Provides that benefits received from a group legal services plan shall be excluded from the wage base for purposes of railroad retirement taxes.

Amends the Tax Reform Act of 1984 to postpone until July 22, 1985, the increase in the imputed interest rate on certain transactions with deferred payments not exceeding $2,000,000. Provides that where the principal loan amount exceeds $2,000,000, the imputed interest rate will be a "blended" test rate. Requires that interest on farm property under $2,000,000 in loan amount be accounted for on the cash receipts and disbursement method of accounting by both the buyer and the seller.

Provides that the imputed interest rules shall apply to any assumptions of loans with certain exceptions. Provides that the assumptions of loans made before October 15, 1984, will be excepted from the imputed interest rules. Requires the Secretary of the Treasury to prescribe regulations relating to the application of the imputed interest rules to loan assumptions.

Exempts from the imputed interest rules the assumption of loans with respect to a residence, farm, or trade or business unless the terms and conditions of such debt obligations are modified in connection with the assumption.