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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) September 11, 1998
The Allstate Corporation
(Exact Name of Registrant as Specified in Charter)
Delaware 1-11840 36-3871531
(State or Other (Commission (IRS Employer
Jurisdiction of File Number) Identification
Incorporation) Number)
2775 Sanders Road, Northbrook, Illinois 60062
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (847) 402-6075
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Exhibit Index at Page 4
Item 5. Other Events
Pursuant to an agreement between Allstate Insurance Company, the
registrant's wholly-owned subsidiary, and the Internal Revenue Service, on
September 11, 1998 Allstate Insurance Company will issue the Public Statement
attached as Exhibit 99 concerning conditions required for continuation of
Allstate Insurance Company's Neighborhood Office Agent Program as an employee
program under the Internal Revenue Code.
If Allstate Insurance Company is required to terminate the Neighborhood
Office Agent program due to the conditions described in Exhibit 99, it may be
subject to an increase in the number and size of settlement charges related to
Allstate Insurance Company's pension plan if a large number of lump sum benefits
were paid to participants upon their retirement or termination.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
THE ALLSTATE CORPORATION
By /s/ Samuel H. Pilch
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Name: Samuel H. Pilch
Title: Controller
September 11, 1998
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Index to Exhibits
Sequential
Page
Number Description Number
- ------ ----------- ------
99 Public statement regarding conditions 5
for continuation of Allstate Insurance Company's
Neighborhood Office Agent Program as an employee
program under the Internal Revenue Code.
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EXHIBIT NO. 99
PUBLIC STATEMENT
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Allstate Insurance Company and the Internal Revenue Service have
reached an agreement under which Allstate may continue its Neighborhood Office
Agent program as an employee program and may continue to provide the opportunity
for its Neighborhood Office Agents to participate in tax-qualified benefit
plans. Allstate initiated discussions with the IRS after the Tax Court
determined that certain of Allstate's Neighborhood Office Agents were
independent contractors, rather than employees, for purposes of deducting
Allstate-related business expenses. The fiduciaries of Allstate's profit-sharing
plan and its pension plan for employee agents also have entered into an
agreement with the IRS with respect to those plans.
Under the agreement, Allstate's Neighborhood Office Agent program will
be modified, effective January 1, 1999, to increase the degree of direction and
control that the Company exercises over the details of the agents' work,
including increased control over business expenses. The IRS will continue to
treat Allstate's retirement plans as tax-qualified. Neighborhood Office Agents
may continue to participate in tax-qualified retirement plans and employee
welfare benefit plans that are made available to Neighborhood Office Agents,
with the exception of those agents who have received court decisions that result
in their being taxed as independent contractors.
Those Neighborhood Office Agents who have received or in the future
receive such a court decision will be treated as independent contractors by
Allstate consistent with those court decisions and, as a result, will cease to
be eligible for employee benefits. Under the agreements entered into with
Allstate and the fiduciaries of Allstate's tax-qualified plans, employee welfare
benefits provided to such an agent will be treated by Allstate as benefits
provided to an independent contractor; elective contributions to Allstate's
profit sharing plan, and earnings thereon, will be treated as compensation paid
to an independent contractor and will be distributed from the Plan; account
balances in Allstate's profit sharing plan will be adjusted to reflect only
those Company contributions and earnings for periods in which the agent
performed services as an employee; similarly, benefits under Allstate's pension
plan for employee agents will reflect only the agent's period of service as an
employee. If a Neighborhood Office Agent who has received a court decision that
results in the agent being taxed as an independent contractor subsequently
performs services as an employee with Allstate, then he or she may participate
in any employee benefit plans that may be made available by Allstate for those
periods of employment.
The agreement does not alter Allstate's existing discretion to enter
into, retain, or terminate a business relationship with any person, including
any Neighborhood Office Agent who has already received or in the future receives
a court decision that results in the agent being taxed as an independent
contractor. If, in the future, however, there is a
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decision of the U.S. Supreme Court or at least two final, nonappealable court
decisions determining that Neighborhood Office Agents under the modified program
are independent contractors, Allstate will begin treating all agents who
continue to perform services as Neighborhood Office Agents as independent
contractors and cease providing all Neighborhood Office Agents with employee
benefits.
The obligations under the agreements will continue until the agreements
terminate, which shall be no later than December 31, 2005. The protections
afforded the Company's qualified plans will remain in effect for those tax years
covered by the agreements. The agreements are confidential pursuant to Section
6103 of the Internal Revenue Code. Any further questions should be directed to
Al Orendorff, Media Relations Director, Allstate Insurance Company, 2775 Sanders
Road, Suite F3, Northbrook, Illinois, 60062.
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