CCA 200546042: IRS agrees a railroad business is an employer despite contracted crews

Plain-English summary

The Railroad Retirement Board concluded that a redacted business was an employer under the railroad retirement and unemployment insurance laws. After reviewing the Board's opinion and information, IRS Chief Counsel also concluded that it was an employer under the Railroad Retirement Tax Act. The memorandum says the business planned to obtain its direct operating employees from outside contractors, including engineers and maintenance crews. It notes the Board's view that services performed by people operating a railroad are covered services and asks the IRS processing office to take appropriate action. The business and effective date are redacted.

Ruling snapshot

• Question: Should the IRS treat this business as a railroad employer when operating crews come from outside contractors?
• Outcome: Advice given: Chief Counsel agreed with the Board's employer status determination.
• Key authorities: Railroad Retirement Tax Act; UILC 3231.01-00.

Full text (IRS public release)

Office of Chief Counsel

Memorandum
Internal Revenue Service

Number: 200546042
Release Date: 11/18/2005
CC:TEGE:EOEG:ET1
POSTN-130481-05

UILC: 3231.01-00

date: August 5, 2005
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 the following business is an employer under the Railroad Retirement Act and the Railroad Unemployment Insurance Act as of ----------------------:
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We have reviewed the opinion of the RRB and, based upon the information submitted to us by the RRB, we also conclude that ------------------------------------------------------is an employer under the Railroad Retirement Tax Act as of ----------------------. -------------------- ------------------------------------------------------------------------------------------------------------has advised the RRB that ----------- will have its direct operating employees (i.e., engineers, switchmen, track maintenance crew, locomotive and car maintenance crew) provided by outside contractors. The RRB notes that prior decisions by the agency have held that services performed by individuals operating a railroad are covered services under the Acts. Please take the appropriate action regarding this business.

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Janine Cook cc: