apply the ordinary meaning of the r r t a and to hold the congress really meant what it said when it said that employers and employees in the railroad industry should pay taxes only on remuneration that one is paid in a form of money and two that is paid for service that a railroad directs and supervises the government in this case rejects the ordinary meaning of these words it thinks that the words are historical maybe legal east but either way meaningless it assumes that congress included these words by accident in the one nine hundred thirty s and this is all part of the government's effort to erase these words out of the code in its view everything is taxable under the r t a because the phrase any form of money re because the phrase the requirement that payments be for services a railroad directs and supervises actually includes anything a railroad gives to its employees this approach of the government has goes against not just the first and most basic rule goes against every familiar rule of statutory construction and that's because in our view the government's case is not really about statutory tax it's about policy the i r s is policy preference that the r t a should be treated the same way as fica but in every material respect the statutes are different your honour's railroads as you know often get unique statutes in the us code they're treated differently from the rest of american industry all the time and indeed in the one nine hundred thirty s the  fica were created as two different programs r t a funds a defined benefit pension that applies only to railroad employees whereas fica funds a social where for welfare a new ity for the rest of the american economy and there are  significant operational difference as between an annuity and a defined benefit pension there's one i want to highlight if i let me ask you this is if money remuneration only means money why would there be exceptions for certain in kind benefits your hon of the exceptions cover at least one form of money it is the case that the exceptions on our interpretation all cover one form of money on the government's they would cover things that are money and things that aren't money in other words we think the exceptions just focus the court  back on the meaning of any form of money remuneration so let's take for example of the each twelve exemption because that's the one that most courts have focused on and have thought that this is the one to have what each twelve which is the exemption for incentive stock options  most courts have focused on that and notably the fifth circuit has held that unless the word money is meaningless the e twelve exemption is meaningless as well this sort of dueling superfluities that the fifth circuit has concocted we believe that's wrong and that the fifth circuit  misunderstood how incentive stock options operate in practice the important thing is that an employee exercising an incentive stock option can receive cash from his employer at the same time he receives stock at the exercise in addition it's clear that when the employee sells that stock on the market in a market transaction the employee is going to receive cash as well so what the each exemption does is it says it to the extent the employer receives cash at exercise or at at sale that cash is not taxed as a form of money remuneration and as we explained in our brief we can walk through a lot of the exceptions your honor but i do think and if there's any particular you want to discuss i'm happy to do so but all of the exceptions cover at least one form money its ordinary meaning and the ordinary meaning your honour's is this it is the stuff that is conventionally used by a range of individuals as a medium of exchange in general commerce which serves as a measure of value for commerce commercial  other original regulation to find a compensation set it met all remuneration and money or in something which may be used in lieu of money script and merchandise orders for example exactly which armed by an individual correct so how i mean seem to me that that makes your point yes in the word you used the verb are used in that sentence is not used in a colloquial sense it means used as a means of the case law from the late one thousand nine hundred four and to present are clear on what the ordinary meaning of the word money is and stock does not satisfy that definition we think that judge mannion in the seventh circuit last month in his dissent got this exactly correct you cannot use stock to buy groceries you can't use it to pay rent this court won't let us use stock to pay the filing fee for a notice on appeal and it is clear that the i r s prohibits individuals or corporations from paying their income taxes  that's correct but scrip has ceased to be a form of money that's kind of in our view the genius of the phrase that congress wrote in the statute here that while the legal meaning of the phrase any form of money remuneration is clear it's in one thousand thirty five congress understood that as the economy you know it's times change what is in fact used as money may change the script is it used any longer but now credit cards and debit cards are those new things are treated as forms of money the r t a back to the incentive stock option excess you you say that involves money and that's why but isn't it a sort of a very rare and very diminished amount of money it's only when there's fractional shares that's wort fractional shares or bonuses so the way the i r s is set up the regulations for sent of stock options an employer may pay a cash bonus to an employee all along with each share when at exercise so it's up to the employer's discretion how they to set up their plan i can't tell you whether it's rare or infrequent just seems unlikely that congress would set up that exception with the idea in mind that there's these very de minimus fractional amount of cash that might come with the stock option i think your honor though it is more unlikely that congress included this exception and then meant to retroactively change the accepted meaning of the phrase any form of money and this gets to the point that an exception to my point of stock clearly is not included why would there be this exception for incentive stock options well because congress was trying to make incentive stock options tax the same way under all statutes so under fica you will get the t be when you receive the share and the money none of that is taxed under the r t a the share portion isn't taxed because it's not included within the scope of any form of money but the cash portion should not be taxed as well that creates equality between the statutes it may be rare within the confines of the r t a but when look broadly the two thousand and four memon added a verbatim exception to the r t a into fica because congress was attempting to provide uniformity across all of the tax tax rules it is our burden nevertheless judge grounder i think to show only that there is at least a circumstance where there is money that is transferred and thus it is not rendered superfluous but i'll go a step further even if the first portion of the twelve worse purpose that would not be a reason to change the the meaning of any form of money that gets the canon against implied repeal which again we briefed and i think judge mannion got correct and the seven circuit dissent and when congress is acting to narrow the tax base which is clearly what the twelve exemption is doing it is exempting from taxation something that was previously taxed it is completely backwards to say that that act of exception exempt accepting excuse me somehow expanded the underlying tax base the only clear and manifest intent of congress in two thousand and four was to narrow the scope of taxation not to expand the scope of taxation there is a second requirement in the statute here your honor and unless the court has further questions about the form of money requirement i'll move to the second requirement which is that there be a purpose that is not just payments for money but that are payments for services that are rendered to  the railroad in the r t a again unlike fica defines service services defined as something that the railroad supervises and directs one thing that it is clear railroads do not supervise and do not direct is collective action that is a fundamental principle of all of labor law and in particular the railway labor act in this case ratification payments were paid in cash admittedly but not for service rendered to the union they were paid in order to have the union except the collective bargaining agreement think of it your honors as consideration in a contract by paying a ratification payment which was asked for requested by  union then it brought to a close a very contentious bargaining process that was consideration therefore for the union to and its right to continue negotiating and potentially holding up the collective bargaining agreement and indeed these payments were paid out ratification they were lump sums they were the same for all of the of the union members regardless of their craft whether they were an engineer or whether they were alignment everyone got the same flat two thousand dollars  and so we think that this is again a straight forward application of the definition direct and supervise the government like the district court completely ignores the r t a's special definition of service instead just cites a litany of cases under fica which again doesn't define service doesn't in fact define employment as something that is controlled by the employer those fica cases and just like fica itself on this is completely irrelevant for that reason i'd like to direct the court to a provision in the r t a which i think ties together very nicely the two arguments that we've put in place here and that's the section thirty two thirty one easy to see if your honour's have the red brief text page eighty eight this is a provision on successor employers we cited this in our opening brief we discuss it in our reply brief what the r t a says when there's an instance of success for employers it says with an express cross reference used the successor employers rule from fica but with two important substitutions congress directs that the word employment the fica specific word be substituted with the r t a specific word service and in addition  are at issue in this case is because congress understood there's a difference there's a difference between what fica defines as wages and what the r t a defines as compensation there's a difference between what fica calls employment and what they are to call service the government has no explanation for why these additional provisions are in thirty two thirty one to see again we put in our opening brief it's not even cited in the government's response brief i would like your honour's i think to make one more point before i get to a conclusion unless you're the court has for the questions and that is the ordinary meaning in this case does not open up a loophole into the r t a is a undercurrents of judge posner's decision and i think an undercurrent of the district court decision below to read the word money with its original meaning will not end the r t a or the program or be some massive loophole that railroad's or take advantage of for several reasons first employees prefer to be paid in money because they can't use stock to buy the things that they want for their daily life but they can use money for that and in addition reading the word form of money as it would take its ordinary meaning that they were paid entirely in stock then they see employees would see their pension benefits go down and employees don't want that either shareholders similarly will not approve a company like union pacific to have a massive buyback on a regular basis of shares that would be necessary in order to pay the fifty thousand plus employees of union pacific all with stock which is not practically going to happen shareholders won't approve it and i think the reality is demonstrated by the facts of this case we are seeking a refund of only the tiniest a fraction of union pacifics r t a payments employee contrast that with fica which is only twelve point four percent tax rate is more than two and a half times as great under the r t a as it is under five and under that tax rate union pacific paid twenty billion dollars between ninety one and two thousand and seven the refund for stock is fifty million dollars in this case that's one quarter of one percent of all of their r t a taxes that union pacific paid in that eight hundred seventeen year period this is clearly not a massive loop we believe that congress  intent for the r t a is plain throughout the face of that statute and that this court should reject the i r s as attempt to turn the r t a into fica they are different things and that this court should therefore reverse the district court's conclusion that fica others understand other murders ambiguous i think that's correct there's a lot of reasons people have incentives to to change the definitions and make an argument where they can and this is one of those cases where we think the ordinary meaning is very clear and it's the government who has been  basically trying to given the vast disagreement among scores didn't the fifth circuit get it right when it said it was an ambiguous oh no not at all your honor with the fifth circuit made several fundamental errors in its analysis first the fifth circuit reading historical  texts believed that evidence of in kind payments was was evidence of a money payment even though all the sources that the court cited used in kind in money not interchangeably but at to show contrast with each other so that was the court of gerrymandered ambiguity from the one nine hundred thirty s a fundamentally the fifth circuit messed up because it misunderstood the eat twelve exemption for incentive stock options that that court believed that you had to make money meaningless in order for the twelve to make are subject to the rare retirement tax act and i think given that those two courts have reached that conclusion and then also the tax court and the middle district of florida recently reach the same holding it's really impossible to square with the railroads view that the statues unambiguously narrow this court like the district court here and wisconsin central have either clearly held that money remuneration is broad enough to include stock or they've held that the any form of is broadening and that the other pointed out it doesn't make sense because money really is the economic equivalent of stock the these plans basically have the cell to cover options where the employees could on the day they were able to exercise their option which is the taxable event could  ask that their stock be sold and that payment be remitted to the company for the stock the tax the taxes and then they got cash so effectively because these are publicly traded stock that could be easily disturbing to stock in a most of the cases the employers would do that for the money in the records a little murky whether the employees had to use their own brokers or they did it here but there's definitely at page sixty two of the  an example of a that sort of sell to cover option being available to the employees here so i think they definitely could get cash immediately and also money stock is the most common way of investing money today and what people do with their money to include commodity payments and commodities which would include stock and i think the hold that it's more narrow in the tax context than the benefits contacts would create an imbalance that again would undercut the riedel purpose and  the railroad is trying to differentiate the statute from from fica and they are separate statutes but they're but they're aimed at the same remedial purpose in virtually every circuit of the seventh circuit recently recognized as has gone back and and has in the context of looking at these and you can take a check written out to you and give it to the bank to the grocery store either probably good in my hometown well but in mile in my city of washington d c that would be very unlikely that it would take that market but at the same time you might have stating that these all have some cash component i think the analysis that the supreme court applied and quality stores and looking at the fact there were some exception for some types of severance payments as including that severance payments were covered by fica well also applies here i think you're going down two different tracks here i think perhaps what judge was suggesting that if we were to find that it was ambiguous and branch of around deference as you suggested yes here if we look  pre nine hundred ninety four regulation wouldn't they be entitled to refunds for those early years and i have you know your honor because i think stock because it could be immediately sold and in most of these rarer to rain bricks can be immediately so your view wouldn't argue bricks are the same as cash or same as money well i think that the line might be murkier in that regard but specifically congress is carved out as exceptions so that the tax doesn't apply all sorts of things that are non cash benefits you know bricks aren't usually something the employers give to their employees but things like theatre tickets words tickets birthday cake is judge pos are the christmas turkey that sort of thing all those things are carved out of the statute as exceptions section thirty two thirty one a five includes the exceptions of things everything that since could excluded from income tax under section one thirty exclude those things from any form of money remuneration and so i think the fact that congress has carved out all these things as this is an exception that as a suggestion that money remuneration is very broad and it is it does include a compensation for services and i think that's not and i think so something that can be used in lieu of money is something that can be sold for a value that gives you money i think is a reasonable exclusion are certainly something that's easily exchangeable in commerce like stock and i don't think we have to reach the question of the harder to sell things because stock is it easy to exchange thing and in many instances these employees never even saw the stock they just saw the cash because the immediately sold the stock and pay the tax so i think that that that supports the conclusion that that even if the statute is ambiguous that you get to do even under the old regulation it would include stock and certainly if if you look at the statute as a whole that reading makes sense in light of the statutory language because as i said these exceptions really don't they they do actually include examples where it's only noncash benefit those french benefits or one there are certain things subject to tax under the new regulation and i think the in lieu of money i mean scrip in a company store is something that could only be used in one place it's certainly not the equivalent of money in the sense that  know you could do the same thing like buy a house with it you could with money you couldn't go and go to new york and go shop and you could only use it in your local company store which would be like the equivalent of a grocery store gift card  today and i think the fact that those sort of scripted merchandising orders examples were given were saying that things that you could use as a substitute for money that would give you the buying power of money or things that would be money earlier years and i would just emphasize in looking at the statute as a whole the history of the statute also supports a broader reading because when that phrase money remuneration was first introduced in one thousand nine hundred five there was an exception for free transportation and i think and additionally just the fact that numerous courts have emphasized that the fica and retirement tax act have a parallel purpose in fact that congress has repeatedly aligned these the fact that there are these there are these situations where there are non cash exceptions that are carved out and just going to the extent of stock options briefly there is a possibility the cash payments company as an incentive cut stock option but in section four twenty two which is the incentive part of the regulations they're under and makes pretty clear that the cash accompanying the option is not part of the option and that is subject to income tax and i think there was not any reason to think that there would have been confusion about that being subject to that employment tax that would have been reason for twelve to have been added the situation was that congress had made carved out these incentive stock options as not being and income tax triggering event and it didn't do anything about employment tax and the employment tax context and the i r s looked at it and said well then those must be tax for employment tax purposes and then congress came back and said no no we mean that exception to apply for employment tax that stock is never a form of money marina aeration there would have been no reason to do it there's just as much chance of there being cash with a non qualified stock option as cash with a stock and center stock option and if anything the law is clearer about the payment issue and that issue i think that the term ratification payments is really a misnomer for what these payments were because nothing in the agreements themselves actually called the ratification payments rather they fall under the heading wages in these collective bargaining agreements which are basically employment agreements and there they are good examples of this their own page for seventy five and five forty the supplemental appendix where they're under the category wages and there's a lot of some payment provision and then the hourly wage provisions and both of these provisions are agreed upon as part of the contract that governs the term point that these aren't payments for ratification of the contract it is true that for either the lump sum payments or the general wage increases to apply the contract has to be ratified but the ratification was not what the payment turned on there's no requirement that the employees have to vote for the ratification or have done anything to make the rat happen to get these payments where the the the agreement they had to live employees they had to work for a certain amount of time they have to have worked enough to earn vacation time or work a certain number of hours or been employees during a certain window or on a act really reflects the same language as the regulation and which talks about who who is an employee also their have their or their parallel regulations and fica and the retirement tax act under fica it's thirty one point thirty one twenty one d one and under the retirement act it's thirty one point thirty two thirty one b one but they're both entitled who are the employees and these regulations talk about the employee being someone who's over whom the employee has the employer has the right to exercise control of the work but that a player can never control whether the employee will enter into an employment contract which is what the ramrod is basically trying to use th language to say it's the control over the work and fica and the statute defines an employee as someone who is an employee a common law and then it's reg picks up the exact same language as the railroad retirement tax act doesn't have in the statu e that describes employees as common law as one who whose work is under the supervision of the employer or into the control of the employer so i think this control notion really is not different under the  is considered remuneration for services is anything arising out of the employment relationship and it is paid on account of the employment relationship and in that context the supreme court going back to roco in the one nine hundred forty s and literally dozens of cases in all the circuits have consistently held that that remuneration for services includes any payments arising out of the employer relationship including a lump sum payment under collective bargaining agreement back pay this court has held it in the context of in the lame processing and maybury cases lying processing involved a situation where the employer had gone bankrupt and the employees were given an enticement of getting stock that was held in trust if they continued to work and these distributions of stock were held to be remuneration for employment even though the employer had by then ceased to exist and similarly and chicago milwaukee and cases and just one final point i think i'd like to make sure that i address is the successor employees language in thirty to thirty one each to see where the court where the arrow point out that  reiteration for employment but because they're x different exceptions the from the general rule so both statutes have their general rule about what is compensation and then they have exceptions and most of those are parallel but not all of them the phrase in the form of money remuneration first of all money i actually looked at a lot of dictionaries in looking at this phrase and a lot of case law and her pretty money and i would say that generally money is a noun this uses it as an adjective it's unusual  additionally when money is defined as an adjective and like i said there it's not very often it generally adopts the court those dictionaries use the broader definitions like wealth or capital generally or assets that are readily convertible to cash and didn't question that they were liable for it and paid the refund claim and there was no questioning that this language did include stock for decades long it's only the railroads that have recently come up with a new argument that this is not money remuneration i think they read the statute and the prior regulation as including stock because they pay those taxes without seeking refunds for years and they certainly had legal counsel who could have looked at it was a large script i think they did and i think that's a reasonable reading is of explained because something in lieu of money could be liquidated for money ok because it seemed to me there was a kind of unexplained shift in the attitude i think if anything it's and i think it's a shift in the railroad your honor the railroads brought this issue up in one thousand nine hundred one because that was the first time ratification payments have been paid and because it was not until the mid one nine hundred eighty s when congress amended the r t a to change it from a system that imposed tax on a monthly basis to tax on a yearly basis and when you switch the tax ceilings from monthly to any will stocks suddenly matters because the annual compensation is much greater than the monthly compensation in stock is an economically material difference only in the early ninety's late eighty's when a super originally was filed so the government's case is really a case that the phrase any form of money remuneration means any form of remuneration the word money corner the government is meaningless the new regulation that the government adopted in one thousand nine hundred four which it adopted out of the blue there was no legislative change the only thing it pointed to was the one thousand nine hundred seventy four amendment of the our r t a to include the new tear one this new regulation does not attempt to define the word money this regulation is perfectly circular it says the r t a and fica will be treated the same except where they're different well that doesn't get you anywhere and is only in the context of some later litigation that the i r s has made its position clear that it thinks that this money is so meaningless that it is no longer one of the differences between the statutes mr also argued that stock should be treated like money because it's just as liquid as money taking up the the same thing the judge posner had in the seventh circuit well there are a lot of things that are easy to sell and this court in the united states supreme court have talked about promissory notes have talked about foreign currency talked about treasury bonds and all of those in a variety of contexts have been held not to be money because they are not mediums of exchange that's the clear ordinary meaning of the phrase ms del sol talked about the word convert she said that stock could be converted into money that is a colloquial use of the word convert stock can be sold for money the word convert when used with money is like what happened in the united states before n the same things ms also also talks about the cross references and she says by that i mean the exceptions to the r t a there's a list of these exceptions most of which operate by cross reference and when you look at the cross reference section there are money items and there are non money items and she says there's cross reference must have meant to pull in not just the money items but also the non money items but all we need to show as i explained to judge grounder before is that the pulling in the money items matters congress doesn't have to go line by line and only cross reference the sub sub sub sections that refer to money instead it just pulled in the entire section money and non money alike so the government began if i may finish my point under  you the government began by asking you to follow other courts while the other courts while they have gone the way of the government have contradictory rationales one court holds it's ambiguous one court hold it's clear our way another court holds it's clear the other way you can't follow three courts that are running all over themselves just to follow the i r s are there any circuit courts sort of rule you're the no but the but i what i meant by that your honor is that we have the district court in texas that when our way and the seventh circuit i believe all we would do we went your way we'd be creating a circuit split yes you would your honor and one that you know we think is justified and warranted given the correct interpretation of these laws this is not an ordinary tax case it's not about tax shelters it's not about economic substance confident this court will find the courage to do so thank you your honor so are all the cases submitted and we will take it under consideration so