QSLOB

[Randy Watson]

In the 7 years I've been doing benefits, I've never filed for a determination letter to satisfy the "administrative scrutiny" requirement under the QSLOB rules. How difficult is it to receive one of these letters? Am I looking at a long, tedious process, or is the level of interaction with the IRS similar to your typical determination letter application? Should I avoid submitting at all costs? Any insight would be appreciated. Thanks.

[JanetM]

Normally it is simple if you actually have SLOBs. We have varied the number of SLOBs in our CG over the years and currently have two. The catch is the number of substantial service employees and making sure you actually have mostly separate managment folks for the SLOBS.

The process ins't any more involved, you just have to some head counting and file a 5310 indicating you want to be viewed as having QSLOB.

SEC. 4. APPLICATION

The industry categories for purposes of applying section 1.414®-5© 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®-5©(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 1O, 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).