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Irs Gov 2012 Tax Forms

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Irs Gov 2012 Tax Forms

Irs gov 2012 tax forms Internal Revenue Bulletin:  2012-14  April 2, 2012  Rev. Irs gov 2012 tax forms Proc. Irs gov 2012 tax forms 2012-23 Table of Contents SECTION 1. Irs gov 2012 tax forms PURPOSE SECTION 2. Irs gov 2012 tax forms BACKGROUND SECTION 3. Irs gov 2012 tax forms SCOPE SECTION 4. Irs gov 2012 tax forms APPLICATION. Irs gov 2012 tax forms 01 Limitations on Depreciation Deductions for Certain Automobiles. Irs gov 2012 tax forms . Irs gov 2012 tax forms 02 Inclusions in Income of Lessees of Passenger Automobiles. Irs gov 2012 tax forms SECTION 5. Irs gov 2012 tax forms EFFECTIVE DATE SECTION 6. Irs gov 2012 tax forms DRAFTING INFORMATION SECTION 1. Irs gov 2012 tax forms PURPOSE This revenue procedure provides: (1) limitations on depreciation deductions for owners of passenger automobiles first placed in service by the taxpayer during calendar year 2012, including separate tables of limitations on depreciation deductions for trucks and vans; and (2) the amounts that must be included in income by lessees of passenger automobiles first leased by the taxpayer during calendar year 2012, including a separate table of inclusion amounts for lessees of trucks and vans. Irs gov 2012 tax forms The tables detailing these depreciation limitations and lessee inclusion amounts reflect the automobile price inflation adjustments required by § 280F(d)(7) of the Internal Revenue Code. Irs gov 2012 tax forms SECTION 2. Irs gov 2012 tax forms BACKGROUND . Irs gov 2012 tax forms 01 For owners of passenger automobiles, § 280F(a) imposes dollar limitations on the depreciation deduction for the year the taxpayer places the passenger automobile in service and for each succeeding year. Irs gov 2012 tax forms For passenger automobiles placed in service after 1988, § 280F(d)(7) requires the Internal Revenue Service to increase the amounts allowable as depreciation deductions by a price inflation adjustment amount. Irs gov 2012 tax forms The method of calculating this price inflation amount for trucks and vans placed in service in or after calendar year 2003 uses a different CPI “automobile component” (the “new trucks” component) than that used in the price inflation amount calculation for other passenger automobiles (the “new cars” component), resulting in somewhat higher depreciation deductions for trucks and vans. Irs gov 2012 tax forms This change reflects the higher rate of price inflation for trucks and vans since 1988. Irs gov 2012 tax forms . Irs gov 2012 tax forms 02 Section 401(a) of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, Pub. Irs gov 2012 tax forms L. Irs gov 2012 tax forms No. Irs gov 2012 tax forms 111-312, 124 Stat. Irs gov 2012 tax forms 3296 (Dec. Irs gov 2012 tax forms 17, 2010) (the “Act”) extended the 50 percent additional first year depreciation deduction under § 168(k) to qualified property acquired by the taxpayer after December 31, 2007, and before January 1, 2013, if no written binding contract for the acquisition of the property existed before January 1, 2008, and if the taxpayer places the property in service generally before January 1, 2013. Irs gov 2012 tax forms Section 168(k)(2)(F)(i) increases the first year depreciation allowed under § 280F(a)(1)(A)(i) by $8,000 for passenger automobiles to which the additional first year depreciation deduction under § 168(k) (hereinafter, referred to as “§ 168(k) additional first year depreciation deduction”) applies. Irs gov 2012 tax forms . Irs gov 2012 tax forms 03 Section 168(k)(2)(D)(i) provides that the § 168(k) additional first year depreciation deduction does not apply to any property required to be depreciated under the alternative depreciation system of § 168(g), including property described in § 280F(b)(1). Irs gov 2012 tax forms Section 168(k)(2)(D)(iii) permits a taxpayer to elect out of the § 168(k) additional first year depreciation deduction for any class of property. Irs gov 2012 tax forms Section 168(k)(4), as amended by the Act, permits a corporation to elect to increase the alternative minimum tax (“AMT”) credit limitation under § 53(c), instead of claiming the § 168(k) additional first year depreciation deduction for all eligible qualified property placed in service after December 31, 2010, that is round 2 extension property (as defined in § 168(k)(4)(I)(iv)). Irs gov 2012 tax forms Accordingly, this revenue procedure provides tables for passenger automobiles for which the § 168(k) additional first year depreciation deduction applies. Irs gov 2012 tax forms This revenue procedure also provides tables for passenger automobiles for which the § 168(k) additional first year depreciation deduction does not apply, either because taxpayer (1) purchased the passenger automobile used; (2) did not use the passenger automobile during 2012 more than 50 percent for business purposes; (3) elected out of the § 168(k) additional first year depreciation deduction pursuant to § 168(k)(2)(D)(iii); or (4) elected to increase the § 53 AMT credit limitation in lieu of claiming § 168(k) additional first year depreciation. Irs gov 2012 tax forms . Irs gov 2012 tax forms 04 Section 280F(c) requires a reduction in the deduction allowed to the lessee of a leased passenger automobile. Irs gov 2012 tax forms The reduction must be substantially equivalent to the limitations on the depreciation deductions imposed on owners of passenger automobiles. Irs gov 2012 tax forms Under § 1. Irs gov 2012 tax forms 280F-7(a) of the Income Tax Regulations, this reduction requires a lessee to include in gross income an amount determined by applying a formula to the amount obtained from a table. Irs gov 2012 tax forms One table applies to lessees of trucks and vans and another table applies to all other passenger automobiles. Irs gov 2012 tax forms Each table shows inclusion amounts for a range of fair market values for each taxable year after the passenger automobile is first leased. Irs gov 2012 tax forms SECTION 3. Irs gov 2012 tax forms SCOPE . Irs gov 2012 tax forms 01 The limitations on depreciation deductions in section 4. Irs gov 2012 tax forms 01(2) of this revenue procedure apply to passenger automobiles (other than leased passenger automobiles) that are placed in service by the taxpayer in calendar year 2012, and continue to apply for each taxable year that the passenger automobile remains in service. Irs gov 2012 tax forms . Irs gov 2012 tax forms 02 The tables in section 4. Irs gov 2012 tax forms 02 of this revenue procedure apply to leased passenger automobiles for which the lease term begins during calendar year 2012. Irs gov 2012 tax forms Lessees of these passenger automobiles must use these tables to determine the inclusion amount for each taxable year during which the passenger automobile is leased. Irs gov 2012 tax forms See Rev. Irs gov 2012 tax forms Proc. Irs gov 2012 tax forms 2007-30, 2007-1 C. Irs gov 2012 tax forms B. Irs gov 2012 tax forms 1104, for passenger automobiles first leased during calendar year 2007; Rev. Irs gov 2012 tax forms Proc. Irs gov 2012 tax forms 2008-22, 2008-1 C. Irs gov 2012 tax forms B. Irs gov 2012 tax forms 658, for passenger automobiles first leased during calendar year 2008; Rev. Irs gov 2012 tax forms Proc. Irs gov 2012 tax forms 2009-24, 2009-17 I. Irs gov 2012 tax forms R. Irs gov 2012 tax forms B. Irs gov 2012 tax forms 885, for passenger automobiles first leased during calendar year 2009; Rev. Irs gov 2012 tax forms Proc. Irs gov 2012 tax forms 2010-18, 2010-9 I. Irs gov 2012 tax forms R. Irs gov 2012 tax forms B. Irs gov 2012 tax forms 427, as amplified and modified by section 4. Irs gov 2012 tax forms 03 of Rev. Irs gov 2012 tax forms Proc. Irs gov 2012 tax forms 2011-21, 2011-12 I. Irs gov 2012 tax forms R. Irs gov 2012 tax forms B. Irs gov 2012 tax forms 560, for passenger automobiles first leased during calendar year 2010; and Rev. Irs gov 2012 tax forms Proc. Irs gov 2012 tax forms 2011-21, for passenger automobiles first leased during calendar year 2011. Irs gov 2012 tax forms SECTION 4. Irs gov 2012 tax forms APPLICATION . Irs gov 2012 tax forms 01 Limitations on Depreciation Deductions for Certain Automobiles. Irs gov 2012 tax forms (1) Amount of the inflation adjustment. Irs gov 2012 tax forms (a) Passenger automobiles (other than trucks or vans). Irs gov 2012 tax forms Under § 280F(d)(7)(B)(i), the automobile price inflation adjustment for any calendar year is the percentage (if any) by which the CPI automobile component for October of the preceding calendar year exceeds the CPI automobile component for October 1987. Irs gov 2012 tax forms Section 280F(d)(7)(B)(ii) defines the term “CPI automobile component” as the automobile component of the Consumer Price Index for all Urban Consumers published by the Department of Labor. Irs gov 2012 tax forms The new car component of the CPI was 115. Irs gov 2012 tax forms 2 for October 1987 and 143. Irs gov 2012 tax forms 419 for October 2011. Irs gov 2012 tax forms The October 2011 index exceeded the October 1987 index by 28. Irs gov 2012 tax forms 219. Irs gov 2012 tax forms Therefore, the automobile price inflation adjustment for 2012 for passenger automobiles (other than trucks and vans) is 24. Irs gov 2012 tax forms 5 percent (28. Irs gov 2012 tax forms 219/115. Irs gov 2012 tax forms 2 x 100%). Irs gov 2012 tax forms The dollar limitations in § 280F(a) are multiplied by a factor of 0. Irs gov 2012 tax forms 245, and the resulting increases, after rounding to the nearest $100, are added to the 1988 limitations to give the depreciation limitations applicable to passenger automobiles (other than trucks and vans) for calendar year 2012. Irs gov 2012 tax forms This adjustment applies to all passenger automobiles (other than trucks and vans) that are first placed in service in calendar year 2012. Irs gov 2012 tax forms (b) Trucks and vans. Irs gov 2012 tax forms To determine the dollar limitations for trucks and vans first placed in service during calendar year 2012, the Service uses the new truck component of the CPI instead of the new car component. Irs gov 2012 tax forms The new truck component of the CPI was 112. Irs gov 2012 tax forms 4 for October 1987 and 146. Irs gov 2012 tax forms 607 for October 2011. Irs gov 2012 tax forms The October 2011 index exceeded the October 1987 index by 34. Irs gov 2012 tax forms 207. Irs gov 2012 tax forms Therefore, the automobile price inflation adjustment for 2012 for trucks and vans is 30. Irs gov 2012 tax forms 43 percent (34. Irs gov 2012 tax forms 207/112. Irs gov 2012 tax forms 4 x 100%). Irs gov 2012 tax forms The dollar limitations in § 280F(a) are multiplied by a factor of 0. Irs gov 2012 tax forms 3043, and the resulting increases, after rounding to the nearest $100, are added to the 1988 limitations to give the depreciation limitations for trucks and vans. Irs gov 2012 tax forms This adjustment applies to all trucks and vans that are first placed in service in calendar year 2012. Irs gov 2012 tax forms (2) Amount of the limitation. Irs gov 2012 tax forms Tables 1 through 4 contain the dollar amount of the depreciation limitation for each taxable year for passenger automobiles a taxpayer places in service in calendar year 2012. Irs gov 2012 tax forms Use Table 1 for a passenger automobile (other than a truck or van), and Table 2 for a truck or van, placed in service in calendar year 2012 for which the § 168(k) additional first year depreciation deduction applies. Irs gov 2012 tax forms Use Table 3 for a passenger automobile (other than a truck or van), and Table 4 for a truck or van, placed in service in calendar year 2012 for which the § 168(k) additional first year depreciation deduction does not apply. Irs gov 2012 tax forms REV. Irs gov 2012 tax forms PROC. Irs gov 2012 tax forms 2012-23 TABLE 1 DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) PLACED IN SERVICE IN CALENDAR YEAR 2012 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION APPLIES Tax Year Amount 1st Tax Year $11,160 2nd Tax Year $5,100 3rd Tax Year $3,050 Each Succeeding Year $1,875 REV. Irs gov 2012 tax forms PROC. Irs gov 2012 tax forms 2012-23 TABLE 2 DEPRECIATION LIMITATIONS FOR TRUCKS AND VANS PLACED IN SERVICE IN CALENDAR YEAR 2012 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION APPLIES Tax Year Amount 1st Tax Year $11,360 2nd Tax Year $5,300 3rd Tax Year $3,150 Each Succeeding Year $1,875 REV. Irs gov 2012 tax forms PROC. Irs gov 2012 tax forms 2012-23 TABLE 3 DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) PLACED IN SERVICE IN CALENDAR YEAR 2012 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION DOES NOT APPLY Tax Year Amount 1st Tax Year $3,160 2nd Tax Year $5,100 3rd Tax Year $3,050 Each Succeeding Year $1,875 REV. Irs gov 2012 tax forms PROC. Irs gov 2012 tax forms 2012-23 TABLE 4 DEPRECIATION LIMITATIONS FOR TRUCKS AND VANS PLACED IN SERVICE IN CALENDAR YEAR 2012 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION DOES NOT APPLY Tax Year Amount 1st Tax Year $3,360 2nd Tax Year $5,300 3rd Tax Year $3,150 Each Succeeding Year $1,875 . Irs gov 2012 tax forms 02 Inclusions in Income of Lessees of Passenger Automobiles. Irs gov 2012 tax forms A taxpayer must follow the procedures in § 1. Irs gov 2012 tax forms 280F-7(a) for determining the inclusion amounts for passenger automobiles first leased in calendar year 2012. Irs gov 2012 tax forms In applying these procedures, lessees of passenger automobiles other than trucks and vans should use Table 5 of this revenue procedure, while lessees of trucks and vans should use Table 6 of this revenue procedure. Irs gov 2012 tax forms REV. Irs gov 2012 tax forms PROC. Irs gov 2012 tax forms 2012-23 TABLE 5 DOLLAR AMOUNTS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2012 Fair Market Value of Passenger Automobile Tax Year During Lease Over Not Over 1st 2nd 3rd 4th 5th & Later $18,500 $19,000 2 4 5 6 8 19,000 19,500 2 4 7 7 9 19,500 20,000 2 5 8 8 10 20,000 20,500 3 5 9 10 11 20,500 21,000 3 6 9 12 12 21,000 21,500 3 7 10 12 14 21,500 22,000 3 8 11 13 16 22,000 23,000 4 8 13 15 17 23,000 24,000 4 10 15 17 20 24,000 25,000 5 11 17 19 23 25,000 26,000 6 12 19 21 26 26,000 27,000 6 14 20 24 28 27,000 28,000 7 15 22 26 31 28,000 29,000 7 16 25 28 33 29,000 30,000 8 18 25 32 35 30,000 31,000 9 19 27 34 38 31,000 32,000 9 20 30 36 41 32,000 33,000 10 21 32 38 43 33,000 34,000 10 23 33 41 46 34,000 35,000 11 24 35 43 49 35,000 36,000 12 25 37 45 52 36,000 37,000 12 27 39 47 54 37,000 38,000 13 28 41 49 57 38,000 39,000 13 29 43 52 59 39,000 40,000 14 30 45 54 62 40,000 41,000 14 32 47 56 65 41,000 42,000 15 33 49 58 68 42,000 43,000 16 34 51 61 70 43,000 44,000 16 36 52 63 73 44,000 45,000 17 37 54 66 75 45,000 46,000 17 38 57 67 78 46,000 47,000 18 39 59 70 80 47,000 48,000 19 40 61 72 83 48,000 49,000 19 42 62 75 86 49,000 50,000 20 43 64 77 89 50,000 51,000 20 45 66 79 91 51,000 52,000 21 46 68 81 94 52,000 53,000 21 47 70 84 96 53,000 54,000 22 48 72 86 99 54,000 55,000 23 49 74 88 102 55,000 56,000 23 51 76 90 104 56,000 57,000 24 52 78 92 107 57,000 58,000 24 54 79 95 110 58,000 59,000 25 55 81 97 113 59,000 60,000 26 56 83 100 115 60,000 62,000 26 58 86 103 119 62,000 64,000 28 60 90 108 124 64,000 66,000 29 63 94 112 129 66,000 68,000 30 66 97 117 135 68,000 70,000 31 68 102 121 140 70,000 72,000 32 71 105 126 145 72,000 74,000 33 74 109 130 151 74,000 76,000 35 76 113 135 156 76,000 78,000 36 78 117 140 161 78,000 80,000 37 81 120 145 166 80,000 85,000 39 86 127 152 176 85,000 90,000 42 92 137 163 189 90,000 95,000 45 98 147 175 202 95,000 100,000 48 105 155 187 215 100,000 110,000 52 115 170 203 235 110,000 120,000 58 127 189 227 262 120,000 130,000 64 140 208 250 288 130,000 140,000 70 153 227 272 315 140,000 150,000 75 166 246 296 340 150,000 160,000 81 179 265 318 368 160,000 170,000 87 192 284 341 394 170,000 180,000 93 204 304 364 420 180,000 190,000 99 217 323 387 446 190,000 200,000 105 230 342 409 473 200,000 210,000 111 243 361 432 499 210,000 220,000 116 256 380 455 526 220,000 230,000 122 269 399 478 552 230,000 240,000 128 282 418 501 578 240,000 and up 134 294 437 524 605 REV. Irs gov 2012 tax forms PROC. Irs gov 2012 tax forms 2012-23 TABLE 6 DOLLAR AMOUNTS FOR TRUCKS AND VANS WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2012 Fair Market Value of Truck or Van Tax Year During Lease Over Not Over 1st 2nd 3rd 4th 5th & Later $19,000 $19,500 1 4 5 6 7 19,500 20,000 2 4 6 7 9 20,000 20,500 2 5 7 8 10 20,500 21,000 2 5 8 10 11 21,000 21,500 3 6 9 10 13 21,500 22,000 3 6 10 12 14 22,000 23,000 3 8 11 14 15 23,000 24,000 4 9 13 16 18 24,000 25,000 4 10 15 19 21 25,000 26,000 5 11 17 21 24 26,000 27,000 6 12 19 23 26 27,000 28,000 6 14 21 25 29 28,000 29,000 7 15 23 27 32 29,000 30,000 7 17 24 30 34 30,000 31,000 8 18 26 32 37 31,000 32,000 9 19 28 34 40 32,000 33,000 9 20 31 36 42 33,000 34,000 10 21 33 39 44 34,000 35,000 10 23 34 41 48 35,000 36,000 11 24 36 44 50 36,000 37,000 12 25 38 46 53 37,000 38,000 12 27 40 48 55 38,000 39,000 13 28 42 50 58 39,000 40,000 13 29 44 53 60 40,000 41,000 14 31 45 55 63 41,000 42,000 14 32 48 57 66 42,000 43,000 15 33 50 59 69 43,000 44,000 16 34 52 61 72 44,000 45,000 16 36 53 64 74 45,000 46,000 17 37 55 66 77 46,000 47,000 17 38 58 68 79 47,000 48,000 18 40 59 70 82 48,000 49,000 19 41 61 73 84 49,000 50,000 19 42 63 75 87 50,000 51,000 20 43 65 78 89 51,000 52,000 20 45 66 80 93 52,000 53,000 21 46 68 83 95 53,000 54,000 21 48 70 84 98 54,000 55,000 22 49 72 87 100 55,000 56,000 23 50 74 89 103 56,000 57,000 23 51 76 92 105 57,000 58,000 24 52 78 94 108 58,000 59,000 24 54 80 96 111 59,000 60,000 25 55 82 98 114 60,000 62,000 26 57 85 101 118 62,000 64,000 27 60 88 106 123 64,000 66,000 28 62 93 110 128 66,000 68,000 29 65 96 115 134 68,000 70,000 30 67 100 120 139 70,000 72,000 32 70 103 125 144 72,000 74,000 33 72 108 129 149 74,000 76,000 34 75 111 134 155 76,000 78,000 35 78 115 138 160 78,000 80,000 36 80 119 143 165 80,000 85,000 38 85 125 151 175 85,000 90,000 41 91 135 163 187 90,000 95,000 44 98 144 174 201 95,000 100,000 47 104 154 185 214 100,000 110,000 52 113 169 202 234 110,000 120,000 57 127 187 225 261 120,000 130,000 63 139 207 248 287 130,000 140,000 69 152 226 271 313 140,000 150,000 75 165 245 294 339 150,000 160,000 81 178 264 316 366 160,000 170,000 87 190 283 340 392 170,000 180,000 92 204 302 362 419 180,000 190,000 98 216 322 385 445 190,000 200,000 104 229 340 409 471 200,000 210,000 110 242 359 431 498 210,000 220,000 116 255 378 454 524 220,000 230,000 122 267 398 477 551 230,000 240,000 127 281 416 500 577 240,000 and up 133 294 435 523 603 SECTION 5. Irs gov 2012 tax forms EFFECTIVE DATE This revenue procedure applies to passenger automobiles that a taxpayer first places in service or first leases during calendar year 2012. Irs gov 2012 tax forms SECTION 6. Irs gov 2012 tax forms DRAFTING INFORMATION The principal author of this revenue procedure is Bernard P. Irs gov 2012 tax forms Harvey of the Office of Associate Chief Counsel (Income Tax & Accounting). Irs gov 2012 tax forms For further information regarding this revenue procedure, contact Mr. Irs gov 2012 tax forms Harvey at (202) 622-4930 (not a toll-free call). Irs gov 2012 tax forms Prev  Up  Next   Home   More Internal Revenue Bulletins
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Railroad Retirement Tax Act (RRTA) Desk Guide (January 2009)

LMSB-4-0908-048

1. Preface

  • Ground Transportation Technical Advisor

2.  Introduction

  • Role of RRB

The Railroad Retirement Systems

Types of Tax

  • RRTA - Tiers and Rates

Filing Requirements, IRS
  • Forms
  • Form CT-
  • Form CT-2
  • Form 941
  • Form W-2
  • Form W-3

Filing Requirements, RRB
  • RRB Reports

Deposit Requirements

3.  Interaction Between IRS and RRB

  • Memorandum of Understanding (Coordination and Implementation Agreements)
  • On-site Information Exchange
  • IRS Reports
  • RRB Determination of Coverage
  • RRB Audit Report
  • IRS Follow-up

4.  Definitions

Employer

  • RRA vs. RRTA
  • Employer
  • Owned Company
  • Controlled Companies
  • Stock Ownership
  • Licenses
  • Agreements
  • Any Railroad Service
  • Indirect Services
  • Indirect
  • Companies
  • Casual Service
  • Receiver or Trustee as Employer
  • Railroad Associations
  • Railway Labor Organizations
  • Exclusions From "Employer"

Employee

  • In the Service of One or More Employers
  • Officer
  • Special Categories
  • Exclusions

Compensation

  • Comparison of RRTA to FICA
  • Included and Excluded
  • Earned vs. Paid

5.  Audit Techniques

Audit Plan

  • Preliminary
  • Payroll System
  • Computer Audit Specialist (CAS) Applications
  • Reconciliation of CT-1's
  • Supplemental Annuity Tax
  • RURT
  • Fringe Benefits
  • Backup Withholding
  • Conversion Issues
  • FICA vs. RRTA.

6.  Potential Issues

General

  • General Comments
  • Employee vs. Independent Contractor
  • Section 530
  • General Issues

Industry Specific Issues:

  • Severance Pay/ Termination Pay
  • Annual Productivity Fund Payments
  • Productivity Fund Buyouts
  • Employee Achievement Awards
  • Housing Allowances
  • Meals, Travel, Lodging
  • SEGREGATION
  • Excluded Companies
  • Principally Engaged in Railroad Activities
  • Separate, Identifiable Enterprise
  • Court Cases

Employer Issues

  • Common Paymaster
  • Successor Employers

Related Corporations:

  • Car Repair Shops
  • Warehousing and Warehouse Companies
  • Construction Companies
  • Real Estate Companies
  • Data Processing Companies

Examination Techniques, Related Corporations

  • Subsidiary Records
  • Parent Records
  • Contractual Relationship
  • General Inquiries
  • Other Considerations

7.  Report Writing

  • General
  • ET Version 8.0
  • Form 4665, Form 4666, Form 886A, Form 2504, Form 2297, Form 3363
  • Form 4668-RT
  • Form 4667
  • Conversion Case
  • IRC § 3509

Computation of Tax

  • Tier I 
  • Tier II

8.  Other Considerations

  • Statutory Period of Limitations
  • Form SS-1O
  • RRB Report Title
  • BA-3a Annual Report of Creditable Compensation
  • BA-4 Report of Creditable Compensation Adjustments
  • BA-9 Report of Separation Allowance or Severance Pay
  • BA-10 Report of Miscellaneous Compensation and Sick Pay
  • Form G-241 Summary Statement of Quarterly Report of Railroad Retirement
  • Supplemental Annuity Tax Liabilities
  • Form G-245 Summary Statement of Quarterly Report of Railroad Retirement
  • Supplemental Tax Credits
  • Form G-440 Report Specifications Sheet
  • Penalties, Interest Free Adjustments, Abatements


1.  Preface

This Desk Reference Guide is intended as a resource tool to assist Revenue Agents who are assigned the examination of a railroad employer. The Guide was prepared presuming that the reader has already received employment tax training. The guide will provide:

  • An overview of the Railroad Retirement System.
  • An explanation of the role of the Railroad Retirement Board (RRB).
  • An explanation of the interaction of the IRS and the RRB.
  • Definitions specific to railroad retirement terminology.
  • A suggested audit plan.
  • A list of potential issues with possible position write-ups.

We have attempted to include as many citations as possible throughout the text to relevant court cases, revenue rulings, revenue procedures, private letter rulings, etc.

Ground Transportation Technical Advisor
Technical Advisors assist the field in identifying, developing and resolving industry specific and cross-industry issues; provide educational opportunities to internal and external customers as appropriate; and maintain and develop industry and issue expertise. The Ground Transportation  Technical Advisor (TA) provides these services for the railroad and trucking industries. The TA maintains a liaison with various functions within the IRS as well as in other governmental agencies, and may also be aware of issues being raised at various other examination sites throughout the country.  As a result, the TA may be able to provide the examiner with current information to consider during the course of the audit.

The TA also maintains a web site at: http://lmsb.irs.gov/hq/pftg/railroad/index.asp

This web site may be useful in obtaining information on topics of an even more current nature The railroad industry is unique in many ways and we encourage examiners to use the web site as a means of obtaining knowledge and understanding about the industry.

It is recommended that the examiner use four hours to review the guide during the planning stages of the examination. The guide can then be used on a continuing basis during the course of the examination as a reference tool.

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2.  Introduction

Railroad employers are subject to a separate and distinct system of employment taxes from the Federal Insurance Contributions Act (FICA) and the Federal Unemployment Tax Act (FUTA) systems covering most other employers.  Parts of the system are the responsibility of the IRS, and parts of the system are the responsibility of the Railroad Retirement Board, an independent governmental agency.

Because this is a separate system for railroad employers, payments subject to railroad retirement taxes are specifically excepted from FICA, FUTA, and the Self-Employment Contributions Act (SECA).

The Railroad Retirement Board (RRB) is an independent agency in the executive branch of the Federal Government.  The RRB is headed by a three member Board appointed by the President of the United States, with the advice and consent of the Senate.  One member is appointed upon the recommendation of railroad employers, one is appointed upon the recommendation of railroad labor organizations, and the third member, who is the Chairman, is appointed to represent the public interest.  The Board Members' terms of office are five years, and are scheduled to expire in different years.

The primary function of the Board is the determination and payment of benefits under the retirement-survivor and unemployment-sickness programs. To this end, the Board employs field representatives to assist railroad personnel and their families in filing claims for benefits, examiners to adjudicate the claims, and information technology staff to operate the data processing equipment and administer the automated programs needed to maintain earnings records, calculate benefits and process payments.

The Board also employs actuaries to predict the future income and outlays of the railroad retirement trust funds, statisticians and economists to provide vital data, and attorneys to interpret legislation and represent the Board in litigation. Internal administration requires a procurement staff, a budget and accounting staff, and personnel specialists. The Inspector General employs auditors and investigators to detect any waste, fraud or abuse in the benefit programs.

The Board's headquarters is located in Chicago, Illinois.  The Board maintains field offices across the United States in localities easily accessible to large numbers of railroad workers.

Role of RRB
The role of the RRB is to administer the benefits of the Railroad Retirement Act (RRA) and Railroad Unemployment Insurance Act (RUIA) systems. Thus, the RRB maintains earnings records for each railroad employee in a manner similar to those maintained by the Social Security Administration.   The RRB’s relationship with the Social Security Administration (SSA) is particularly extensive because of the coordination between the two systems.  Railroad retirement annuities may be based in part on social security credits and social security benefit amounts awarded after 1974 to railroad retirement annuitants are made through the Board as part of combined railroad retirement-social security monthly benefit payments.

The RRB and the Social Security Administration have an interagency agreement providing for system-to-system access between the two agencies.
 
The Railroad Retirement System
Railroad employment taxes consist of employer and employee taxes. The employer and employees pay certain taxes at different rates and some are only paid by one or the other, though all taxes are collected by the employer and the employer makes deposits of these taxes.

  1. Railroad Retirement Tax Act (RRTA) – RRTA taxes fund railroad worker retirement benefits.  Collection of these taxes is the responsibility of the IRS.  These taxes are imposed by chapter 22 of the Internal Revenue Code (IRC).
  2. Railroad Retirement Act (RRA) – RRA is the benefit system through which payments are made to retired railroad workers. Benefits are administered by the RRB.
  3. Railroad Unemployment Insurance Act (RUIA) - This system provides unemployment and sickness insurance benefit program for railroad workers. The system is administered, and the taxes are collected by, the RRB.
  4. Railroad Unemployment Repayment Tax (RURT) - in periods of economic downturn, when the RUIA account becomes insufficient to cover payments of unemployment benefits, funds are advanced to the RUIA account from the RRTA account.  RURT taxes are then collected as a means of repaying the advance, bringing the RUIA fund back into balance.  Thus, this tax goes into and out of effect, depending on the balance in the RUIA account.

    As of June 29, 1993, the RUIA account was fully funded and all advances from the RRTA account had been repaid.  As a result, the RURT was terminated effective with respect to wages paid on or after July 1, 1993.  This tax could be reinstated at some future date.  When in effect this tax is imposed by Chapter 23A of the IRC.
  5. Tax on Employee Representatives - Certain individuals perform services as an officer or official representative of a railway labor organization for purposes of representing employees under the Railway Labor Act.  These individuals are subject to RRTA taxes, and file a separate return to report the wage payments and RRTA taxes. Individuals subject to this tax will not be covered in detail in this desk guide due to the limited number of returns filed for this special situation.  Discussion of employee representatives will be limited to an awareness only basis.
  6. IRC 6103 (l) (1) (C) - The IRS is authorized to disclose tax information regarding RRTA taxes to the RRB for purposes of its administration of the RRA.  The RRB may not use such tax information to administer any other statutes.  Such tax information may not be disclosed to RRB contractors (in connection with the administration of the RRA).  The IRS may not disclose RURT information to the RRB.

RRTA – Tiers and Rates
Legislation was enacted in 1934, 1935, and 1937 to establish a railroad retirement system separate from the Social Security Act of 1935.  Under Railroad Retirement provisions, service was credited back to 1936 and rail workers received a somewhat higher benefit than they would have under Social Security.  Additional legislation passed in 1974 restructured railroad retirement benefits into two tiers to coordinate them more fully with social security benefits. 

Railroad retirement replaces the social security system for railroad workers. The taxes under the railroad retirement system are included in two tiers.  The first tier is based on combined railroad retirement and social security credits, using social security benefit formulas.  The second tier is based on railroad service only and is comparable to the pensions paid over and above social security benefits in other heavy industries.  These tiers and rates are as follows:

RRTA

2008

2007

2006

Tier I Wage Base/Rate *

$102,000/6.20%

$97,500/6.20%

$94,200/6.20%

Tier I Wage Base/Rate *

unlimited/1.45%

unlimited/1.45%

unlimited/1.45%

Tier II ER Wage Base/Rate

$75,900/12.1%

$72,600/12.1%

$69,900/12.6%

Tier II EE Wage Base/Rate

$75,900/3.9%

$72,600/3.9%

$69,900/4.4%

* Subject to both employer and employee

 

 


When looking at the rates for RRTA, and comparing them to the rates used for social security, it is readily apparent that a railroad employer is subject to a much higher rate of tax than a non-railroad employer.  Thus, there is a significant incentive for an employer to attempt to be classified as a non-railroad, to classify workers as independent contractors, or to classify payments as something other than wages.
 
Filing Requirements, IRS

Forms

Because railroad employers do not come under the social security system, they file different employment tax returns from those used to report FICA wages.

The forms used to report railroad employment taxes are presented below.

Form CT-1

Employer's Annual Railroad Retirement Tax Return

A railroad employer files an annual CT-1 to report RRTA taxes.  All CT-1 returns are filed with the IRS Cincinnati Campus, and must be filed by the last day of the second month following the end of the calendar year (normally, by February 28th).

The IRS Cincinnati Campus provides information to the RRB to allow the RRB to reconcile railroad employer accounts.

Note: For any year in which the RURT is applicable, a separate entry is provided in order for the RURT to be reported on the Form CT-1.

Form CT-2

Employee Representative's Quarterly Railroad Tax Return

A CT-2 is filed on a quarterly basis by individuals subject to the Tax on Employee Representatives.

Form 941

Employer’s Quarterly Federal Tax Return

Although railroad employers are not subject to FICA, they are still required to withhold income tax on behalf of their railroad employees; there is no provision on Form CT-l to report the income tax withholding, so railroad employers use Form 941 for this purpose.

It is also conceivable that an employer could have some employees covered by FICA, and other employees covered by RRTA. In this situation the employer would be reporting FICA wages on the Form 941.  (This subject will be discussed in greater detail in the “Potential Issues” section of the guide.)

Form W-2

Wage and Tax Statement

Railroad employers use Form W-2 to report wage payments to employees and to SSA.  RRTA taxes are shown in Box 14, and Boxes 3, 4, 5, 6 and 7, relating to FICA and Medicare, should be blank.

Form W-3

Transmittal of Income and Tax Statements

Railroad employers use Form W-3 to transmit Forms W-2 to SSA.  Form W-3 provides a box to indicate that the employer is a railroad, alerting SSA to the fact that the information reported reflects RRTA rather than FICA and Medicare.

If an employer has some employees covered under FICA and Medicare as well as RRTA, the Form W-2's must be segregated by type, and separate Forms  W-3 prepared for each batch.

Filing Requirements, RRB

RRB Reports

A railroad employer is also required to submit numerous reports to the RRB which can be used by the examiner as a cross check of the amounts reported on the Form CT-1. Some of the reports are as follows:

RRB Report

Title

BA-3a

Annual Report of Creditable Compensation

BA-4

Report of Creditable Compensation Adjustments

BA-9

Report of Separation Allowance or Severance Pay

BA-10

Report of Miscellaneous Compensation and Sick Pay

Form G-241

Summary Statement of Quarterly Report of Railroad Retirement Supplemental Annuity Tax Liabilities

Form G-245

Summary Statement of Quarterly Report of Railroad Retirement Supplemental Tax Credits

Form G-440

Report Specifications Sheet

Deposit Requirements

Railroads are under the same rules as any other business or employer for determining deposit requirements for all types of tax.  RRTA taxes are also subject to deposit requirements.  The “Instructions for Form CT-1”, contain a detailed discussion of deposit rules for RRTA taxes. There were major changes made to the deposit requirements in 1999.  See News Release IR-1999-27 and Notice 99-20, 1999-17 I.R.B. 16.

In general RRTA taxes are deposited with an authorized financial institution or a Federal Reserve Bank by using Form 8109, Federal Tax Deposit Coupon.  Based on a dollar threshold there is a mandatory electronic deposit requirement.  That threshold has been increased from $50,000 to $200,000. If the total Federal tax deposits made in 2006 exceed $200,000 they must use the Electronic Federal Tax Payment System (EFTPS) or RRBLINK beginning January 1,2007.   

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3.  Interaction Between IRS and RRB

Agreement Between the Railroad Retirement Board and Internal Revenue Service

The Agreement between the Railroad Retirement Board and Internal Revenue Service (Agreement)  facilitates the sharing of information between the two agencies.

The terms of the Agreement call for each agency to share the results of its investigations with the other agency and to provide supporting work papers or documentation on an as needed basis, to the extent authorized under IRC § 6103(l)(1)(c) and other applicable federal laws.

On-site Information Exchange

On occasion, the IRS and RRB may be simultaneously involved in an audit of the same employer.  In such an event, each agency may share information with the other as permitted by applicable federal laws.  The LMSB Ground Transportation Technical Advisor should be contacted before any information is shared

IRS Reports

The Agreement calls for the IRS to furnish a copy of any examination report to the RRB.  For an agreed case, the report is furnished when the examiner is closing the case. Unagreed reports are furnished after Appeals action.

It is important to note that the RRB is NOT entitled to receive any information with respect to RURT taxes and/or social security taxes. If an examination results in changes to RURT and/or social security taxes, the report should be sanitized so that RURT and/or social security information is not included in the copy being provided to the RRB.  Such sanitizing should be coordinated with the local IRS disclosure officer.
 
RRB Determination of Coverage

The RRB conducts investigations with regard to whether or not an employer is an RRA employer, the results of which are referred to as determinations of coverage.

The RRB employs a legal staff charged with the responsibility of submitting a recommendation to the Board concerning questions of coverage.  The Board then makes the final determination of coverage after analyzing the recommendation of legal counsel.

The results of a determination of coverage can fall into three categories, and are forwarded to the IRS for appropriate action, as shown below.

Note that while the Board makes the determination of coverage, the IRS must conduct any follow-up action since the assessment and collection of applicable RRTA taxes are the responsibility of the IRS.

RRB Audit Report

The RRB also conducts audits of existing RRA employers.  During the course of such audits, the RRB may identify compensation that is not being reported as wages for RRTA purposes. The RRB forwards a copy of its report to the IRS for follow-up since the IRS is responsible for the assessment and collection of applicable RRTA taxes.

IRS Follow-up

With regard to both determinations of coverage and RRB audit reports, the IRS must decide what action is appropriate relative to assessment and collection of RRTA. This decision should take into account the relative size of the potential adjustment, the year(s) involved, other workload priorities, etc.

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4.  Definitions

Employer  RRA vs. RRTA

RRTA, RRA and RUIA each contain a definition of the term "employer". The IRS has endorsed the policy of construing and applying the term "employer" for RRTA purposes in the same manner as that term is construed and applied for RRA and RUIA purposes.  See Rev. Rul. 77-445, 1977-2 C.B. 357 and Rev. Rul. 74-121, 1974-1 C.B. 300.  See also City of Galveston by and Through Board of Trustees v. United States, 33 Fed. Cl. 685 (1995); Standard Office Bldg. Corp. v. United States, 819 F.2d 1371 (7th Cir. Ill. 1987); Galveston by and Through Board of Trustees v. United States, 22 Cl. Ct. 600 (1991); Carland, Inc. v. United States, 75 A.F.T.R.2d 1234 (W.D. Mo. 1995).

Employer

A RRTA "employer" is a railroad carrier or any company that: (1) is "directly or indirectly owned or controlled by" a railroad carrier or is "under common control" with such a carrier; and (2) "operates any equipment or facility or performs any service (except trucking service, casual service, and the casual operation of equipment or facilities) in connection with the transportation of passengers or property by railroad, or the receipt, delivery, elevation, transfer in transit, refrigeration or icing, storage, or handling of property transported by railroad. (see  IRC § 3231(a))

Owned Company

The Surface Transportation Board requires companies involved in the transportation industry to file reports and to list in these reports all affiliated companies.  These reports provide information regarding the principal business activity, the form of control, the percentage of control, along with information regarding any other company that may own a portion of the affiliated company.  Any company listed in these schedules will generally be railroad employers set out in Treas. Reg. § 31.3231(a)-1.

Controlled Companies

Companies that perform railroad service and are controlled by one or more carriers are employers.  Control may be by means of:

  • Stock ownership
  • Agreements
  • Licenses.
  • Any other devices which insure that the operation of the company is in the   interest of one or more carriers

Stock Ownership

If this is the form of control used, then the examiner should be able to show that a majority of the stock owners are also stock owners of one or more companies that control a carrier.  The examiner should request from the controlled company a list of their stock owners and other companies that they own stock in.

Licenses

If this is the form of control used, then the examiner should be able to show that the licensor of the controlled company has the same licenses with those of one or more companies that control a carrier.

Agreements

This means of control may be present through a contract or agreement. For example, when a carrier enters into a cost plus contract, the carrier may step in and control management action to prevent cost overruns. Another example of this means of control may occur when the right to control is set out in an agreement even though the company is designated as an independent contractor. Look for a separate agreement, like a union agreement, that simply states that the carrier will maintain the control necessary to determine whether workers are employees. Also a contract or agreement may spell out the control over the manner and method of accomplishing results. Such control may be found in an addendum to the contract or in the form of general specifications which set out the results and the manner and method of accomplishing the results.

The examiner is looking for a situation in which a result could be accomplished by one or more different methods. When the contract spells out the results to be achieved, as well as the method of accomplishing that result, the company is not free to use its own method, and is controlled.

Any Railroad Service

In addition to being owned or controlled, a company must also be performing a railroad service.  The service may be direct or indirect.

Direct Services

Direct services are those that involve the transportation by rail of:

  • Passengers
  • Property

Indirect Services

Indirect services involve those that are connected with, or supportive of rail transportation and/or essential to its proper functioning, but which are not casual or trucking services. The following list represents examples of services that are included in indirect services:

  • Accounting services
  • Bookkeeping
  • Bridge services
  • Building services
  • Construction
  • Engineering
  • Equipment leasing and rental
  • Loading and unloading freight
  • Maintenance of way
  • Office building rental
  • Piggyback trailer ramping, deramping and repair
  • Purchasing department
  • Repair services
  • Servicing overhead trolley lines
  • Stenographic services

Listed below are the kinds of companies that may provide indirect services:

  • Communications Company - Look for those that use microwave relays such as TV antenna (Cable TV) companies or other companies that may handle the railroad's communication, signal, and switching operations.
  • Computer Company - Look for those owned by a carrier that are performing accounting services or use computers to operate signals, keep track of shipments, rolling stock; and other rail activities. See Revenue Ruling 77-445, 1977-2 C.B. 357.  See also City of Galveston by and Through Board of Trustees v. United States, 33 Fed. Cl. 685 (1995); Galveston by and Through Board of Trustees v. United States, 22 Cl.Ct. 600 (1991).
  • Concrete Company - Look for those that pour pre-stressed concrete.  Check to see if they make concrete cross ties.
  • Dock Company - Look for all types of terminal companies, including potential subdivisions of a state such as port authorities which may also be subject to RRTA tax. See Revenue Ruling 77-386, 1977-2 C.B. 356 and Revenue Ruling 82-64, 1982-1 C.B. 154.
  • Financial Companies - Look for those that own or lease rolling stock.
  • Fuel Companies - Check to see if they are fueling, heating, or cooling units on cars or piggyback trailers. See Revenue Ruling 74-552, 1974-2 C.B. 338.  But See Missouri Pacific Lines, Inc. v. United States, 3 Cl. Ct. 14 (1983).
  • Gravel Companies – Look for those that furnish ballast including crushed slag.
  • Ice Companies - Icing boxcars generally have been replaced by refrigerator cars but sometimes ice companies fuel these cars. Revenue Ruling 69-306 1969-1 C.B. 267.
  • Lumber Companies - Look for those that furnish railroad ties or plywood cut to fit in railroad boxcars.
  • Manufacturing Companies - Look for those owned by a carrier that manufacture or remanufacture railroad pans, accessories, or other equipment used by a carrier. See Revenue Ruling 85-177, 1985-2 C.B. 203.  See also Trans-Serve, Inc. v. United States, 521 F.3d 462 (5th Cir. 2008).
  • Real Estate Company - Look for those owned by a carrier that own office buildings, warehouses, terminal tracks, and furnish or lease these to or on behalf of the railroad. See Revenue Ruling 74-121, 1974-1 C.B. 300.  See also Standard Office Bldg. Corp. v. United States, 819 F.2d 1371 (7th Cir. Ill. 1987); Carland, Inc. v. United States, 75 A.F.T.R.2d 1234 (W.D. Mo. 1995).
  • Steel Companies - Look for those that repair or build rolling stock. See Despatch Shops, Inc. v. Railroad Retirement Board, 153 F.2d 644 (D.C. Cir. 1946) regarding RUIA and Despatch Shops v. Railroad Retirement Board, 154 F.2d 417 (2d Cir. 1946) regarding RRA.
  • Warehouse Company - Look at each of these very carefully. Include any produce terminal company buildings, grain elevators, etc.

Casual Service

Treas. Reg. § 31.3231(a)-1(c) states that:

"... the term casual applies when the service rendered or the operation of equipment or facilities by a controlled company or person in connection with the transportation of passengers or property by railroad is so irregular or infrequent as to afford no substantial basis for an inference that such service or operation will be repeated, or whenever such service or operation is insubstantial."

The RRB regulations define “casual service” essentially the same: “…whenever such service or operation is so irregular or infrequent as to afford no substantial basis for an inference that such service or operation will be repeated, or whenever such service or operation is insubstantial.”  As a guideline in applying the definition of “insubstantial”, the RRB uses less than 10 percent of total revenue, employees, and output. This guideline, however, is not part of the RRB regulations. 20 CFR 202.6.

When issuing its regulations, the IRS declined to implement a less than 10 percent rule.  The Service stated that situations can arise where one of the factors is less than 10 percent while the remaining factors are greater than 10 percent, (factors here refers to revenue, employees and output). It is not clear that the service or operation of equipment or facilities would be insubstantial in those situations.

Receiver or Trustee as Employer

The definition of employer, at IRC § 3231(a), also includes:

"...Any receiver, trustee, or other individual or body, judicial or otherwise, when in the possession of the property or operating all or any part of the business of any such employer;…”

This would only apply to individuals who would be employees if the property or business operation had continued in the possession of the preceding employer.  This situation could occur, for example, if a railroad sought protection through the bankruptcy court, and the bankruptcy court appointed a trustee to operate the company.  The trustee would be a railroad employer of the carrier's employees.

Railroad Associations

The definition of employer also includes railroad associations, tariff bureaus, demurrage bureaus, weighing and inspection bureaus, collection agencies, and other organizations that are:

  1. Controlled and maintained wholly or principally by two or more employers and
  2. Engaged in performing services in connection with or incidental to railroad transportation.  An organization is engaged in performing services incidental to railroad transportation when such function would normally, in the absence of the organization, be performed by the constituent employers.

Railway Labor Organizations

The term employer includes railway labor organizations that are national in scope and organized in accordance with the provisions of the Railway Labor Act. "Employer" also includes the following railway labor organization subordinate units established according to constitution and by laws:

  1. State and national legislative committees
  2. General committees
  3. Insurance departments
  4. Local lodges and divisions.

Exclusions From "Employer"

IRC § 3231(a) excludes certain companies from the definition of "employer".

  1. A street railway, or interurban or electric railway, unless it is operating as a part of a general steam-railroad system of transportation.  (This definition also includes a general rail transportation system operated by electric, diesel, or other means of power.)
  2. any company because it is engaged in mining coal, supplying coal to an employer if delivery is not beyond the mine tipple, and operating equipment or facilities therefore, or in any of these activities.

Employee

For purposes of RRTA, "employee” is defined at IRC § 3231(b), and Treas. Reg. § 31.3231(b)-1 provides that an employee includes any individual who is:

  1. In the service of one or more employers,
  2. An officer of an employer,
  3. An employee of a local lodge or division defined as an employer, or
  4. In the service of a general committee.

In the Service of One or More Employers

The definition of "employee”, for RRTA purposes, is very similar to the definition of an employee for FICA purposes.  Treas. Reg. § 31.3231(b)-1 defines a worker as an employee if he or she is:

  1. Subject to the continuing authority of the employer who supervises and directs the manner in which the employee's services are rendered,
  2. Rendering professional or technical services integrated into the staff of the employer
  3. Rendering other personal services on the property used in the operations of the employer which are an integral part of those operations.

With respect to 2 and 3 above, an individual performing services as an independent contractor may be, with regard to such services, in the service of an employer within the meaning of these paragraphs. See Treas. Reg. § 31.3231(b)-1(a)(3).

Treas. Reg. § 31.3231(b)-1 goes onto provide additional facts to be considered, including:

  • It is the right to control, not the actual exercise of this right, that is important
  • The right of the employer to discharge the worker is an important indication that the worker is subject to direction and control
  • The furnishing of tools and the furnishing of a place to work are important indications that the worker is subject to direction and control
  • If the worker is subject to control and direction merely as to the results to be achieved, and not as to the means for achieving those results, the worker would generally be considered an independent contractor
  • Whether or not a worker is an employee must be determined based upon an examination of the particular facts of the case
  • If a worker is an employee, it is of no consequence that the worker is designated as a partner, independent contractor, etc.
  • If a worker is an employee, it is of no consequence that the worker performs the services on a part-time basis.

Officer

Similar to the rules under FICA, an officer of an employer is one who performs the duties of his or her office for compensation.

Special Categories

The definition also includes provision to include as an employee those individuals performing services on behalf of a railway labor organization.  If you are involved in the examination of a labor organization, refer to the code and regulations for the rules to be applied.

Exclusions

The term "employee” excludes individuals engaged in certain coal mining operations, as follows:

  • Coal mining
  • Preparing coal
  • Loading coal at the tipple
  • Handling coal between the mine and the tipple, unless the handling consists of movement by rail with standard locomotives.

Compensation

Comparison of RRTA to FICA

The definition of compensation for RRTA purposes is found at IRC § 3231(e), and, while there are historical differences between the FICA and RRTA statutes, there are also significant similarities. Legislation enacted over the years has made the RRTA Tier I tax identical to the FICA tax as well as conforming the Tier I wage ceiling to the FICA wage ceiling.

Along with conforming the structure of the RRTA to parallel that of the FICA, the exclusions from the definition of compensation under RRTA, with few exceptions, mirror the exclusions from the definition of wages under FICA.  These exclusions from compensation include non-monetary benefits such as fringe benefits, meals and lodging excludable under IRC § 119, and employer-paid life insurance premiums for group-term life insurance under $50,000.

In amending RRTA, Congress often indicated the purpose was to provide conformity to FICA.  Congress has added references to FICA provisions in the RRTA definition of successor employer and the rules for non-qualified deferred compensation (IRC §§ 3231(e)(2)(C) and 3231(e)(8), respectively).  In addition, Tier I benefits are designed to be equivalent to social security benefits, and are subject to federal income taxation in the same manner as social security benefits.

For calendar years after December 31, 1992, Treas. Reg. § 31.3231(e)-1(a)(1) provides that "compensation" for computation of RRTA taxes has the same meaning as the term "wages" under IRC § 3121(a), except as specifically limited by the Railroad Retirement Act or regulations

Included and Excluded

The Code provides for the inclusion or exclusion of the following items:

  • IRC § 3231(e)(1) -

Include -
1. Money remuneration for services rendered 
Exclude -
2. Payment for health insurance plan
3. Tips (but see IRC 3231(e)(3) below)
4. Employee business expense advance or reimbursement

  • IRC § 321l(e)(2) - provides for the application of the Tier I and II wage base amounts
  • IRC § 3231(e)(3) -
    includes cash tips unless the amount of cash tips is less than $20 for any calendar month
  • IRC § 3231(e)(4) -
    excludes payments from Tier I taxes that are made on account of sickness or accident disability to the extent they are received under a workmen's compensation law or RUIA.
  • IRC § 3231(e)(5) -
    excludes amounts for employee achievement awards, scholarship and fringe benefits, if the employee will meet the requirements or IRC §§ 74(C), 117, and 132, respectively.
  • IRC § 3231(e)(6) -
    excludes educational assistance program payments if the employee will meet the requirements of IRC § l27,
  • IRC § 3231(e)(7) -
    excludes qualified group legal service plan if the employee will meet the requirements of IRC § 120.
  • IRC § 323l(e)(8) -
    includes amounts contributed to a 401(k) plan in general, conforms RRTA rules with FICA rules with respect to non-qualified deferred compensation.
  • IRC § 3231(e)(9) -
    excludes meals and lodging if the employee will meet the requirements of IRC § 119.

Earned vs. Paid

As a historical note, in prior years RRTA was computed at the time of payment using the tax rates in effect when the compensation was earned.  RRTA also used a monthly wage base limitation rather than an annual wage base.

The statute was eventually modified to bring RRTA into conformity with FICA. Since 1985, the tax has been computed using rates in effect at the time of payment, regardless of when the compensation was earned. In addition, RRTA uses the annual wage base limitations rather than monthly limits.

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5.  Audit Techniques

Audit Plan

This chapter provides a suggested audit plan for the examination of a railroad for employment tax purposes.  The audit plan presented would result in a fairly complete review of the employer for compliance with filing requirements, correct treatment of various types of payments, employee/independent contractor issues, etc.  Depending on the time allotted to your specific examination, or prior examination history, it may be necessary to tailor the plan to your case by eliminating certain steps.

  1. Preliminary
    • Request copies of the following reports from the taxpayer
    • ICC Form A & B
    • RRB Form BA-3a
    • RRB Form BA-4
    • RRB Form BA-9
    • RRB Form BA-10
  2. Request a listing of all payroll returns filed by company and by type (i.e. Forms CT-1, 941, 940).
  3. Establish which companies and/or employees are covered by each return.

Payroll System

  1. Ask the taxpayer the following questions:
    • Are there any known errors on the returns under examination?
    • Are there any outstanding amended/corrected returns in regard to the Forms CT-1/941 for the years under examination?
    • Are there any amended/corrected returns being prepared or contemplated by the taxpayer regarding the Forms CT-1/941?
    • Are there any work papers or summaries available reconciling the return to the books or showing the account summaries for reporting the various taxable components on the Form CT-1?
    • Are there any work papers or summaries relating to payroll from other sources, such as audits or examinations by Internal Audit, State Agencies, RRB, other internal/external sources?

      Follow-up to secure copies of any of the above information, as appropriate.
  2. Have the taxpayer explain the payroll and accounting process with regard to:
    • How the determination is made as to whether an employee is covered by RRTA or FICA.
    • Payroll payments that may be excluded from Tier I and Tier II tax.
    • Whether compensation is reported on an earned or paid basis.
    • How the work hours for the supplemental annuity tax are determined.

Computer Audit Specialist (CAS) Applications

  1. Obtain the following computer information:
    • Form W-2 tapes
    • Form 1099 tapes
    • RRB Forms BA-3a, BA-4, BA-9 and BA-10 tapes
    • Payroll master file or record layouts
  2. Have the CAS:
    • Reconcile the W-2's to the 1099's to identify the conversion of workers from employees to independent contractors and/or to identify payments being made to employees who have been excluded from RRTA taxation.
    • Reconcile the Form W-2 tape to the BA-3a tape, taking into account 401(k) contributions and group term life insurance calculations.  This may identify payments reported on the BA-3a but excluded from RRTA taxation.
    • Reconcile the W-2 tape to the BA-9 tape. Discrepancies may indicate severance or dismissal payments which have been excluded from RRTA taxation.
    • Reconcile the W-2 tape to the BA-3a tape. Discrepancies may indicate sick pay payments which have been excluded from RRTA taxation.

Reconciliation of CT-1's

Determine whether or not Tier I and Tier II wage and tax amounts have been correctly reported by conducting the following tests:

  • Reconcile CT-1, line 5, to BA-3a. (Tier I)
  • Reconcile CT-1, line 6, to BA-3a. (Tier I)
  • Reconcile CT-1, line 11, to BA-4. (Tier I)
  • Reconcile CT-1, line 11, to BA-4. (Tier II)
    Note: request all Forms BA-4 filed with the RRB during the year and identify the reason for each adjustment.  Consider only those adjustments with a RRTA tax affect.  Compare this total to the railroad’s supporting work papers for line 11 of the CT-1.  Watch for statute of limitations, cash vs. earned, correction of errors, and incorrectly reported compensation
  • Verify that the correct wage base and tax rates have been used.
  • Review the chart of accounts for account titles that are related to employee compensation.  If any are found, test to determine whether or not they were included in taxable compensation.  Be aware of payments being made through accounts payable or voucher accounts.

Supplemental Annuity Tax

Determine whether or not the Supplemental Annuity Tax (SAT) has been correctly reported.  A safe harbor method of computing SAT is available for years after 12-31-93.  See the Section on SAT in the "Definitions" section of this guide.

RURT

Railroad Unemployment Repayment Tax - This tax was terminated effective with respect to payments made on or after July 1, 1993.  However, in the event it is reinstated, the following audit techniques are suggested:

  • Ask the taxpayer how the tax was computed.
  • Reconcile CT-1 RURT wages to Form BA-3a RUIA wages.
  • Select a sample of employees from the Form BA-3a to test for proper RURT computation.
  • Determine the impact of any discrepancies found for Tier I and/or Tier II purposes for RURT purposes.

Fringe Benefits

  1. Review the chart of accounts for account titles that indicate which fringe benefits are being offered.
  2. Request policy statements for fringe benefits that are offered to employees.  The policy should describe the following:
    • The benefit.
    • Which employees or group of employees are entitled to the benefit.
    • The requirements any employee must satisfy to qualify for the benefit.
    • Any limitations that are placed on any employee or group of employees in regard to use of the benefit.
    • The accountability requirements, if any, an employee is required to follow.
    • The RRTA Tier I and Tier II treatment of the benefit.
    • The federal income tax withholding treatment of the benefit.
    • How the benefit is reported to the recipient (i.e W-2, Form 1099, no reporting, etc.).
  3. Determine whether the fringe benefits are being treated properly for RRTA Tier I, Tier II and income tax withholding purposes. Consider:
    • Is a nontaxable benefit being offered that is not covered by IRC § 3121(a)?  If so, pursue further.
    • Is a nontaxable benefit being offered that appears to discriminate in favor of highly compensated individuals?  If so, pursue further.
    • Is a nontaxable benefit being offered on a flat rate basis without proper accountability? If so, pursue further.

Backup Withholding

Backup withholding applies to a railroad employer just as to any other type of employer.

The filed 1099's should be inspected, either by hard copy or tape, to determine whether or not any were filed with missing, incomplete, or obviously incorrect taxpayer identification numbers.  Take appropriate action with respect to any discrepancies discovered.

The taxpayer’s policies and procedures for determining when a 1099 must be issued should be reviewed and tested by comparison to accounts payable vendor listings.  The agent will have to make a decision on the necessity and/or depth of this compliance check based on such factors as prior audit history with the taxpayer, completeness and accuracy of policies and procedures, availability of computerized records for conducting the compliance test, etc.

Conversion Issues

Section 530 of the Revenue Act of 1978 applies to a railroad employer just as to any other type of employer, and must be considered prior to initiating any conversion issues.  This section, as amended through the years, provides an employer with relief from Federal employment taxes with respect to workers who have been reclassified as employees.  Section 530 relieves the employer from paying and withholding any employment taxes (including withholding on income tax) with respect to these employees not only for the period covered by the audit, but for future periods as well.

The Classification Settlement Program (CSP) is also available to railroad employers in the event of a reclassification issue.

The examiner should refer to the materials relating to worker classification that are included in this desk guide.

FICA vs. RRTA.

Determine whether the taxpayer has a group of employees who are covered by FICA rather than RRTA and if this is appropriate. Consider reclassifying for RRTA coverage under IRC Section 3231(a) and (b).

Determine whether the taxpayer owns or directly controls any entities that meet the definition of a carrier under IRC Section 3231(a) and has employees that are covered for FICA rather than RRTA.  Consider reclassifying for RRTA coverage under IRC Section 3231(a) and (b).

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6. Potential Issues

General

General Comments

Almost any issue that might be present in a FICA employment tax case may also be present with respect to a railroad employer.  Therefore, the examiner should consider current issues from other types of cases whenever examining a railroad employer.

Employee vs. Independent Contractor

The method of determining a worker to be an independent contractor or an employee is the same for a railroad employer as it is for any non-railroad employer.

Reference materials concerning worker classification have been included in this guide to assist the examiner in developing these issues.

The Classification Settlement Program would also apply to a railroad employer.

Section 530

Section 530 has the same application to a railroad employer as it does to any other type of employer.  The taxpayer should be provided the handout concerning Section 530 before beginning any conversion issues.

General Issues

Consider the following during the course of the employment tax examination:

  • Treatment of severance pay as non-qualified deferred compensation
  • Treatment of bonus and award payments as other-than compensation
  • Treatment of employees as independent contractors
  • Treatment of medical reimbursement plans
  • Treatment of employee relocation expense reimbursements
  • Treatment of related entities as FICA employers

This list is not meant to be all-inclusive.  It is only meant to demonstrate the fact that issues present in non-railroad employment tax cases may also be present, and should be considered, in a railroad employer examination.

Industry Specific Issues:

Severance Pay/ Termination Pay

Railroad employers have been very aggressive in attempts to treat severance pay and/or termination pay as not subject to RRTA.

Some of the arguments for this are...

  1. Severance/termination pay represents the buyout of a contract right, and is not taxable based on Revenue Ruling 58-301, 1958-1 C.B. 23.
  2. Severance payments are not subject to RRTA tax because the payments represent supplement unemployment benefit payments (SUB pay).  See CSX Corp. et. al v. United States, 518 F.3d 1328 (Fed. Cir. 2008).  
  3. Severance payments made after the year of termination constitute nonqualified deferred compensation under IRC § 3121(v)(2) as incorporated in IRC § 3231(e)(8)(B). 

With regard to the first argument, the government takes the position that Revenue Ruling 75-44, 1975-1 C.B. 15, is controlling, and that the payments represent compensation for past services rather than the buyout of contract rights.

With regard to the employer's secondary argument, there is no statutory provision for SUB-pay under IRC § 3221(e).  SUB-pay is excluded administratively from compensation for RRTA purposes as a result of the Service’s issuance of a series of FICA and FUTA revenue rulings dating back to 1956.  Revenue Ruling 56-249, 1956-1 C.B. 488, provides a limited exception from the definition of wages for FICA, FUTA and federal income tax withholding for certain payments made upon the involuntary separation of an employee from the service of the employer.  Rev. Rul. 56-249 sets forth eight criteria for determining if payments meet the limited exception. By extending the application of this revenue ruling to the railroad employer's severance/termination plan, it can usually be demonstrated that the plan fails most, if not all, of the eight criteria. Thus the payments made to the employees are not excludable from RRTA.

The third argument is that the payments are compensation in the form of periodic severance pay and if made beyond the year of termination constitutes nonqualified deferred compensation under IRC § 3121(v)(2) as incorporated in IRC § 3231(e)(8)(B). The Service’s position is that payments made under a severance plan are not deferred compensation (see Treas. Regs. § 31.3121(v)(2)-1, and Kraft Foods v. United States, 58 Fed. Cl. 507(2003))

Annual Productivity Fund Payments

In order to reduce costs, some railroad employers have negotiated agreements with their employees to reduce the size of the crew operating the train. In return for agreeing to reduce the size of the crew, the employees receive additional payments from the employer.

The employer agrees to set aside a certain amount of money throughout the course of the year, based on the number of trains operated with a reduced crew. Then, after year-end, each employee who participated in the operation of a train with a reduced crew receives a pro rata share of the funds set aside by the employer.

Employers have attempted to classify these payments as other than compensation for services, and therefore as not subject to RRTA. Employers generally base their position on Revenue Ruling 58-301, 1958-1 C.B. 23, modified and superseded by, Rev. Rul. 2004-110, 2004-2 C.B. 960.

The service has taken the position that these payments represent compensation for services rendered, and are subject to RRTA.  The service position is based on Revenue Ruling 75-44, 1975-1 C.B. 15.  In Rev. Rul. 75-44, the Service expressly distinguished the unexplained holding in Rev. Rul. 58-301 by pointing out that lump sum payments "for the past performance of services reflected in the employment rights [an employee] was giving up" are wages, whereas the relinquishment of a purely contractual right is not "wages."  STA of Baltimore – ILA Container Royalty Fund v. United States, 621 F. Supp. 1567 (1985), aff’d, 804 F.2d 296 (4th Cir. 1986).  This case held that payments made by employers into a “royalty fund” that were subsequently shared by eligible employees were “wages” for FICA and FUTA purposes.

If these types of payments are found, it is suggested that a request for Technical Advice be submitted because of the fact intensive nature of this issue.  Revenue Ruling 75-44, is not sufficient to support this type of issue.

Productivity Fund Buyouts

Some employers, having negotiated a productivity fund system, have subsequently offered employees a lump sum payment in exchange for the employees’ giving up any rights to receive future payments from the productivity fund.  These plans generally call for a payment to be made to the employee at the time the employee accepts the buyout, with an additional payment to be made to the employee at the time the employee leaves the service of the employer.

As with the issue presented above, employers have attempted to classify these payments as other than compensation for services, and therefore as not subject to RRTA, basing their position on Revenue Ruling 58-301.

The Service relies on Rev. Rul. 75-44 and Rev. Rul. 2004-110 to support its position that these payments represent compensation for services rendered, and are subject to RRTA.

Employee Achievement Awards

Employers frequently institute programs to recognize and reward employees for safety, perfect attendance, and other similar types of achievement.  In at least a few cases, railroads have chosen to give the employees shares of stock as the reward under these programs.  A dispute has arisen concerning the taxability of the stock for RRTA purposes.  The railroads are taking the position that stock does not meet the definition of compensation. (Other railroads may be taking this same position with respect to other forms of remuneration such as “reward points”, "bonus points”, etc.)

The argument of the railroad employers can be summarized as follows:

Both the RRA and RRTA define compensation as ”money remuneration". "Money" is a well defined term referring to coin and paper currency, and stock does not meet this definition.

For FICA purpose, compensation is defined as all remuneration, including the cash value of remuneration paid in some medium other than cash.  Stock would meet this broader definition of compensation.

Over the years Congress has had many opportunities to conform the definition of compensation for RRTA and FICA purposes, and in fact has done so with respect to some aspects of the definition.  However, Congress has never chosen to remove the term “money" from either the RRTA or RRA definition.

Since Congress included “money" in the definition of compensation, it must have had a reason for doing so, and the RRB and/or IRS cannot ignore the use of the word when issuing regulations.

Therefore, payments made to employees in the form of shares of stock are excludable from compensation for RRTA and RRA purposes.

The IRS and RRB position, on the other hand, is as follows:

While there are historical differences between the FICA and RRTA statutes, there are also significant similarities.  Legislation enacted over the years has made the RRTA Tier I tax identical to the FICA tax as well as conforming the Tier I wage ceiling to the FICA wage ceiling.  See, e.g., T.D. 8582, 1995-1 C.B. 187.

Along with conforming the structure of the RRTA to parallel that of the FICA, the exclusions from the definition of compensation under RRTA, with few exceptions, mirror the exclusions from the definition of wages under FICA.  These exclusions from compensation include non-monetary benefits such as fringe benefits, meals and lodging excludable under section 119 of the Internal Revenue Code, and employer-paid life insurance premiums for group-term life Insurance under $50,000.

In amending RRTA, Congress often indicated the purpose was to provide conformity to FICA.  Congress has added references to FICA provisions in the RRTA definition of successor employer and the rules for non-qualified deferred compensation (323l(e)(2)(C) and 323l(e)(8), respectively).  In addition, Tier I benefits are designed to be equivalent to social security benefits, and are subject to federal income taxation in the same manner as social security benefits.

Although the two statutes are not completely identical, the language of the regulations for RRTA indicates that the term compensation has the same meaning as the term wages for FICA.

It should be noted that new regulations regarding the definition of compensation were issued in 1994, clarifying that compensation for RRTA and FICA purposes was essentially the same. See Treas. Reg. § 31.3231(e)-1(a).

If you encounter this issue contact the Ground Transportation Technical Advisor for current information on our position.

Housing Allowances

See Rev. Rul. 69-391; 1969-2 C.B. 191, concerning of the value of housing provided to railroad employees.

Meals, Travel, Lodging

See Rev. Rul. 75-279, 1975-2 C.B. 409. Generally, allowances for travel expenses are not wages subject to RRTA taxes if the employee is required to take a period for substantial rest away from home, or if the employee is away from home overnight while on service, and made a full accounting for the allowance.

Other allowances for shorter trips when the employee does not require substantial rest away from home or is not away from home overnight are includible in wages subject to RRTA taxes.

Segregation

Segregation is a concept used for the separation of employees subject to FICA taxes from those subject to RRTA taxes.  Although the concept of segregation at one time was not present in the IRC or Regulations, the Service had used the concept in publishing rulings.  In 1994, Treas. Reg. § 31.3231(a)-1 was amended, by adding paragraph (f).  This new paragraph incorporated the concept of segregation into the regulations.

The purpose of segregation is to obtain a fair and reasonable application of law, but it cannot be used in all cases.  For example, it cannot be used if the records are inadequate or if the railroad and non-railroad work is so commingled that it cannot be separately identified.

Segregation is permitted only if the employer in question is principally engaged in non-railroad activities.  "Principally engaged," for this purpose, is 50 percent or more.  This determination requires consideration of relative revenues, number of employees, payrolls, output, facilities in use, and the character of customers.  Sound judgment will dictate the test or combination of tests to use for your determination.  You may want to incorporate into your determination process consideration of relative net profits and the amount of control over such profits exercised by the parent railroad; also, you may take into consideration the demonstrated purpose for creation of the company and the principal occupation and interest of company executives.

Excluded Companies

Segregation cannot be used for express companies, sleeping car companies, or carrier railroads.  Segregation can be used when, for example, a company has two different businesses and there is a definite separation between them.

Principally Engaged in Railroad Activities

Since, as stated, segregation is not applicable to a company that is principally engaged in railroad activities, you will have to determine the status of a given company by some or all of the following comparisons.

  • Revenues
  • Number of employees
  • Payrolls
  • Output
  • Facilities in use
  • Character of customers

Because the objective is to cover under RRTA all employees that perform some railroad services, it is important that the tests clearly reflect the business activities of the company.  The best tests to accomplish this purpose must be selected on a case-by-case basis.

  • Illustration - In the case of an office building, test by output (relative occupancy) and character of tenants (relative number of RRTA and non-RRTA employers).  It is immaterial to the latter test that non-RRTA employers include those owned or controlled by RRTA employers.  The ultimate test is whether the building primarily serves RRTA employers and if so, it is not eligible for segregation.

Separate, Identifiable Enterprise

Segregation can be applied only to a separate identifiable enterprise. Therefore, when a company's records are commingled so that the enterprise cannot be separately identified, segregation cannot be applied.

In some cases, the records for railroad activities and for non-railroad activities must, in order to meet the test, be kept as if the company were operating two separate divisions.  In other cases, the records do not need to be as separate.  In determining the extent to which records need to be separately maintained, consider the extent, scope, and inter-relationship of the railroad and non-railroad operations.  The larger the size of the company and the territory covered, and the more the railroad and non-railroad operations are related, the more independent the records should be in order for the railroad operation to quality as a separate identifiable enterprise for purposes of segregation.

Court Cases

A number of court cases and revenue rulings have dealt with the issue of segregation.  See in general, the discussion that follows concerning related corporations.
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Employer Issues

Common Paymaster

The common paymaster rules apply when the total wages of an employee of two or more related RRTA employers are paid by one of the RRTA employers.  The common paymaster is treated as the sole employer for purposes of the RRTA taxes and the annual wages base.

The common paymaster rule, however, does not apply if the employers are not related, or if the employers are not all RRTA employers.  Thus, an RRTA employer cannot be a common paymaster for FICA purposes and a FICA employer cannot be a common paymaster for RRTA purposes.

Successor Employers

The RRTA adopts the successor provisions found under FICA at IRC § 3121(a)(1), allowing an employer that acquires and continues a business of another employer to include wages paid by the prior employer for purposes of determining the annual wage base limitation.  However, the RRTA requires that the terms "employer", "service" and "compensation" be given their meaning under RRTA.  As a result, successor employer issues involving FICA and RRTA employers cannot be commingled.
 
Related Corporations:

“Employer” is defined by IRC § 3231(a) for RRTA purposes as a company under some kind of control by a railroad that provides a railroad-related service that is not a trucking service, casual service, or the casual operation of equipment or facilities.  This definition has generated a long line of court cases dealing with the issue of whether or not a related company should be considered a railroad employer.  The courts have generally held that if an entity’s operations are related both “functionally” and “economically” to a carrier under common control with the entity, the entity is an “employer” within the meaning of the RRTA.

Some of the related corporation issues that have been considered by the courts are presented below.

Car Repair Shops

Car repair shops – Despatch Shops, Inc. v. Railroad Retirement Board, 153
F.2d 644 (D.C. Cir. 1946) regarding RUIA and Despatch Shops, Inc. v. Railroad Retirement Board, 154 F.2d 417 (2d Cir. 1946) regarding RRA.  The taxpayer argued that it should not be treated as a railroad employer because it was a separately incorporated manufacturing company distinct from its parent, a railroad, and because it was doing heavy repairs and manufacturing similar to that done by other, similar non-railroad companies.  The court rejected this argument, stating:

“If Despatch, in this situation, is not an 'employer' under the Act it can be readily seen that the railroads would be free to take from under the Act virtually all of their workers whose employment is in the ‘supporting’ activities, through the simple expedient of setting up wholly owned corporate affiliates to perform these services.  It is conceivable that everything from maintenance-of-way through engineering or bookkeeping might be done by so called 'independent' corporations.”

Warehousing and Warehouse Companies

Warehousing and warehouse companies - Railroad Retirement Board v. Duquesne Warehouse Co., 326 U.S. 446(1946).

Construction Companies

Construction companies - Southern Development Company v Railroad Retirement Board, 243 F.2d 351 (8th Cir. 1957).

Real Estate Companies

Real estate companies - Standard Office Building Corp. v. United States, 819 F.2d 1371 (7th Cir. 1987).  In this case, the position of the Service was that employees of Standard, owner and operator of an office building, were RRTA employees because the company was controlled by a railroad and the building was more than half occupied by offices of the railroad.

Although the position of the Service was sustained by the district court, that court was reversed by the appellate court on the basis that the taxpayer was not covered by RRTA because it was incorporated prior to the passage in 1937 of the RRTA, and because its employees would have secured a pension windfall if covered under RRTA. The portion of the building occupied by the railroad did not exceed 57 percent during the period in question.

By contrast, in the Southern Development case, cited earlier, Southern was controlled by a railroad and owned an office building, 64 percent of which was occupied by offices of the railroad.  The railroad paid 73 percent of the total rents of the building equal to 39 percent of Southern's total income.  Although Southern owned other properties all of its employees were engaged in the operation of the office building.  Based on these facts, Southern was held to be an RRTA employer. The rationale of Southern was adopted in Rev. Rul. 74-121, l974-l C.B. 300.

These contrasting decisions highlight the fact that it cannot be assumed that any subsidiary corporation performing a railroad related function will be held to be an RRTA employer, even though it appears to meet the two tests of IRC § 3231(a). The result will depend on how the subsidiary unit fits into the general scheme of corporate operations.  If its service is truly significant to transportation, a good case can be made and, if not, all attempts to classify it as an RRTA employer may be fruitless.

Data Processing Companies

Issues involving these companies do not markedly differ from the preceding ones, particularly if the data processing company is controlled by a railroad and appears to have little reason for coming into existence other than to take a group of employees out of RRTA and make them subject to the lesser FICA taxes.

However, assume for discussion that a subsidiary of a railroad conglomerate provides data processing services to the railroad while also providing such services to banks, mutual funds, and other non-railroad clients.  In addition, another subsidiary is formed to provide computer programmers and software to the first subsidiary to the extent of 3O percent of its services, with the balance being provided to non-railroad clients.

Taxability of the subsidiaries for RRTA purposes is not dependent on the percentage of service as much as it is dependent on the degree to which the services are integrated into the normal functions of the railroad.

It can be argued that computer programming and design of software is as essential to railroad operations as is the leasing of office space or the furnishing of accounting services.  It would follow then that employees of the subsidiaries who render such services are subject to RRTA taxes.  However, it does not necessarily follow that the companies are RRTA employers with respect to all of their operations or all of their employees.

Examination Techniques, Related Corporations

Most issues concerning a parent and subsidiary relationship can be developed in a similar fashion. The guidelines presented below present a suggested method that can be modified, as appropriate, to fit the circumstances of your specific case. Also remember that while a subsidiary of a railroad employer may also be a railroad employer, the parent of a railroad employer is not a railroad employer under Union Pacific Corporation v. United States, 26 Cl. Ct. 739 (1992), aff'd, 5 F.3d 523 (Fed. Cir. 1993).

Subsidiary Records

Review the subsidiary's corporate minute book and stock record book to ascertain:

  • The date of incorporation
  • The stated corporate purpose
  • The exact location of the subsidiary
  • The stock authorized and issued, including a complete stock history from inception to the present

Parent Records

Analyze the following schedules on Form R-1, Annual Report to the Surface Transportation Board, of the parent corporation:

  • Schedule A, Identity of Respondent with Affiliated Companies
  • Schedule 310, Investments in Affiliated Companies
  • Schedule 310A, Investments in Common Stock of Affiliated Companies
  • Schedules 352A to 352B, Road and Equipment Property (These schedules can help in reconciling and locating property used by the entity under examination)
  • Schedule 410, Railway Operating Expenses (Look for expenses paid to a subsidiary that is supposedly not an RRTA company)
  • Schedule 512, Transactions Between Respondent and Companies or Persons Affiliated with Respondent for Services Received or Provided

Review the corporate minute book for:

  • Advances from the parent to the affiliate (Note date, amount, terms and purpose)
  • Financial forecasts for the affiliate, including monthly, quarterly, semiannual, annual, and other long-range forecasts
  • Budgets, proposed and actual, prepared by or for the company

Contractual Relationship

Determine the contractual relationship between the parent and subsidiary by examining all intercorporate contracts.  Pay particular attention to those for services to be rendered by the parent company.  Compare the contracts with similar contracts between non-affiliated companies and ascertain:

  • Whether transactions were at arms length
  • The amount of income derived by the subsidiary from the parent as compared with income from other sources
  • Contractual amounts expended by the parent to its affiliate, compared with similar amounts expended to non-affiliated companies
  • Whether persons presently under contract with the affiliate were formerly employed by the parent

General Inquiries

Make the following general inquiries:

  • Were private letter rulings obtained with reference to the issue? (If so, obtain copies and determine whether or not the facts as presented were complete and accurate in their presentation of the situation in question.)
  • Was the entity in question ever subject to RRTA taxes? (If so, determine why and when it was removed from coverage.)
  • Were letter opinions obtained from the Railroad Retirement Board? (If so, obtain copies and determine whether or not the facts as presented were complete and accurate in their presentation of the situation in question.)

Note: Letter opinions on coverage were issued by the RRB’s General Counsel prior to 1992.  After 1991, the RRB’s Board Members made such coverage rulings referred to as Board Determinations on coverage.

  • Obtain a copy of the Employer Status Listing published by the RRB, and, if necessary, secure more specific information from the Board via the Ground Transportation Technical Advisor
  • Refer to Moody's Transportation manuals for other useful information
  • Compute the operating ratio of the company in question for several years, if possible, and make further studies if the ratio exceeds 100 for a sustained period

Other Considerations

Analyze any statistical, financial, profitability, and feasibility studies made by or on behalf of the parent company.  Such studies would generally provide a basis for important decisions that may affect the subsidiary in question.

Review the Authority for Expenditures (AFE's) or at least the AFE logbook for acquisitions that affect the subsidiary in question and, if found, determine if they were subsequently charged back to the parent.

Review correspondence and filed records if the company maintains an index or log of such documentation.

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7. Report Writing

General

Report writing for RRTA purposes is similar to report writing for any other type of employment tax examination.  However, certain forms must be modified  for differences between RRTA and FICA rates and tax categories.

Form 4665, Form 4666, Form 886A, Form 2504, Form 2297, Form 3363

The forms listed above are used in a similar fashion for an RRTA report as in any other type of employment tax report.  In an unagreed case the report should include a complete narrative write up of facts, law, and argument.  Refer to general employment tax report writing instructions when completing these forms.

Form 4668

Form 4668 must be modified to account for Tier I and Tier II taxes.

Care should be taken to ensure that the appropriate wage base and tax rate amounts are used when completing this form.

Form 4667

Since railroad employers are not subject to FUTA, Form 4667 is not used. However, if workers were treated by the employer as being subject to FUTA and those workers are being converted to railroad employees, the examiner should prepare a report reflecting the over assessment of FUTA.  The examiner should include a recommendation to transfer the FUTA to any RUIA liability. See IRM 4.23.8.6.2.

Conversion Case

If an employer treated certain workers as employees subject to FICA, and it is determined that the workers should correctly be treated as employees subject to RRTA, or vice versa, it may be necessary to prepare two reports: one to process the deficiency, and one to process the over assessment.

Refer in general to IRM 4.23.8.6.2 for special rules concerning this type of case.

Prior to making a conversion, consideration must be given to the statutory period of limitations. Some employers may already have filed 941 returns as well as CT-1 returns. Do not undertake a conversion issue unless the statute on the return for which additional tax is due has been protected.

Where the conversion case involves a delinquent return, follow the usual substitute for return/delinquent return procedures.

In an agreed conversion case, where wages are converted from FICA to RRTA, only the net additional tax due will be assessed.

If the conversion is unagreed, the taxpayer should be advised to file a claim under IRC § 3503 for the FICA.  The examiner will propose the assessment of the full amount of the RRTA taxes, and the claim will not be acted upon until the final resolution of the unagreed case.

IRC § 3509

The provisions of IRC § 3509 do not apply to RRTA taxes.
 
Computation of Tax

Tier I
Tier I tax is the equivalent of FICA and Medicare, and is computed in the same manner, using the same annual wage base and tax rates.  It is assessed equally on the employer and employee.

Tier II
Tier II tax uses a separate annual wage base and tax rate from those applicable for Tier I.  In addition, the tax is not assessed equally on the employer and employee. Instead, the employer pays a significantly greater share of this tax.

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8. Other Considerations

Statutory Period of Limitations

Form CT-1 is an annual return, due by the last day of the second month following the end of the calendar year (i.e., February 28th) see Treas. Reg.   § 31.6071(a)-1(b). The normal statutory period of limitations expires three years after the due date, or the date filed, whichever is later.

The presumptive filing date pertaining to Form 941, found at IRC § 6501(b)(2), DOES NOT apply to Form CT-1.

Various courts have considered the question of whether or not the filing of Form 941 starts the running of the statute of limitations with respect to Form CT-1. Although the IRS has been sustained in some courts in its position that the filing of a Form 941 does not start the running of the statutory period of limitations with respect to the CT-1 at least one court has ruled otherwise. The court found that the Form 941 provided sufficient information for the IRS to assess the RRTA taxes, and, therefore, the three year statute for the Form CT-1 had started with the filing of the Form 941. As a result, aggressive action should be taken to protect the statutory period of limitations in all situations.

Form SS-1O
The statutory period of limitations for RRTA purposes is extended using Form SS-10.

Form SS-10 must be modified in order to extend the statutory period of limitations with regard to RURT taxes.  Line 1(a), which is normally used to extend the statutory period of limitations with respect to FUTA taxes, will not be effective for extending the statute with respect to RURT taxes.  Since FUTA taxes do not normally apply to a railroad employer, Line (1)(a) on Form SS-l0 should be changed to state: "The Railroad Unemployment Repayment Tax for Calendar years".

Questions or concerns with regard to extending the RURT statute should be discussed with the Ground Transportation Technical Advisor.  The Ground Transportation Technical Advisor can assist in obtaining advice from Counsel.

Penalties, Interest Free Adjustments, Abatements

Penalties, the provisions for interest free adjustments, and abatements apply to RRTA cases in the same manner as in any other type of employment tax examination.
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Page Last Reviewed or Updated: 24-Jan-2014

The Irs Gov 2012 Tax Forms

Irs gov 2012 tax forms Index Symbols 10% owners, Ten-percent owners. Irs gov 2012 tax forms 501(c) organizations, Foreign Governments and Certain Other Foreign Organizations 80/20 company, Dividends paid by a domestic corporation (an existing 80/20 company). Irs gov 2012 tax forms A Acceptance agent, Unexpected payment. Irs gov 2012 tax forms Accounts, offshore, Offshore accounts. Irs gov 2012 tax forms Alien Illegal, Illegal aliens. Irs gov 2012 tax forms Nonresident, Nonresident alien. Irs gov 2012 tax forms Resident, Resident alien. Irs gov 2012 tax forms Alimony, Pensions, Annuities, and Alimony (Income Code 14), Alimony payments. Irs gov 2012 tax forms Allocation information, Failure to provide allocation information. Irs gov 2012 tax forms American Samoa, U. Irs gov 2012 tax forms S. Irs gov 2012 tax forms Virgin Islands and American Samoa corporations. Irs gov 2012 tax forms Amount to withhold, Determination of amount to withhold. Irs gov 2012 tax forms Annuities, Pensions, Annuities, and Alimony (Income Code 14), Pensions and annuities. Irs gov 2012 tax forms Artists and athletes Earnings of, Artists and Athletes (Income Codes 42 and 43) Special events and promotions, Artists and Athletes (Income Codes 42 and 43) Assistance (see Tax help) Awards, Other Grants, Prizes, and Awards B Backup withholding, Withholding and Reporting Obligations, Primary NRA and Form 1099 responsibility assumed. Irs gov 2012 tax forms Banks, interest received by, Banks. Irs gov 2012 tax forms Beneficial owner, Beneficial Owners Bonds sold between interest dates, Sales of bonds between interest dates. Irs gov 2012 tax forms Branch profits tax, Corporation subject to branch profits tax. Irs gov 2012 tax forms C Canada, Exception 3. Irs gov 2012 tax forms , Deposit interest paid to nonresident alien individuals in 2012. Irs gov 2012 tax forms , Deposit interest paid to certain nonresident alien individuals in 2013. Irs gov 2012 tax forms Capital gains, Capital gains (Income Code 9). Irs gov 2012 tax forms Central withholding agreements, Income Code 43. Irs gov 2012 tax forms Consent dividends, Consent dividends. Irs gov 2012 tax forms , Consent dividends. Irs gov 2012 tax forms Contingent interest, Contingent interest. Irs gov 2012 tax forms Controlled foreign corporations, interest paid to, Controlled foreign corporations. Irs gov 2012 tax forms Controlling foreign corporations, Interest paid to controlling foreign corporations (Income Code 3). Irs gov 2012 tax forms Covenant not to compete, Covenant not to compete. Irs gov 2012 tax forms Crew members, Crew members. Irs gov 2012 tax forms D Dependent personal services, Pay for dependent personal services (Income Code 17). Irs gov 2012 tax forms Allowance for personal exemptions, Withholding exemptions. Irs gov 2012 tax forms Defined, Pay for dependent personal services (Income Code 17). Irs gov 2012 tax forms Exempt from withholding, Graduated rates. Irs gov 2012 tax forms Depositing taxes How to, Depositing Withheld Taxes When to, When Deposits Are Required Deposits, Interest on deposits (Income Code 29). Irs gov 2012 tax forms Disregarded entities, Disregarded entities. Irs gov 2012 tax forms Dividends Direct dividend rate, Dividends qualifying for direct dividend rate (Income Code 7). Irs gov 2012 tax forms Domestic corporation, Dividends paid by a domestic corporation (an existing 80/20 company). Irs gov 2012 tax forms Foreign corporations, Dividends paid by foreign corporations (Income Code 8). Irs gov 2012 tax forms In general, Dividends Documentary evidence, Documentary evidence. Irs gov 2012 tax forms , Documentary Evidence, Documentary evidence. Irs gov 2012 tax forms Documentation From foreign beneficial owners and U. Irs gov 2012 tax forms S. Irs gov 2012 tax forms payees, Documentation From foreign intermediaries and foreign flow-through entities, Foreign Intermediaries and Foreign Flow-Through Entities Presumptions in the absence of, Presumption Rules Qualified intermediaries, Documentation. Irs gov 2012 tax forms E Effectively connected income, Effectively Connected Income Defined, Effectively Connected Income Foreign partners, Partnership Withholding on Effectively Connected Income EFTPS, Electronic deposit requirement. Irs gov 2012 tax forms Electronic deposit rules, Electronic deposit requirement. Irs gov 2012 tax forms Employees, Employees. Irs gov 2012 tax forms , Employee. Irs gov 2012 tax forms Employer, Employer. Irs gov 2012 tax forms F Federal unemployment tax, Federal unemployment tax (FUTA). Irs gov 2012 tax forms Fellowship grants, Scholarships and Fellowship Grants (Income Code 15) Fellowship income, Scholarships, fellowships, and grants. Irs gov 2012 tax forms Financial institutions, Branches of financial institutions. Irs gov 2012 tax forms FIRPTA withholding, U. Irs gov 2012 tax forms S. Irs gov 2012 tax forms real property interest. Irs gov 2012 tax forms , U. Irs gov 2012 tax forms S. Irs gov 2012 tax forms Real Property Interest Fiscally transparent entity, Fiscally transparent entity. Irs gov 2012 tax forms Fixed or determinable annual or periodic income, Fixed or Determinable Annual or Periodical Income (FDAP) Flow-through entities, Flow-Through Entities, Nonqualified Intermediaries Foreign, Foreign partner. Irs gov 2012 tax forms 501(c) organizations, Foreign Governments and Certain Other Foreign Organizations Bank, U. Irs gov 2012 tax forms S. Irs gov 2012 tax forms branches of foreign banks and foreign insurance companies. Irs gov 2012 tax forms , Income paid to U. Irs gov 2012 tax forms S. Irs gov 2012 tax forms branch of foreign bank or insurance company. Irs gov 2012 tax forms Charitable organizations, Other foreign organizations, associations, and charitable institutions. Irs gov 2012 tax forms Corporations, Foreign corporations. Irs gov 2012 tax forms Governments, Foreign Governments and Certain Other Foreign Organizations Insurance company, U. Irs gov 2012 tax forms S. Irs gov 2012 tax forms branches of foreign banks and foreign insurance companies. Irs gov 2012 tax forms , Income paid to U. Irs gov 2012 tax forms S. Irs gov 2012 tax forms branch of foreign bank or insurance company. Irs gov 2012 tax forms Intermediary, Foreign Intermediaries Organizations and associations, Other foreign organizations, associations, and charitable institutions. Irs gov 2012 tax forms Partner, Who Must Withhold Partnerships, nonwithholding, Foreign partnerships. Irs gov 2012 tax forms Person, Foreign Persons Private foundation, Foreign private foundations. Irs gov 2012 tax forms , Foreign Governments and Certain Other Foreign Organizations Status, Establishment of foreign status. Irs gov 2012 tax forms Trusts, Foreign simple and grantor trust. Irs gov 2012 tax forms Form 1042, Withholding and Reporting Obligations, Form 1042 filing. Irs gov 2012 tax forms , Responsibilities of WT. Irs gov 2012 tax forms , Form 1042. Irs gov 2012 tax forms 1042-S, Withholding and Reporting Obligations, Form 1042-S reporting. Irs gov 2012 tax forms , Form 1042-S reporting. Irs gov 2012 tax forms , Form 1042 filing. Irs gov 2012 tax forms , Form 1042-S. Irs gov 2012 tax forms 1099, Withholding and Reporting Obligations, Primary NRA and Form 1099 responsibility assumed. Irs gov 2012 tax forms 1099-S, Form 1099-S, Proceeds From Real Estate Transactions. Irs gov 2012 tax forms 4419, Electronic reporting. Irs gov 2012 tax forms 7004, Extension to file Form 1042. Irs gov 2012 tax forms 8233, Form 8233, Exemption From Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual. Irs gov 2012 tax forms 8288, Reporting and Paying the Tax, Form 8288, U. Irs gov 2012 tax forms S. Irs gov 2012 tax forms Withholding Tax Return for Dispositions by Foreign Persons of U. Irs gov 2012 tax forms S. Irs gov 2012 tax forms Real Property Interests. Irs gov 2012 tax forms 8288-A, Reporting and Paying the Tax, Form 8288-A, Statement of Withholding on Dispositions by Foreign Persons of U. Irs gov 2012 tax forms S. Irs gov 2012 tax forms Real Property Interests. Irs gov 2012 tax forms 8288-B, Categories (1), (2), and (3). Irs gov 2012 tax forms 8804, Form 8804, Annual Return for Partnership Withholding Tax (Section 1446). Irs gov 2012 tax forms 8805, Form 8805, Foreign Partner's Information Statement of Section 1446 Withholding Tax. Irs gov 2012 tax forms 8813, Form 8813, Partnership Withholding Tax Payment Voucher (Section 1446). Irs gov 2012 tax forms 8833, Claiming treaty benefits. Irs gov 2012 tax forms 940, Federal unemployment tax (FUTA). Irs gov 2012 tax forms 941, Reporting requirements for wages and withheld taxes paid to nonresident aliens. Irs gov 2012 tax forms 972, Consent dividends. Irs gov 2012 tax forms SS-4, U. Irs gov 2012 tax forms S. Irs gov 2012 tax forms Taxpayer Identification Numbers SS-5, U. Irs gov 2012 tax forms S. Irs gov 2012 tax forms Taxpayer Identification Numbers W-2, Reporting requirements for wages and withheld taxes paid to nonresident aliens. Irs gov 2012 tax forms , Form W-2. Irs gov 2012 tax forms W-4, Alternate withholding procedure. Irs gov 2012 tax forms , Form W-4, Employee's Withholding Allowance Certificate. Irs gov 2012 tax forms , Withholding exemptions. Irs gov 2012 tax forms , Special instructions for Form W-4. Irs gov 2012 tax forms W-7, U. Irs gov 2012 tax forms S. Irs gov 2012 tax forms Taxpayer Identification Numbers W-8BEN, Beneficial Owners W-8ECI, Documentary evidence. Irs gov 2012 tax forms W-8EXP, Form W-8ECI, Certificate of Foreign Person's Claim That Income Is Effectively Connected With the Conduct of a Trade or Business in the United States. Irs gov 2012 tax forms W-8IMY, Foreign Intermediaries and Foreign Flow-Through Entities W-9, U. Irs gov 2012 tax forms S. Irs gov 2012 tax forms Taxpayer Identification Numbers Free tax services, How To Get Tax Help FUTA, Federal unemployment tax (FUTA). Irs gov 2012 tax forms G Gambling winnings, Gambling winnings (Income Code 28). Irs gov 2012 tax forms Graduated rates, Graduated rates. Irs gov 2012 tax forms Graduated withholding, Wages Paid to Employees— Graduated Withholding Grant income, Scholarships, fellowships, and grants. Irs gov 2012 tax forms Grants, Scholarships and Fellowship Grants (Income Code 15), Other Grants, Prizes, and Awards Green card test, Resident alien. Irs gov 2012 tax forms Guam, Guam or Northern Mariana Islands corporations. Irs gov 2012 tax forms H Help (see Tax help) I Identification number, taxpayer, U. Irs gov 2012 tax forms S. Irs gov 2012 tax forms Taxpayer Identification Numbers, Identification numbers. Irs gov 2012 tax forms Illegal aliens, Illegal aliens. Irs gov 2012 tax forms Important reminders, Reminders Income Fixed or determinable annual or periodical, Fixed or Determinable Annual or Periodical Income (FDAP) Interest, Interest Notional principal contract, Notional principal contract income. Irs gov 2012 tax forms Other than effectively connected, Income Not Effectively Connected Personal service, Personal service income. Irs gov 2012 tax forms Source of, Source of Income Transportation, Transportation income. Irs gov 2012 tax forms Income code 01, Interest paid by U. Irs gov 2012 tax forms S. Irs gov 2012 tax forms obligors—general (Income Code 1). Irs gov 2012 tax forms 02, Interest on real property mortgages (Income Code 2). Irs gov 2012 tax forms 03, Interest paid to controlling foreign corporations (Income Code 3). Irs gov 2012 tax forms 04, Interest paid by foreign corporations (Income Code 4). Irs gov 2012 tax forms 06, Dividends paid by U. Irs gov 2012 tax forms S. Irs gov 2012 tax forms corporations — general (Income Code 6). Irs gov 2012 tax forms 07, Dividends qualifying for direct dividend rate (Income Code 7). Irs gov 2012 tax forms 08, Dividends paid by foreign corporations (Income Code 8). Irs gov 2012 tax forms 09, Capital gains (Income Code 9). Irs gov 2012 tax forms 10, Industrial royalties (Income Code 10). Irs gov 2012 tax forms 11, Motion picture or television copyright royalties (Income Code 11). Irs gov 2012 tax forms 12, Other royalties (for example, copyright, recording, publishing) (Income Code 12). Irs gov 2012 tax forms 13, Real Property Income and Natural Resources Royalties (Income Code 13) 14, Pensions, Annuities, and Alimony (Income Code 14) 15, Scholarships and Fellowship Grants (Income Code 15) 16, Pay for independent personal services (Income Code 16). Irs gov 2012 tax forms 17, Pay for dependent personal services (Income Code 17). Irs gov 2012 tax forms 18, Pay for teaching (Income Code 18). Irs gov 2012 tax forms 19, Pay during studying and training (Income Code 19). Irs gov 2012 tax forms 20, Artists and Athletes (Income Codes 42 and 43) 24, Reporting and Paying the Tax 25, Reporting and Paying the Tax 26, Reporting and Paying the Tax 27, Publicly Traded Partnerships 28, Gambling winnings (Income Code 28). Irs gov 2012 tax forms 29, Interest on deposits (Income Code 29). Irs gov 2012 tax forms 30, Original issue discount (Income Code 30). Irs gov 2012 tax forms 50, Other income (Income Code 50). Irs gov 2012 tax forms Independent personal services Defined, Pay for independent personal services (Income Code 16). Irs gov 2012 tax forms Exempt from withholding, Pay for independent personal services (Income Code 16). Irs gov 2012 tax forms , 30% rate. Irs gov 2012 tax forms India, Students and business apprentices from India. Irs gov 2012 tax forms Indirect account holders, Indirect Account Holders Installment payment, Installment payments. Irs gov 2012 tax forms , Installment payments. Irs gov 2012 tax forms Insurance proceeds, Insurance proceeds. Irs gov 2012 tax forms Interest Contingent, Contingent interest. Irs gov 2012 tax forms Controlling foreign corporations, Interest paid to controlling foreign corporations (Income Code 3). Irs gov 2012 tax forms Deposits, Interest on deposits (Income Code 29). Irs gov 2012 tax forms Foreign business arrangements, Interest from foreign business arrangements. Irs gov 2012 tax forms Foreign corporations, Interest paid by foreign corporations (Income Code 4). Irs gov 2012 tax forms Income, Interest Portfolio, Portfolio interest. Irs gov 2012 tax forms , Interest that does not qualify as portfolio interest. Irs gov 2012 tax forms Real property mortgages, Interest on real property mortgages (Income Code 2). Irs gov 2012 tax forms Intermediary Foreign, Foreign Intermediaries Nonqualified, Nonqualified intermediary. Irs gov 2012 tax forms Qualified, Qualified intermediary. Irs gov 2012 tax forms , Qualified Intermediaries International organizations, Foreign Governments and Certain Other Foreign Organizations ITIN, U. Irs gov 2012 tax forms S. Irs gov 2012 tax forms Taxpayer Identification Numbers K Knowledge, standards of, Standards of Knowledge L Liability of withholding agent, Liability for tax. Irs gov 2012 tax forms M Magnetic media reporting, Electronic reporting. Irs gov 2012 tax forms Marketable securities, Marketable securities. Irs gov 2012 tax forms Mexico, Exception 3. Irs gov 2012 tax forms Missing children, Reminders More information (see Tax help) Mortgages, Interest on real property mortgages (Income Code 2). Irs gov 2012 tax forms N Non-registered obligations, Obligations not in registered form. Irs gov 2012 tax forms Nonqualified intermediary, Nonqualified intermediary. Irs gov 2012 tax forms , Nonqualified Intermediaries Nonresident alien Defined, Nonresident alien. Irs gov 2012 tax forms Married to U. Irs gov 2012 tax forms S. Irs gov 2012 tax forms citizen or resident, Married to U. Irs gov 2012 tax forms S. Irs gov 2012 tax forms citizen or resident alien. Irs gov 2012 tax forms Nonwage pay, Pay that is not wages. Irs gov 2012 tax forms Northern Mariana Islands, Guam or Northern Mariana Islands corporations. Irs gov 2012 tax forms Notional principal contract income, Notional principal contract income. Irs gov 2012 tax forms NRA withholding In general, Withholding of Tax Income subject to, Income Subject to NRA Withholding Persons subject to, Persons Subject to NRA Withholding O Obligations Registered, Obligations in registered form. Irs gov 2012 tax forms Obligations: Not in registered form, Obligations not in registered form. Irs gov 2012 tax forms Offshore accounts, Offshore accounts. Irs gov 2012 tax forms Original issue discount, Original issue discount (Income Code 30). Irs gov 2012 tax forms Overwithholding, adjustment for, Adjustment for Overwithholding P Partner, Foreign partner. Irs gov 2012 tax forms Partner, foreign, Who Must Withhold Partnerships Effectively connected income of foreign partners, Partnership Withholding on Effectively Connected Income Foreign, Foreign partnerships. Irs gov 2012 tax forms Publicly traded, Publicly Traded Partnerships Smaller, Smaller partnerships and trusts. Irs gov 2012 tax forms , Smaller partnerships and trusts. Irs gov 2012 tax forms , Smaller partnerships and trusts. Irs gov 2012 tax forms Withholding foreign, Withholding foreign partnership and foreign trust. Irs gov 2012 tax forms , Withholding Foreign Partnerships Pay for personal services Artists and athletes, Artists and Athletes (Income Codes 42 and 43) Dependent personal services, Pay for dependent personal services (Income Code 17). Irs gov 2012 tax forms Employees, Wages Paid to Employees— Graduated Withholding Exempt from withholding, Pay for Personal Services Performed Independent personal services, Pay for independent personal services (Income Code 16). Irs gov 2012 tax forms Salaries and wages, Wages Paid to Employees— Graduated Withholding Scholarship or fellowship recipient, Pay for services rendered. Irs gov 2012 tax forms Studying, Pay during studying and training (Income Code 19). Irs gov 2012 tax forms Teaching, Pay for teaching (Income Code 18). Irs gov 2012 tax forms Training, Pay during studying and training (Income Code 19). Irs gov 2012 tax forms Payee, Identifying the Payee Penalties Deposit, Penalty for failure to make deposits on time. Irs gov 2012 tax forms Form 1042, Penalties Form 8804, Penalties. Irs gov 2012 tax forms Form 8805, Penalties. Irs gov 2012 tax forms Magnetic media, Failure to file electronically. Irs gov 2012 tax forms Trust fund recovery, Trust fund recovery penalty. Irs gov 2012 tax forms Pensions, Pension payments. Irs gov 2012 tax forms , Pensions, Annuities, and Alimony (Income Code 14), Pensions and annuities. Irs gov 2012 tax forms Per diem, Per diem paid by the U. Irs gov 2012 tax forms S. Irs gov 2012 tax forms Government. Irs gov 2012 tax forms Personal service income, Personal service income. Irs gov 2012 tax forms Pooled withholding information, Pooled withholding information. Irs gov 2012 tax forms Portfolio interest, Portfolio interest. Irs gov 2012 tax forms , Interest that does not qualify as portfolio interest. Irs gov 2012 tax forms Presumption Corporation, Presumption Rules Individual, Presumption Rules Partnership, Presumption Rules Rules, Presumption Rules Trust, Presumption Rules Private foundation, foreign, Foreign private foundations. Irs gov 2012 tax forms Prizes, Other Grants, Prizes, and Awards Publications (see Tax help) Puerto Rico, Resident of a U. Irs gov 2012 tax forms S. Irs gov 2012 tax forms possession. Irs gov 2012 tax forms , Exception 4. Irs gov 2012 tax forms Q QI withholding agreement, QI withholding agreement. Irs gov 2012 tax forms Qualified intermediary, Qualified intermediary. Irs gov 2012 tax forms , Qualified Intermediaries Qualified investment entity (QIE) Distributions paid by, Qualified investment entities. Irs gov 2012 tax forms Dividends paid by, Dividends paid by U. Irs gov 2012 tax forms S. Irs gov 2012 tax forms corporations — general (Income Code 6). Irs gov 2012 tax forms R Racing purses, Racing purses. Irs gov 2012 tax forms Real property interest Disposition of, U. Irs gov 2012 tax forms S. Irs gov 2012 tax forms Real Property Interest Withholding certificates, Withholding Certificates Reason to know, Reason To Know Refund procedures Qualified intermediaries, Collective refund procedures. Irs gov 2012 tax forms Registered obligations, Obligations in registered form. Irs gov 2012 tax forms Researchers, Tax treaties. Irs gov 2012 tax forms Resident alien defined, Resident alien. Irs gov 2012 tax forms Returns required, Returns Required Royalties, Royalties, Real Property Income and Natural Resources Royalties (Income Code 13) Ryukyu Islands, Income from U. Irs gov 2012 tax forms S. Irs gov 2012 tax forms Savings Bonds of residents of the Ryukyu Islands or the Trust Territory of the Pacific Islands. Irs gov 2012 tax forms S Salaries, Wages Paid to Employees— Graduated Withholding Saving clause, Nonresident alien who becomes a resident alien. Irs gov 2012 tax forms Scholarship, Scholarships, fellowships, and grants. Irs gov 2012 tax forms , Scholarships and Fellowship Grants (Income Code 15) Securities, Marketable securities. Irs gov 2012 tax forms , Income from securities. Irs gov 2012 tax forms Services performed outside the U. Irs gov 2012 tax forms S. Irs gov 2012 tax forms , Services performed outside the United States. Irs gov 2012 tax forms Short-term obligation, Short-term obligations. Irs gov 2012 tax forms Social security, Social security and Medicare tax. Irs gov 2012 tax forms Source of income, Source of Income Standards of knowledge, Standards of Knowledge Substantial presence test, Resident alien. Irs gov 2012 tax forms T Tax Reporting and paying, Reporting and Paying the Tax Tax help, How To Get Tax Help Tax treaties Claiming benefits, Claiming treaty benefits. Irs gov 2012 tax forms Dependent personal services, Tax treaties. Irs gov 2012 tax forms Entertainers and athletes, Tax treaties. Irs gov 2012 tax forms Gains, Tax treaties. Irs gov 2012 tax forms Gambling winnings, Tax treaties. Irs gov 2012 tax forms Independent personal services, Tax treaties. Irs gov 2012 tax forms Student, Tax treaties. Irs gov 2012 tax forms Students and trainees, Tax treaties. Irs gov 2012 tax forms Tables, Tax Treaty Tables Teaching, Tax treaties. Irs gov 2012 tax forms Tax-exempt entities, Foreign Governments and Certain Other Foreign Organizations Taxpayer Advocate, Taxpayer Advocate Service. Irs gov 2012 tax forms Taxpayer identification number (TIN), U. Irs gov 2012 tax forms S. Irs gov 2012 tax forms Taxpayer Identification Numbers, Identification numbers. Irs gov 2012 tax forms Exceptions, Exceptions to TIN requirement. Irs gov 2012 tax forms Teachers, Pay for teaching (Income Code 18). Irs gov 2012 tax forms Ten-percent owners, Ten-percent owners. Irs gov 2012 tax forms Territorial limits, Territorial limits. Irs gov 2012 tax forms Totalization agreements, Social security and Medicare tax. Irs gov 2012 tax forms Transportation income, Transportation income. Irs gov 2012 tax forms Travel expenses, Travel expenses. Irs gov 2012 tax forms Trust Territory of the Pacific Islands, Income from U. Irs gov 2012 tax forms S. Irs gov 2012 tax forms Savings Bonds of residents of the Ryukyu Islands or the Trust Territory of the Pacific Islands. Irs gov 2012 tax forms Trusts Foreign, Foreign simple and grantor trust. Irs gov 2012 tax forms Smaller, Smaller partnerships and trusts. Irs gov 2012 tax forms Withholding foreign, Withholding foreign partnership and foreign trust. Irs gov 2012 tax forms , Withholding Foreign Trusts TTY/TDD information, How To Get Tax Help U U. Irs gov 2012 tax forms S. Irs gov 2012 tax forms agent of foreign person, U. Irs gov 2012 tax forms S. Irs gov 2012 tax forms agent of foreign person. Irs gov 2012 tax forms U. Irs gov 2012 tax forms S. Irs gov 2012 tax forms branch Foreign bank, U. Irs gov 2012 tax forms S. Irs gov 2012 tax forms branches of foreign banks and foreign insurance companies. Irs gov 2012 tax forms , Income paid to U. Irs gov 2012 tax forms S. Irs gov 2012 tax forms branch of foreign bank or insurance company. Irs gov 2012 tax forms Foreign insurance company, U. Irs gov 2012 tax forms S. Irs gov 2012 tax forms branches of foreign banks and foreign insurance companies. Irs gov 2012 tax forms , Income paid to U. Irs gov 2012 tax forms S. Irs gov 2012 tax forms branch of foreign bank or insurance company. Irs gov 2012 tax forms Foreign person, U. Irs gov 2012 tax forms S. Irs gov 2012 tax forms branches of foreign persons. Irs gov 2012 tax forms U. Irs gov 2012 tax forms S. Irs gov 2012 tax forms national, 30% rate. Irs gov 2012 tax forms U. Irs gov 2012 tax forms S. Irs gov 2012 tax forms real property interest, U. Irs gov 2012 tax forms S. Irs gov 2012 tax forms real property interest. Irs gov 2012 tax forms U. Irs gov 2012 tax forms S. Irs gov 2012 tax forms savings bonds, Income from U. Irs gov 2012 tax forms S. Irs gov 2012 tax forms Savings Bonds of residents of the Ryukyu Islands or the Trust Territory of the Pacific Islands. Irs gov 2012 tax forms U. Irs gov 2012 tax forms S. Irs gov 2012 tax forms territorial limits, Territorial limits. Irs gov 2012 tax forms U. Irs gov 2012 tax forms S. Irs gov 2012 tax forms Virgin Islands, U. Irs gov 2012 tax forms S. Irs gov 2012 tax forms Virgin Islands and American Samoa corporations. Irs gov 2012 tax forms Unexpected payment, Unexpected payment. Irs gov 2012 tax forms W Wages Paid to employees, Wages Paid to Employees— Graduated Withholding Pay that is not, Pay that is not wages. Irs gov 2012 tax forms When to withhold, When to withhold. Irs gov 2012 tax forms Withhold, amount to, Determination of amount to withhold. Irs gov 2012 tax forms Withhold, when to, When to withhold. Irs gov 2012 tax forms Withholding Agreements, QI withholding agreement. Irs gov 2012 tax forms , WP and WT withholding agreements. Irs gov 2012 tax forms , Withholding agreements. Irs gov 2012 tax forms , Income Code 43. Irs gov 2012 tax forms Alternative procedure, Alternative procedure. Irs gov 2012 tax forms Certificate, Withholding Certificates, Withholding certificate. Irs gov 2012 tax forms Rate pool, Pooled withholding information. Irs gov 2012 tax forms Real property, U. Irs gov 2012 tax forms S. Irs gov 2012 tax forms Real Property Interest Withholding agent Defined, Withholding Agent Liability, Liability for tax. Irs gov 2012 tax forms Returns required, Returns Required Tax deposit requirements, Depositing Withheld Taxes Withholding exemptions and reductions Dependent personal services, Graduated rates. Irs gov 2012 tax forms Exemption, Withholding exemption. Irs gov 2012 tax forms Final payment exemption, Final payment exemption. Irs gov 2012 tax forms Foreign governments, Foreign Governments and Certain Other Foreign Organizations International organizations, Foreign Governments and Certain Other Foreign Organizations Real property interest, Withholding Certificates Researchers, Tax treaties. Irs gov 2012 tax forms Scholarships and fellowship grants, Alternate withholding procedure. Irs gov 2012 tax forms Students, Tax treaties. Irs gov 2012 tax forms Withholding agreements, Withholding agreements. Irs gov 2012 tax forms , Income Code 43. Irs gov 2012 tax forms Prev  Up     Home   More Online Publications