[Code of Federal Regulations]
[Title 26, Volume 2]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.120-3]

[Page 501-503]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.120-3  Notice of application for recognition of status of qualified 
group legal services plan.

    (a) In general. In order for a plan to be a qualified group legal 
services plan for purposes of the exclusion from gross income provided 
by section 120(a), the plan must give notice to the Internal Revenue 
Service that it is applying for recognition of its status as a qualified 
plan. Paragraph (b) of this section describes how the notice is to be 
filed for the plan. Paragraph (c) of this section describes the action 
that the Internal Revenue Service will take in response to the notice 
submitted for the plan. Paragraph (d) of this section describes the 
period of plan qualification.
    (b) Filing of notice--(1) In general. A notice of application for 
recognition of the status of a qualified group legal services plan must 
be filed with the key district director of internal revenue as described 
in Sec. 601.201(n). The notice must be filed on Form 1024, Application 
for Recognition of Exemption Under section 501(a) or for Determination 
Under section 120, with the accompanying Schedule L, and must contain 
the information required by the form and any accompanying instructions. 
The form may be filed by either the employer adopting the plan or the 
person administering the plan. No Form 1024 and Schedule L may be filed 
for a plan before an employer adopts the plan, or proposes to adopt the 
plan contingent only upon the recognition of the plan as a qualified 
plan.

[[Page 502]]

    (2) Plans to which more than one employer contributes. In general, 
for purposes of section 120 the adoption of a plan by an employer 
constitutes the adoption of a separate plan to which that employer alone 
contributes, notwithstanding that, in form, the employer purports to 
adopt a plan with respect to which the employer is one of two or more 
contributing employers. Accordingly, a separate Schedule L must be filed 
pursuant to the instructions accompanying Form 1024 for each employer 
adopting a plan.
    (3) Certain collectively bargained plans. Notwithstanding 
subparagraph (2) of this paragraph, if a plan to which more than one 
employer contributes is a plan to which this subparagraph (3) applies, 
the plan is treated as a single plan for purposes of section 120. 
Accordingly, only one Form 1024 and Schedule L is required to be filed 
for the plan, regardless of the number of employers originally adopting 
the plan. In addition, once a Form 1024 and Schedule L is filed, no 
additional filing is required with respect to an employer who thereafter 
adopts the plan. In general, this subparagraph (3) applies to any plan 
that is maintained pursuant to a collective bargaining agreement between 
employee representatives and more than one employer who is required by 
the plan instrument or other agreement to contribute to the plan with 
respect to employees (or their spouses or dependents) participating in 
the plan. This subparagraph does not apply, however, if all employers 
required to contribute to the plan are corporations which are members of 
a controlled group of corporations within the meaning of section 
1563(a), determined without regard to section 1563(e)(3)(C). If all 
employers required to contribute to the plan are corporations which are 
members of such a controlled group, the filing requirements described in 
subparagraph (2) of this paragraph apply, notwithstanding that the plan 
is maintained pursuant to a collective bargaining agreement.
    (c) Internal Revenue Service action on notice of application for 
recognition. The Internal Revenue Service will issue to the person 
submitting Form 1024 and Schedule L a ruling or determination letter 
stating that the plan is or is not a qualified group legal services 
plan. For general procedural rules, see Sec. 601.201 (a) through (n), 
as that section relates to rulings and determination letters.
    (d) Period of plan qualification--(1) In general. In the case of a 
favorable determination, the plan will be considered a qualified group 
legal services plan. If a Form 1024 and Schedule L required to be filed 
by or on behalf of an employer is filed before--
    (i) The end of the first plan year (as determined under the plan),
    (ii) The end of the plan year within which the employer adopts the 
plan, or
    (iii) July 29, 1980,

the period of plan qualification with respect to the employer will begin 
on the date the plan is adopted by the employer (or, if later, January 
1, 1977). If the form and schedule are not filed before the latest of 
the dates described in subdivisions (i), (ii) and (iii), the period of 
plan qualification with respect to the employer will begin on the date 
of filing. In any case in which either the Form 1024 or Schedule L filed 
by or on behalf of an employer is incomplete, the date of filing is the 
date on which the incomplete form or schedule is filed, if the necessary 
additional information is provided at the request of the Commissioner 
within the additional time period allowed by the Commissioner. If the 
additional information is not provided within the additional time 
period, allowed, the date of filing is the date on which the additional 
information is filed. If no separate Form 1024 and Schedule L are 
required to be filed by or on behalf of an employer (see paragraph 
(b)(3) of this section), the period of plan qualification with respect 
to the employer will begin on the date the plan is adopted by the 
employer (or, if later, January 1, 1977). In any case in which a plan is 
materially modified to conform to the requirements of section 120, 
either before or after a Form 1024 and Schedule L are filed, the period 
of plan qualification will not include any period before the effective 
date of the modification.
    (2) Plans in existence on June 4, 1976. (i) Notwithstanding 
paragraph (d)(1) of this section, a written group legal services plan 
providing for employer contributions which was in existence on

[[Page 503]]

June 4, 1976, will be considered a qualified group legal services plan 
for the period January 1, 1977, through April 2, 1977. However, if the 
plan is maintained pursuant to one or more agreements which were in 
effect on October 4, 1976, and which the Secretary of Labor finds to be 
collective bargaining agreements, the period of deemed qualification 
will extend beyond April 2, 1977, and end on the date on which the last 
of the collective bargaining agreements relating to the plan terminates. 
Extensions of a bargaining agreement which are agreed to after October 
4, 1976, are to be disregarded. The period of deemed qualification for a 
plan maintained pursuant to a collective bargaining agreement will not, 
however, extend beyond December 31, 1981.
    (ii) A written group legal services plan will be considered to have 
been in existence on June 4, 1976, if on or before that date the plan 
was reduced to writing and adopted by one or more employers. No amounts 
need have been contributed under the plan as of June 4, 1976.
    (iii) Notwithstanding that a plan is a qualified plan for the period 
of deemed qualification described in this paragraph (d)(2), the rules of 
paragraphs (c) and (d)(1) of this section still apply with respect to a 
Form 1024 and Schedule L filed for the plan. For example, if a Form 1024 
and Schedule L filed by or on behalf of an employer are filed before the 
latest of the 3 dates described in paragraph (d)(1) of this section, in 
the case of a favorable determination the plan will be a qualified plan 
from the date the plan is adopted by the employer (or, if later, January 
1, 1977), and any period of deemed qualification and the period of 
qualification based upon the favorable determination will overlap. 
However, in the case of a plan to which this paragraph (d)(2) applies, 
if a Form 1024 and Schedule L required to be filed by or on behalf of an 
employer is not filed before the latest of the 3 dates described in 
paragraph (d)(1) of this section, the following rules shall apply. In 
general, if Form 1024 and Schedule L are filed before the end of the 
plan year following the plan year with or within which the plan's period 
of deemed qualification expires, in the event of a favorable 
determination the plan will be a qualified plan with respect to the 
employer beginning on the earlier of the day following the date on which 
the period of deemed qualification expires or the date on which the Form 
1024 and Schedule L are filed. The period of plan qualification with 
respect to an employer cannot, however, include any period before the 
employer adopts the plan. If the Form 1024 and Schedule L are not filed 
before the end of the plan year following the plan year with or within 
which the plan's period of deemed qualification expires, in the case of 
a favorable determination the plan will be a qualified plan with respect 
to an employer from the later of the date of filing or adoption of the 
plan by the employer. The rules described in paragraph (d)(1) of this 
section relating to incomplete filings and plan modifications apply with 
respect to a filing described in this paragraph (d)(2).
    (e) Effective date. This section is effective for notices of 
application for recognition of the status of a qualified group legal 
services plan filed after May 29, 1980.

(Secs. 120(c)(4) and 7805 of the Internal Revenue Code of 1954, 90 Stat. 
1926, 68A Stat. 917; (26 U.S.C. 120(c)(4), 7805))

[T.D. 7696, 45 FR 28320, Apr. 29, 1980]