CCA 200716021: Railroad employer status began with first employee compensation

Plain-English summary

The Railroad Retirement Board found that a business became a covered employer under the Railroad Retirement Act and the Railroad Unemployment Insurance Act when it first had employees. IRS Chief Counsel reviewed the Board's opinion and information and concluded that the business became a covered employer under the Railroad Retirement Tax Act when it first compensated employees. The released memorandum redacts the business's identity and the relevant date. The distinction matters because it fixes the start of railroad retirement tax employer status for this business.

Ruling snapshot

• Question: When did the business become a covered employer under the Railroad Retirement Tax Act?
• Outcome: Advice given; status began when it first compensated employees.
• Key authorities: IRC § 3231; Railroad Retirement Tax Act.

Full text (IRS public release)

Office of Chief Counsel

Memorandum
Internal Revenue Service

Number: 200716021
Release Date: 4/20/2007
CC:TEGE:EOEG:ET1
POSTN-152477-06

UILC: 3231.01-00

date: January 9, 2007
to: Director, Submission Processing
Covington, 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 became a covered employer under the Railroad Retirement Act and the Railroad Unemployment Insurance Act as of ----------------------, the date as of which it first had employees:

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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 ----------------------------became a covered employer under the Railroad Retirement Tax Act as of ----------------------, the date on which it first compensated employees. Please take the appropriate action regarding this business.

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Janine Cook