Employers v. Not Employers

Office of Chief Counsel
Internal Revenue Service
Memorandum
Number: 200645020
Release Date: 11/10/06
CC:TEGE:EOEG:ET1
POSTN-123959-06
UILC: 3231.01-00 date: July 17, 2006 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 dated
---, on reconsideration of the status of the following businesses under the
Railroad Retirement Act and the Railroad Unemployment Insurance Act:
---
---
---
---
---
---
No Employer Identification Numbers (EINs) were provided in the opinion.
We note the procedural and business structure history is complex. In the Board
Coverage Decision No. ---, dated ---, the RRB determined that ---
---was a covered sleeping car company employer under the Railroad Retirement Act and the Railroad Unemployment Insurance Act (the
Acts) effective ---. --- filed a timely request for reconsideration of the decision on ---, and requested a hearing on its appeal. After such hearing, submission of the Hearing Examiner’s report, and the receipt of a declaratory order from the Surface Transportation Board (STB) holding that --- was a rail common carrier, the RRB determined that --- was a covered employer under the Acts as a POSTN-123959-06 2 rail carrier rather than as a sleeping car company. However, the RRB noted that the evidence obtained in the appeal establishes that the original effective date of ------was incorrect because --- operated as two successive entities. The limited liability company which was the subject of B.C.D. --- and the STB decision was preceded by an incorporated business known as ------. Later, --- assumed operations effective ---.
Accordingly, the RRB concluded that ---
---, was a covered rail carrier employer under the Acts effective with the date it acquired the passenger cars from prior owners, ---, and ending ---.
The RRB also concluded that --- became a covered rail carrier employer under the Acts effective ---.
In the request for reconsideration regarding coverage of the ---
---, the Hearing Examiner’s Report recommended that the RRB find two affiliated companies, --- and ---, as covered employers by reason of being under common control with ------ and providing services in connection with railroad transportation.
The RRB concluded that ---and ---have been employers under the Acts. --- performed its service immediately upon receiving title of the equipment effective ---, and thus its status as a covered employer began on that date. ---did not perform its services until operations began effective ---.
We have reviewed the opinion of the RRB and, based upon the information submitted to us by the RRB we also conclude the following:
• --- became an employer under the Railroad
Retirement Tax Act on ---. However, we note that the entity may be treated as an entity disregarded as separate from its owner, ------.
• ---. became an employer under the Railroad Retirement Tax Act on ---and ceased being an employer on ---.
• ---became an employer under the Railroad Retirement
Tax Act on ---.
• ---became an employer under the Railroad Retirement Tax Act on ---. However, we note that the entity may be treated as an entity disregarded as separate from its owner, ---.
POSTN-123959-06 3
Please take the appropriate action regarding these businesses.
____
Janine Cook-