REVENUE PROCEDURE SETS OUT INDUSTRY CATEGORIES RELEVANT TO FINAL SLOB REGS.

Rev. Proc. 91-64

SECTION 1. PURPOSE

01. This revenue procedure sets forth the industry categories prescribed under section 1.414(r)-5(c)(3) of the Income Tax Regulations. This revenue procedure is promulgated pursuant to authority granted in section 7805 of the Internal Revenue Code, section 414(r) of the Code, and section 1.414(r)-5(c)(3) of the regulations.

SEC. 2. BACKGROUND

01. Section 414(r) of the Code sets forth the rules for determining whether an employer is treated as operating qualified separate lines of business for purposes of certain employee benefit provisions under the Code. If an employer is treated as operating qualified separate lines of business under section 414(r), certain requirements under those provisions are applied separately with respect to the employees of each qualified separate line of business operated by the employer. These requirements include the minimum coverage requirements of section 410(b), the minimum participation requirements of section 401(a)(26), and the 55-percent average benefits test of section 129(d)(8).

02. Pursuant to section 414(r)(2)(C) of the Code and section 1.414(r)-1(b)(iv)(D) of the regulations, an employer is not treated as operating qualified separate lines of business under section 414(r) of the Code unless each separate line of business operated by the employer passes administrative scrutiny. The regulations provide two general methods for satisfying this requirement. Under the first method, a separate line of business that satisfies any of the safe harbors in section 1.414(r)-5 of the regulations satisfies the requirement of administrative scrutiny. Under the second method, a separate line of business that does not satisfy any of the safe harbors in section 1.414(r)-5 nonetheless satisfies the requirement of administrative scrutiny if the employer requests and receives an individual determination from the Commissioner that the separate line of business satisfies the requirement of administrative scrutiny.

03. Among the safe harbors provided in section 1.414(r)-5 of the regulations is the safe harbor of section 1.414(r)-5(c) for separate lines of business in different industries. This safe harbor is satisfied only if the separate line of business is in a different industry or industries from every other separate line of business of the employer.

04. Where a separate line of business does not satisfy any of the safe harbors in section 1.414(r)-5 of the regulations, a determination may be requested from the Service that the separate line of business passes administrative scrutiny, but only if at least one of the requirements set forth in section 1.414(r)-6(b) is satisfied. For example, pursuant to section 1.414(r)-6(b)(2)(ii), a determination may be requested if 90 percent of the property or services provided by the separate line of business falls within one or more of the specified industry categories and no more than 10 percent of the property or services provided by other separate lines of business falls within the same industry category. However, this revenue procedure does not establish a program for processing requests for a determination whether a separate line of business meets administrative scrutiny. The Service will publish procedures relating to such requests at a later date.

05. Section 5 of this revenue procedure sets forth the industry categories established by the Commissioner for purposes of the safe harbor in section 1.414(r)-5(c) of the regulations and the administrative scrutiny determination in section 1.4l4(r)-6.

06. The industry categories listed in section 5 of this revenue procedure are derived from the Standard Industrial Classification codes (the "SIC" codes) set forth in Executive Office of the President, Office of Management and Budget, Standard Industrial Classification Manual (1987). The SIC codes are arranged by one-digit divisions, two-digit major groups of industries, three-digit industry groups, and four-digit industries. The industry categories listed in section 5 of this revenue procedure are based on SIC codes at the two-digit level corresponding to major groups of industries. The Service anticipates that these industry categories may be modified from time to time to reflect technological, institutional, and other changes in the economy, taxpayers' and the Service's experiences in working with the industry categories, and changes in the SIC codes from which they are derived.

SEC. 3. SCOPE

This revenue procedure applies to all persons to whom the safe harbor in section 1.414(r)-5(c) of the regulations applies and to all persons who satisfy the conditions under section 1.414(r)-6 that make them eligible to request a determination.

SEC. 4. APPLICATION

The industry categories for purposes of applying section 1.414(r)-5(c) of the regulations are set forth below. The SIC code or codes to which a particular industry category corresponds are set forth in parentheses following the name of the industry category. Except as otherwise indicated, each industry category is intended to have the same content as the SIC code or codes from which it is derived. Although each industry category describes an industry in general terms, the category includes all property and services that are provided to customers by businesses in that industry. Thus, for example, agricultural entomological services (SIC code 0721) are included in the food and agriculture industry category listed below.

Section 1.414(r)-5(c)(1) of the regulations requires that the property or services provided to customers of the employer by a separate line of business must fall exclusively within one or more of the industry categories listed below, and that none of the property or services provided to customers of the employer by any of the employer's other separate lines of business may fall within the same industry category or categories. In determining whether this requirement is satisfied, the SIC code or codes (if any) assigned to the employer's establishments by the Census Bureau are not determinative, because they look to the activities conducted at each of the employer's establishments rather than to the ultimate property or services provided by the separate line of business to customers of the employer. Thus, the employer must look directly to the property or services provided by the separate line of business to customers of the employer to determine whether the requirements of the safe harbor are satisfied.

SEC. 5. INDUSTRY CATEGORIES

1. Food and Agriculture. Food, beverages, tobacco, food stores and restaurants (Groups 1, 2, 7, 8, 9, 20, 21, 54 & 58).

2. Textiles and Clothing. Textile mill products, apparel and other finished products made from fabrics and other similar materials (including leather and leather products) and general merchandise stores (Groups 22, 23, 31, 53, 56 & 57).

3. Forest Products. Pulp, paper, lumber and wood products (including furniture) (Groups 24, 25, 26).

4. Transportation. Transportation equipment and services (Groups 37, 40, 41, 42, 44, 45, 47, & 75).

5. Finance. Banking, insurance, and financial industries (Groups 60, 61, 62, 63, 64, & 67).

6. Utilities. Public utilities and other regulated industries and communications (Groups 48 and 49).

7. Coal and Metals. Metal industries and coal mining and production (Groups 10, 12, 14, 33 and 34).

8. Machinery and Electronics. Industrial and commercial machinery; computers and other electronic and electrical equipment and components (Groups 35, 36 & 38).

9. Petroleum and Chemicals. Oil and gas extraction, production and distribution (including gasoline service stations); petroleum refining and related industries; chemicals and allied products; rubber and miscellaneous plastic products (Groups 13, 28, 29, 30, 46 & 55).

10. Construction and Real Estate. Construction industry, real estate, stone, clay and glass products (Groups 15, 16, 17, 32 & 65).

11. Leisure. Entertainment, sports, hotels (Groups 70, 78, 79, & 84).

12. Printing and Publishing. Printing, publishing and allied industries (Group 27).

DRAFTING INFORMATION

The principal author of this revenue procedure is John H. Turner, of the Employee Plans Technical and Actuarial Division. For further information regarding this revenue procedure, please call the Employee Plans Technical and Actuarial Division's taxpayer assistance service or Mr. Turner between the hours of 1:30 and 4 p.m., Eastern Time, Monday through Thursday, at (202) 566-6783/6784, or (202) 343- 0729, respectively. (These telephone numbers are not toll-free numbers.)