[Federal Register Volume 60, Number 247 (Tuesday, December 26, 1995)]
[Proposed Rules]
[Pages 66770-66771]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-31064]



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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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