EMPLOYER STATUS DETERMINATION

Argus Computing, Inc.

This is the determination of the Railroad Retirement Board concerning the status

of Argus Computing, Inc. (Argus) as an employer under the Railroad Retirement

Act (45 U.S.C. §231 et seq.) (RRA) and the Railroad Unemployment Insurance 

Act (45 U.S.C. §351 et sea.) (RUIA).

By letter dated February 8, 1995, Mr. Walter W. Howland, of Kansas City

Southern Industries, Inc., parent company of Kansas City Southern Railway

Company (BA No. 1806) (KCS) and of Argus, provided to the RRB a copy of a

1987 examination report of the Internal Revenue Service (IRS) involving Argus.

Specifically, the IRS addressed the question of whether Argus was an employer

under section 3231 (a) of the Railroad Retirement Tax Act [26 U.S.C. §3231 (a)].

The IRS letter stated that on March 26, 1984, Argus entered into an agreement

with KCS, the Louisiana & Arkansas Railway Company (L&AR) (BA No. 1 808),

a wholly owned subsidiary of KCS, and their subsidiary companies to provide

computer services in development, operation and maintenance of computing

systems. Under the terms of the agreement, Argus designed software

programs; performed programming, testing, installation, documentation,

expansion, modification, and maintenance; solved problems; consulted with

outside sources; and provided database management, telecommunications,

equipment, software and computer-related services to KCS and L&AR (KCS

Lines). Argus also performed other miscellaneous activities necessary to

support KCS Lines' required computer system service level, effecting all

computer operations and related equipment, including modification of existing

systems and maintenance of software and systems, updating the systems as

needed, and documenting all work and providing security for the same. Argus

was required under the agreement to provide the necessary personnel to

perform its duties under the contract. The IRS letter stated that in 1 985, 25

Argus employees were assigned full-time to perform the contract duties, and in

1986, 23 employees of Argus were assigned full-time to the contract duties.

These numbers represented about 50% of Argus' employees. The agreement

was terminated effective May 31, 1986. All of the employees of Argus that

had been assigned full-time to the contract were physically transferred to KCS

and became employees of KCS. The IRS letter noted that 96% of Argus'

income came from KCS. The IRS concluded that Argus was an employer under

the RRTA and assessed taxes for the two years involved in the examination

(1985 and 1986). The names, social security numbers, and RRTA taxes

assessed for the affected employees are listed on forms attached to the IRS

letter.

BCD 1996-56

BA # 9842
-2-

Argus Computing, Inc.

In a letter dated June 23, 1995, to the Board's Chief of Audit and Compliance,

Mr. Howland stated that when it began operations, Argus provided computer

and data processing services for the pharmaceutical, health care and

transportation industries. Mr. Howland stated that subsequent to 1986, no

further relationship has existed between KCS and Argus. Mr. Howland

indicated further that after 1986 Argus continued to provide computer and data

processing services to the health care industry.

Because the IRS held that Argus was a covered employer under the RRTA for

1985 and 1986, assessed RRTA taxes for those years on particular employees 

whose names, social security numbers, and number of months of creditable

service for those years are appended to the IRS letter, the Board finds that

Argus was an employer under the RRA and the RUIA for those same years

covered by the IRS examination, 1985 and 1986, with respect to the same

employees identified by the IRS. Since Argus has not provided any services for

the railroad industry since 1986, the Board finds further that Argus has not

been an employer under the RRA and the RUIA since December 31, 1986.