CCA 200716022: Business became a railroad retirement tax employer when operations began

Plain-English summary

The Railroad Retirement Board concluded that a business became an employer under the Railroad Retirement Act and the Railroad Unemployment Insurance Act when it began operations. IRS Chief Counsel reviewed the Board's opinion and information and reached the same conclusion for the Railroad Retirement Tax Act. The memorandum flags a possible payroll issue: the business may be paying its employees under a sister company's name. The released document redacts the business's identity and the effective date.

Ruling snapshot

• Question: When did the business become an employer under the Railroad Retirement Tax Act?
• Outcome: Advice given; employer status began when operations began.
• Key authorities: IRC § 3231; Railroad Retirement Tax Act.

Full text (IRS public release)

Office of Chief Counsel

Memorandum
Internal Revenue Service

Number: 200716022
Release Date: 4/20/2007
CC:TEGE:EOEG:ET1
POSTN-152483-06

UILC: 3231.01-00

date: January 9, 2007
to: Director, Submission Processing
Covington, KY
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 an employer under the Railroad Retirement Act and the Railroad Unemployment Insurance Act as of -----------------------, the date it began operations:

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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 an employer under the Railroad Retirement Tax Act as of -----------------------, the date it began operations.

POSTN-152483-06
2

However, we note that the opinion indicates that -----------------------------------may be
compensating its employees under the name of a sister company, ----------------------------
------------------ Please take the appropriate action regarding this business.

_____
Janine Cook-