Rail Employer Reporting Instructions

Part IV - Particular Types of Compensation Payments

Chapter 11: Compensation from Multiple Employers

1

Tier Compensation

Employers should report Tier I and Tier II compensation up to the annual maximums regardless 

whether the employee worked for another employer either concurrently or in a different period in 

that year. An employer must treat an employee as solely its employee for reporting purposes. 

The total compensation reported by all employers for an individual may exceed the annual 

maximum creditable by law. In that situation, the Railroad Retirement Board automatically 

adjusts the account to reflect the annual maximum creditable compensation. 

Employees who have paid employment tax for Tier I or Tier II in excess of the annual maximum 

taxable amounts because they had two or more employers in a calendar year should claim an 

income tax credit on their annual tax return with the Internal Revenue Service. However, there is 

no provision for a credit or refund of tax to the employers. Employees who have paid 

employment tax for Tier I or Tier II in excess of the annual maximum from a single employer 

must seek their refund from that employer. 

RUIA Compensation 

Unlike compensation under the Railroad Retirement Act and the Railroad Retirement Tax Act, 

compensation reported under the Railroad Unemployment Insurance Act may be prorated among 

the multiple employers. Employers may coordinate and each report a share of the maximum 

based on a ratio agreed upon by the employers. 

Acquisitions and Successor Railroads

A successor employer is an employer who has acquired substantially all the assets of its 

predecessor and continues to operate the business of the predecessor. Employers determined to 

be successors to railroads formerly covered under the RRA, may file compensation and tax 

reports as though the employees worked for a single employer in the year of succession. The 

earnings from the prior and successor railroads are considered together in determining the 

creditable and taxable compensation. 

Mergers

A merger between covered railroad employers which results in a third covered railroad will 

require earnings reports from all three employers. The earnings from the two prior railroads are 

not considered in determining the creditable and taxable compensation for the new entity. The 

newly formed employer reports as though they were the sole employer for the employee.

Concurrent Employment Reported by a Common Paymaster

"Common Paymaster" as it is used here refers to two or more related railroads that concurrently 

employ the same individual and compensate that individual through a common paymaster which 

is one of the railroads. Two railroads may disburse their payroll through the same paymaster but 
Rail Employer Reporting Instructions

Part IV - Particular Types of Compensation Payments

Chapter 11: Compensation from Multiple Employers

2

if they do not meet the definitions of "related" corporations and "concurrent employment" found 

in 31.3121(s)-1 of the Internal Revenue Code regulations, they do not have a common paymaster 

for this instruction. Because the emphasis of these instructions is on filing consistent tax returns 

and compensation reports, we have included references to tax returns and revenue procedure.

Advantages to Establishing a Common Paymaster

If two or more related railroads employ the same individual, and the individual's compensation 

from the related railroads is disbursed through a common paymaster, the total amount of taxes 

imposed with respect to the compensation is determined as though the individual has only one 

employer. This will provide the employer Tier I and Tier II tax relief when the employee's 

combined earnings exceed the annual Tier I and Tier II earnings bases. 

There is a potential for tax relief apart from Tier taxes if an individual is concurrently employed 

by two related employers in the same month. If that is the case, using a common paymaster may 

reduce the RUIA liability. 

Requirements and Responsibilities of a Common Paymaster

There are certain requirements and responsibilities of a common paymaster: They are as follows:

• Two or more railroad employers must be related. 

• The related railroad employers must concurrently employ the same individual. (Refer to 

the tests for related corporations and concurrent employment in IRC regulations 

31.3121(s). 

• One of the railroads acts as a common paymaster to disburse compensation to the 

individual(s) concurrently employed by the related railroads. It is not required that the 

common paymaster disburse the entire payroll for all the employees of the related 

railroads, only for concurrent employed employees. 

• The common paymaster files Form BA-3 with the RRB that includes all compensation 

for concurrent employed employees. 

The procedure for establishing a common paymaster differs from the procedure for filing a 

consolidated report. If two or more railroads wish to establish a common paymaster and to file 

consolidated reports, they need to follow the procedure for both. 

Consolidated Reports: Advantages

If related railroads have no employees who are employed concurrently by more than one of the 

railroads, then there is no possibility of employment tax relief. However, two or more employers 

may desire to file consolidated reports in order to reduce the reporting burden and to consolidate 
Rail Employer Reporting Instructions

Part IV - Particular Types of Compensation Payments

Chapter 11: Compensation from Multiple Employers

3

reporting and record keeping responsibilities. For example, a parent railroad may file a 

consolidated report that includes subsidiary railroads. In such a case, the employees of the 

subsidiary railroad are identified in the report with the BA number of the subsidiary.

Requirements and Responsibilities Related to Consolidated Reports

There are certain requirements and responsibilities for filing consolidated reports are. They are as 

follows:

• Two or more railroad employers must desire to file consolidated reports and must 

designate one of the employers to be responsible for filing all returns and reports.

• To file consolidated tax returns, each participating employer must meet the requirements 

of IRS Revenue Ruling 73-32. 

• The designated railroad employer is responsible for maintaining payroll records for all 

participating employers and issuing Form W-2.

• The designated railroad employer must make tax deposits representing combined 

liabilities, and file a consolidated Form CT-1 and Form BA-3. 

If a common paymaster is established and the consolidated report is being filed under only the 

designated railroad's number, IRS Form 2678 may be required to file consolidated tax returns 

under one employer number. 

Unless a common paymaster has been established, the consolidated BA-3 report must identify 

the employing BA number for each employee. If a common paymaster is established, all 

employees may be reported under the designated employer's BA number. This distinction result 

from the difference in creditable and taxable compensation based on an employee's concurrent 

employment with more than one related railroad as demonstrated in the following examples. 

Completion of Form G-440, Report Specifications Sheet

The following information must be included on Form G-440, "Report Specification Sheet", or 

the report cannot be processed correctly at the RRB.

• Common Paymaster: Show in the “remarks” section of the form, “Common Paymaster 

for BA__”, and list the BA number(s).

• Consolidated Report: List in Item 7, the BA numbers for all employees included on the 

consolidated BA-3 report. 
Rail Employer Reporting Instructions

Part IV - Particular Types of Compensation Payments

Chapter 11: Compensation from Multiple Employers

4

Example: Consolidated Report - Not a Common Paymaster

Employee Smith earns $56,000 from the Northern Railroad (BA-8888) from January through 

June 2007 at which time he is terminated and transferred to the Southern Railroad (BA-9999), a 

subsidiary of Northern Railroad, where he earns $60,000 from June through December 2007. 

Employee Smith is consecutively, not concurrently, employed by two related railroads. Northern 

Railroad files consolidated reports that include employees of Southern Railroad.

BA Number SSN Name Tier I Tier II RUIA

8888 111-22-3333 Smith, J 56,000 56,000 7,380

9999 111-22-3333 Smith, J 60,000 60,000 8,610

TOTAL 116,000 112,700 15,990

Taxable compensation is based on each employer's individual liability and is determined as 

though the employee worked only for that employer. Creditable compensation will be reported 

for Mr. Smith under BA-8888 and under BA-9999. These two line items will be included in the 

same report since BA-8888 and BA-9999 are filing consolidated reports, but the taxable and 

creditable amounts will have been determined separately for each employer.

Example: Consolidated Report - Common Paymaster

Employee Jones works the first week of every month for the Eastern Railroad (BA- 3333) and 

earned $25,000 in 2007. For the remainder of each month he works for the Western Railroad 

(BA- 4444) and earned $75,000 in 2007. The Eastern and Western Railroads are both owned and 

operated by the Central Railroad. The Eastern Railroad is the common paymaster for Eastern, 

Western and Central Railroads and files consolidated reports including all three railroads.

BA Number SSN Name Tier I Tier II RUIA

333 111-22-3334 Jones, J 97,500 72,600 14,760

The earnings with BA-4444 are paid by the common paymaster, BA-3333, and are consolidated 

with BA-3333 earnings. A consolidated report under a single BA number clarifies that the tax 

liability is determined as though Mr. Jones worked for a single employer in 2007. The reduced 

liability results because the combined 2007 compensation ($100,000), exceeds the maximum 

amount creditable and taxable from a single source, BA-3333, as shown in the above example.

Be Consistent with IRS Reporting

If a rail employer is designated to act as a common paymaster by the IRS, they should also file 

compensation reports with the RRB as a common paymaster. If a rail employer is filing 

consolidated tax returns, they should also file consolidated compensation reports with the RRB. 

The creditable compensation reported to the RRB on Form BA-3, "Annual Report of Creditable 

Compensation", should be consistent with the taxable compensation reported to the IRS on Form 

CT-1, "Employer's Annual Railroad Retirement Tax Form", and the contributions reported to the 
Rail Employer Reporting Instructions

Part IV - Particular Types of Compensation Payments

Chapter 11: Compensation from Multiple Employers

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RRB on Form DC-1, "Employer's Quarterly Report of Contributions under the Railroad 

Unemployment Insurance Act".