[Federal Register Volume 62, Number 17 (Monday, January 27, 1997)]
[Rules and Regulations]
[Pages 3789-3790]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-1906]
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RAILROAD RETIREMENT BOARD
20 CFR Part 211
RIN 3220-AB10
Finality of Records of Compensation
AGENCY: Railroad Retirement Board.
ACTION: Final rule.
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SUMMARY: The Railroad Retirement Board (Board) hereby adopts
regulations pertaining to the finality of reports of compensation. The
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.
EFFECTIVE DATE: January 27, 1997.
ADDRESSES: Secretary to the Board, Railroad Retirement Board, 844 North
Rush Street, Chicago, Illinois 60611.
FOR FURTHER INFORMATION CONTACT: Thomas W. Sadler, Senior Attorney,
Railroad Retirement Board, 844 North Rush Street, Chicago, Illinois
60611, telephone (312) 751-4513, TTD (312) 751-4701.
SUPPLEMENTARY INFORMATION: This rule amends part 211 of the Board's
regulations (Creditable Railroad Compensation) by adding a new
Sec. 211.16 to that 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. Section 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.
On December 26, 1995, the Board published this rule as a proposed
rule (60 FR 66770). The Labor Member of the Board dissented from
publication of the proposed rule. His reasons for doing so were set
forth in the Supplementary Information section of the proposed rule (60
FR 66770). Comments on the proposed rule were invited on or before
February 26, 1996. Three comments were received with respect to the
proposed rule. Two commentors indicated agreement with the views of the
Labor Member and urged the Board to adopt those views. One of these
commentors also suggested that it is inequitable to put on the employee
the burden of the consequences of erroneous reporting by employers or
erroneous action by a Government agency. A third commentor (the joint
comments of the Association of American Railroads and representatives
of rail labor) submitted comments and suggested certain changes to the
proposed rule. The Board has considered these comments and has made
changes as explained below.
The rule, which is now being adopted as a final rule, protects the
interests of employees, but also protects the integrity of the trust
funds which fund the benefits paid by the agency. Employees have the
right to request the Board to credit service and compensation under the
Railroad Retirement Act. Accordingly, an employee who believes that he
should receive credit, either because he believes that he has been
misclassified as an independent contractor or because he believes that
his employer should be a covered employer under the Railroad Retirement
Act, can notify the Board so the Board can investigate the situation.
The final regulation gives recognition to this right but protects the
integrity of the trust funds by requiring employees to come forward in
a timely manner to contest the correctness of their service and
compensation records. By requiring timely protests the regulation puts
the Government in a better position to collect any employment taxes
associated with the service and compensation correction. It should also
be noted that an employee who does not receive full retroactive service
credit because he did not timely protest his employment record would
still receive social security credit for the service in question, which
social security covered credit would be used in computing any tier I
benefit under the Railroad Retirement Act.
As noted above, the Board has revised the proposed rule in
accordance with comments received. In response to a concern of the
Labor Member, which was repeated by the commentors, to the effect that
an employee may not receive credit in certain circumstances under
either the Railroad Retirement Act or the Social Security Act, the
Board has added language to Sec. 211.16(c) to clarify that this will
not happen. The comment concerned a situation where a company has been
ruled an employer but taxes have not been paid for service more than 4
years in the past. Under the final rule service more than four years in
the past would not be creditable under the RRA. There was concern that
in this situation the service might not be creditable under the SSA.
First of all, the Board does not believe that the service would be
removed under the Social Security Act; however, if this were to occur,
the Railroad Retirement Board would use this service and wages in
computing the tier I component of the employee's railroad retirement
annuity pursuant to section 1(h)(8) of the Railroad Retirement Act (45
U.S.C. 231(h)(8)). Under section 1(h)(8) of the Railroad Retirement Act
remuneration that has been subject to tier I railroad retirement taxes,
which is how the Board would view wage credits removed under the Social
Security Act, is considered to be creditable compensation for the
computation of railroad retirement tier I benefits. As noted above,
language has been added to section 211.16(c) to clarify this result. If
the employee does not accrue the minimum 120 months of railroad
retirement service prior to retirement or death so as to be qualified
for benefits under the Railroad Retirement Act, his railroad service
and compensation will be transferred to the Social Security
Administration and used in computing any benefits payable under the
Social Security Act.
The other change that has been made in the final rule is the
addition of an exception to the general bar against crediting
compensation retroactive more than four years without the payment of
taxes. The exception would apply in the case of an employee's record
that is erroneous as a result of fraudulent reporting by the employee's
employer.
The Office of Management and Budget determined that this is a
significant regulatory action under Executive Order 12866 and has
approved its publication as a final rule. There are no information
collections associated with this rule.
[[Page 3790]]
List of Subjects in 20 CFR Part 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 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 Finality 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. (1) The Board may correct a report of
compensation after the time limit set forth in paragraph (a) of this
section where the compensation was posted or not posted as the result
of fraud on the part of the employer.
(2) 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:
(i) Where the compensation was posted for the wrong person or the
wrong period;
(ii) 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;
(iii) Where a determination pertaining to the coverage under the
Railroad Retirement Act of an individual, partnership, or company as an
employer, is retroactive; or
(iv) 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. (1) Except as provided in
paragraph (b)(1) of this section, 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.
(2) The limitation on the creditability of service months and tier
II compensation in paragraph (c)(1) of this section shall not affect
the creditability, for purposes of computing the tier I component of a
railroad retirement annuity, of compensation payments with respect to
which taxes have been paid under either the Railroad Retirement Tax Act
or the Federal Insurance Contributions Act.
Dated: January 15, 1997.
By Authority of the Board.
Beatrice Ezerski,
Secretary to the Board.
[FR Doc. 97-1906 Filed 1-24-97; 8:45 am]
BILLING CODE 7905-01-P
