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TREAS/IRS RIN: 1545-BP09 Publication ID: Fall 2022 
Title: Determination of Line of Business for Purposes of No-Additional-Cost Service and Qualified Employee Discount Fringe Benefits 

Sections 132(a)(1) and (2) of the Internal Revenue Code exclude from the gross income of an individual any fringe benefit that qualifies as a no-additional-cost service or a qualified employee discount, respectively. In order to be eligible for the exclusion, the no-additional-cost service or employee discount must be for services or property offered for sale by the employer in the ordinary course of the line of business of the employer in which the employee is performing services. Section 1.132-4(a)(2) of the regulations currently states that an employer’s line of business is determined by reference to the Enterprise Standard Industrial Classification Manual (ESIC Manual). These proposed regulations replace the ESIC Manual with the North American Industry Classification System (NAICS) as the industry classification system used to determine an employer’s line of business for purposes of sections 132(a)(1) and (2).

Agency: Department of the Treasury(TREAS)  Priority: Substantive, Nonsignificant 
RIN Status: Previously published in the Unified Agenda Agenda Stage of Rulemaking: Proposed Rule Stage 
Major: No  Unfunded Mandates: No 
CFR Citation: 26 CFR 1.132-4   
Legal Authority: 26 U.S.C. 7805    26 U.S.C. 132   
Legal Deadline:  None
Action Date FR Cite
NPRM  06/00/2023 
Additional Information: REG-132805-17 (NPRM) Drafter attorney: Andrew Holubeck (202) 317-4774 Reviewer attorney: Sydney Gernstein (202) 317-4774 Treasury attorney: N/A CC:EEE
Regulatory Flexibility Analysis Required: Undetermined  Government Levels Affected: None 
Small Entities Affected: Businesses  Federalism: No 
Included in the Regulatory Plan: No 
RIN Data Printed in the FR: No 
Agency Contact:
Andrew K. Holubeck
Senior Counsel
Department of the Treasury
Internal Revenue Service
1111 Constitution Avenue NW., Room 4312,
Washington, DC 20224
Phone:202 317-4774
Fax:855 592-9845