Finality of Records of Compensation

RAILROAD RETIREMENT BOARD

20 CFR Part 211

RIN 3220-AB10

Finality of Records of Compensation

AGENCY: Railroad Retirement Board.

ACTION: Proposed rule.

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SUMMARY: The Railroad Retirement Board (Board) hereby proposes to adopt

regulations pertaining to the finality of reports of compensation. The

proposed regulations relate to corrections to records of compensation

more than four years after the date on which the compensation was

required to be reported to the Board.

DATES: Comments must be received on or before February 26, 1996.

ADDRESSES: Secretary to the Board, Railroad Retirement Board, 844 North

Rush Street, Chicago, Illinois 60611.

FOR FURTHER INFORMATION CONTACT:

Michael C. Litt, General Attorney, Railroad Retirement Board, 844 North

Rush Street, Chicago, Illinois 60611, telephone (312) 751-4929, TTD

(312) 751-4701.

SUPPLEMENTARY INFORMATION: The Board's rules and procedures regarding

the finality and reports of compensation are presently contained in

Board Orders, which are not readily available to the public.

The proposed rule would amend part 211 of the Board's regulations

(Creditable Railroad Compensation) by adding a new Sec. 211.16 to this

part. Under section 9 of the Railroad Retirement Act, the Board will

not change an employee's record of reported compensation if the change

is requested more than four years after the report of compensation is

required to be filed under Sec. 209.6 of the Board's regulations.

Proposed Sec. 211.16 explains when the Board will change a record of

compensation beyond the four year period; for example, where the record

is incorrect because of clerical error or fraud, where the compensation

was posted to the wrong period or person, or where the compensation was

originally reported to the Social Security Administration but the Board

or a court has determined that it should have been reported to the

Board. Changes to credit compensation and service after the four year

period could be made only where taxes due under the Railroad Retirement

Tax Act have been paid.

The Labor Member of the Board dissented from the action of the

majority of the Board approving the proposed rule. The Labor Member's

reasons for dissenting from this action are set out below.

Views of the Labor Member of the Board

The Labor Member feels that this proposed revision to part 211

presents a major change in the crediting of compensation and service,

in that if the four year time limit for corrections to records of

compensation has passed, no employee may be credited with service

months or compensation unless the employee establishes that all

employment taxes have been paid with respect to this service. The Labor

Member acknowledges that in the current environment where the Internal

Revenue Service has responsibility for assessing and collecting taxes

under the Railroad Retirement Tax Act and the Board has the

responsibility for crediting compensation and service, a lack of

coordination is inevitable. He contends that this should in no way

compel the Board to limit the granting of legitimate railroad

retirement credits, but that the change proposed by the majority of the

Board would do this.

The Labor Member feels that this change could also put an employee

in a ``catch 22'' situation since there could be questions as to the

employee's status under the Social Security Act for the period where

the employer is found to be covered under the Railroad Retirement Act,

but because no railroad retirement taxes had been paid, the employee

would receive no railroad retirement credit. Conceivably, the employee

would receive no credit under either Act. The Labor Member points out

that currently there are many situations where the Board may correct a

compensation record retroactively. There are cases where earnings were

erroneously reported to the Social Security Administration by the

employer and, subsequently, the Board rules that the employer is

covered under the Railroad Retirement Act. The Board may correct a

record of compensation where such correction is determined or approved

by a court having jurisdiction to make such a decision, or as a result

of a settlement entered into by the employer and the Internal Revenue

Service.

The Labor Member does not endorse the change recommended by the

majority of the Board. Instead, he feels that the Board should make a

concerted effort to identify when an employer or employee is, in fact,

covered under the Railroad Retirement Act and attempt to mitigate the

consequences of decisions that retroact over several years. He submits

that we are, in fact, doing this now with the assistance of our

agency's Audit and Compliance Division which

[[Page 66771]]

is successfully dedicating significant resources to this effort.

The Board, with the concurrence of the Office of Management and

Budget, has determined that this is not a significant regulatory action

under Executive Order 12866; therefore, no regulatory impact analysis

is required. There are no information collections associated with this

rule.

List of Subjects in 20 CFR Parts 211

Pensions, Railroad employees, Railroad retirement.

For the reasons set out in the preamble, chapter II of title 20 of

the Code of Federal Regulations is proposed to be amended as follows:

PART 211--[AMENDED]

1. The authority citation for part 211 continues to read as

follows:

Authority: 45 U.S.C. 231(f).

2. Part 211 is amended by adding a new Sec. 211.16 to read as

follows:

Sec. 211.16 Finaility of records of compensation.

(a) Time limit for corrections to records of compensation. The

Board's record of the compensation reported as paid to an employee for

a given period shall be conclusive as to amount, or if no compensation

was reported for such period, then as to the employee's having received

no compensation for such period, unless the error in the amount of

compensation or the failure to make return of the compensation is

called to the attention of the Board within four years after the date

on which the compensation was required to be reported to the Board as

provided for in Sec. 209.6 of this chapter.

(b) Correction after 4 years. Subject to paragraph (c) of this

section, the Board may correct a report of compensation after the time

limit set forth in paragraph (a) of this section for one of the

following reasons:

(1) Where the compensation was posted as the result of fraud;

(2) Where the compensation was posted for the wrong person or the

wrong period;

(3) Where the earnings were erroneously reported to the Social

Security Administration in the good faith belief by the employer or

employee that such earnings were not covered under the Railroad

Retirement Act and there is a final decision of the Board under part

259 of this chapter that such employer or employee was covered under

the Railroad Retirement Act during the period in which the earnings

were paid;

(4) Where a determination pertaining to the coverage under the

Railroad Retirement Act of an individual, partnership, or company as an

employer, is retroactive; and

(5) Where a record of compensation could not otherwise be corrected

under this part and where in the judgment of the three-member Board

that heads the Railroad Retirement Board failure to make a correction

would be inequitable.

(c) Limitation on crediting service. No employee may be credited

with service months or tier II compensation beyond the four year period

referred to in paragraph (a) of this section unless the employee

establishes to the satisfaction of the Board that all employment taxes

imposed by sections 3201, 3211, and 3221 of title 26 of the Internal

Revenue Code have been paid with respect to the compensation and

service.

Dated: December 15, 1995.

By Authority of the Board.

Beatrice Ezerski,

Secretary to the Board.

[FR Doc. 95-31064 Filed 12-22-95; 8:45 am]

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