CCA 200516015: Railroad employer changes did not settle tax act successor status

Plain-English summary

The Railroad Retirement Board told the IRS that one redacted business ceased to be an employer and another became an employer under the railroad retirement and unemployment insurance acts. Chief Counsel concluded that the first also ceased to be an employer under the Railroad Retirement Tax Act, assuming it paid no further compensation after the stated date, and that the second became an employer under that act. The board's successor employer decision for contribution rates did not control the tax act analysis. Chief Counsel said it lacked enough information to determine whether a renamed business was a successor employer for Railroad Retirement Tax Act purposes.

Ruling snapshot

• Question: How did the changes in railroad employers affect their status under the Railroad Retirement Tax Act?
• Outcome: Advice given: one employer ended conditionally, another began, and successor status remained uncertain.
• Key authorities: Railroad Retirement Tax Act; Railroad Retirement Board opinion.

Full text (IRS public release)

Office of Chief Counsel

Memorandum
Internal Revenue Service

Number: 200516015
Release Date: 4/22/2005

CC:TEGE:EOEG:ET1:
POSTN-160706-04

UILC: 3231.01-00

date: November 23, 2004

to: Director, Submission Processing
Cincinnati, OH
Attn: Entity Unit

from: Office of Division Counsel/Associate Chief Counsel
Tax Exempt & Government Entities

subject: Railroad Retirement Tax Act Status

In accordance with the coordination procedure established between the Service and the Railroad Retirement Board (RRB), the RRB has provided us with its opinion that ----------
-----------------------ceased to be an employer under the Railroad Retirement Act and the Railroad Unemployment Insurance Act (the Acts) effective ---------------------------and that
------------------------- became an employer under the Acts effective ------------------------------
-----------------------------------------------------------------------------------------------------------------. Effective -------------------------------------------------changed its name to --------------------- ------
------------------ The RRB further concludes that ----------------------------------------is the successor employer of ---------------------------for contribution rate purposes.

--------------------------------
-----------------------------------------
-------------------------------------------
-----------------------------------------
---------------------------------------------------------
-----------------------------------------
------------------------------------------------------------------
----------------------------------------------------------------------
--------------------------------------------------
------------------------------------------

POSTN-160706-04
2

We have reviewed the opinion of the RRB and, based upon the information submitted to us by the RRB, we also conclude that --------------------------------ceased to be an employer under the Railroad Retirement Tax Act (RRTA) effective ----------------------------
------------------------------------------------------------------------------------------------------------------, assuming it paid no further compensation after such date, and that ---------------------------- became an employer under the RRTA effective --------------------------. The RRB’s successor employer determination for contribution rate purposes does not affect the application of RRTA. However, we do not have enough information to determine with certainty that ------------------------- renamed ---------------------------------------- is the successor employer of --------------------------------for RRTA purposes. Please take the appropriate action regarding these businesses.

_____
Janine Cook

cc: