CCA 201020016: Counsel addressed withholding for a railway union representative

Plain-English summary

In an internal Chief Counsel email, the sender addressed a railway union representative whose employer was not an employer under IRC § 3231(a), requiring the worker to pay Tier I and Tier II Railroad Retirement Tax Act taxes using Form CT-2. The email states that if the union is the worker's employer under § 3401, it must withhold income tax under § 3402, file Form W-2 for the worker and quarterly Forms 941 for the taxes paid, and report zero FICA wages because the wages are covered under the Railroad Retirement Tax Act.

Ruling snapshot

• Question: What income-tax withholding and reporting duties apply when a union is the employer of a railway worker for withholding purposes?
• Outcome: Advice given
• Key authorities: IRC §§ 3231(a), 3401, and 3402

Full text (IRS public release)

ID: CCA_2010041615495852 Number: 201020016
Release Date: 5/21/2010
Office: -----------------------------
UILC: 3231.00-00

From: ----------------------------
Sent: Friday, April 16, 2010 3:50:00 PM
To: --------------------
Cc: ---------------------------------------------------------------------------------------------------------------------------
-----------------------------------------
Subject: RE: CT-2 employees

Sorry it took a while to get back to you on this.
You asked about how income tax withholding should be reported in the following situation: a worker is a railway union rep, his employer is not an employer under 3231(a), thus the worker pays Tier I and II RRTA taxes using a Form CT-2. If the union is the worker’s employer under §3401, then the union must withhold income taxes per §3402. If the union is the employer for income tax withholding purposes, then it would follow that it must file W-2 for the worker and quarterly 941s for the taxes paid. On the W-2 and 941, the union would report 0 FICA wages paid, since they wages are covered under RRTA. Let me know if you have any questions.