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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).