[Federal Register Volume 61, Number 87 (Friday, May 3, 1996)]
[Rules and Regulations]
[Pages 20070-20082]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-10983]
[[Page 20069]]
_______________________________________________________________________
Part V
Railroad Retirement Board
_______________________________________________________________________
20 CFR Part 345
Employers' Contributions and Contribution Reports; Final Rule
Federal Register / Vol. 61, No. 87 / Friday, May 3, 1996 / Rules and
Regulations
[[Page 20070]]
RAILROAD RETIREMENT BOARD
20 CFR Part 345
RIN 3220-AA79
Employers' Contributions and Contribution Reports
AGENCY: Railroad Retirement Board.
ACTION: Final rule.
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SUMMARY: The Railroad Retirement Board hereby revises its regulations
under the Railroad Unemployment Insurance Act in order to implement
amendments to that Act in 1988 to provide for employers under the RUIA
to pay unemployment contributions on the basis of an experience rating
system. Prior to amendment, all employers paid contributions at the
same rate.
EFFECTIVE DATE: May 3, 1996.
ADDRESSES: Secretary to the Board, Railroad Retirement Board, 844 North
Rush Street, Chicago, Illinois 60611.
FOR FURTHER INFORMATION CONTACT: Thomas W. Sadler, Assistant General
Counsel, Railroad Retirement Board, Bureau of Law, Chicago, Illinois
60611; (312) 751-4513, TDD (312) 751-4701.
SUPPLEMENTARY INFORMATION: Benefits under the Railroad Unemployment
Insurance Act (RUIA) are funded by contributions paid by employers, as
defined in section 1(a) of the RUIA and part 301 of this chapter. For
calendar years through 1990, all employers, with the exception of
commuter railroads, paid contributions at the same rate. Title VII of
Public Law 100-647 amended section 8(a) of the RUIA to provide for a
contribution rate based upon an employer's experience. The experience
rating system provided by section 8(a) of the RUIA is phased in
beginning with calendar year 1991. For 1991 and 1992, a transitional
rate of contribution applies to each employer. Effective January 1,
1993, each employer will have an experience-based rate of contribution.
A ``new employer'' rate of contribution will be computed for an
employer that first pays compensation after December 31, 1989.
The experience rating system that goes into effect January 1, 1993
is based upon recommendations made by the Railroad Unemployment
Compensation Committee (RUCC), which was established by Section 504 of
the Railroad Retirement Solvency Act of 1983 (Public Law 98-76). The
RUCC was required to review all aspects of the unemployment insurance
system under the RUIA, including the method by which benefit costs
under the RUIA were funded. In its report dated June 29, 1984, the RUCC
recommended that railroad unemployment insurance contributions be put
on an experience rating system utilizing what is termed a ``reserve-
benefit ratio method'' of measuring experience. The methodology
contemplates that each employer will pay contributions at a rate
consisting of a basic rate, plus 0.65 percent to cover the
administrative expenses incurred by the Railroad Retirement Board, plus
the amount of any surcharge that becomes applicable when the balance to
the credit of the railroad unemployment insurance account declines to
certain specified levels.
The basic rate referred to above consists of three components. The
first component is the allocated-experience rate and is based upon
benefit payments that are charged to each employer. The purpose of this
rate is to ensure that each employer is ultimately responsible for the
cost of benefits paid to its own employees. The second component is the
unallocated-experience element, which covers benefit payments that are
not chargeable to any employer. Its purpose is to ensure that
responsibility for benefit charges that, by law, cannot be allocated to
a single employer is fairly shared. The third component covers risk-
shared benefit payments, that is, benefits that are chargeable to a
base year employer but the contributions to cover the cost of those
benefits cannot be collected immediately because of the imposition of a
maximum contribution rate. Risk-sharing picks up the income that
otherwise would be lost because of the maximum rate of contribution.
Eventually, the lost income will be paid by the employers that were at
the maximum rate because the reserve-ratio component assures that, over
time, each employer will contribute amounts equal to all benefit
payments charged to it.
This rule consists of five subparts. Subpart A contains some
general provisions and definitions. Subpart B revises part 345 as it
read prior to this revision and sets forth the requirements for filing
reports of contributions and the manner in which contributions are to
be collected.
Subpart C implements the provisions of section 8(a)(17) and (18) of
the RUIA, which require the Board to establish individual employer
records and to prescribe regulations relating to the establishment and
discontinuance of joint employer records. Subpart C also prescribes the
regulations required by section 8(a)(19) of the RUIA, relating to the
establishment of employer records in the event of mergers,
consolidations, or other changes in employer identity, including
changes resulting from a sale or transfer of assets, reincorporation,
or abandonment.
Subpart D explains the experience rating system under the RUIA and
the methods that the Board will follow in computing each employer's
rate of contribution under the experience rating system. This subpart
also explains the computation of new employer contribution rates.
Subpart E explains how the Board will charge base year employers
with benefit payments made under the RUIA, the handling of adjustments
to those charges, and the process for notifying base year employers of
the charges.
Section By Section Analysis
Subpart A--General Provisions and Definitions
Section 345.101 sets forth the general requirement that employers
(except for a local lodge or division of a railway labor organization)
covered under the RUIA must pay a contribution on compensation paid to
their employees in order to fund unemployment and sickness benefits
payable under that statute. It revises previous Sec. 345.1.
Section 345.102 provides that where an employee is employed by two
or more employers (other than a subordinate unit of a railway
organization) the employers may prorate the amount of contributions due
based upon the amount of compensation paid to the employee. It
simplifies the provisions previously found in Sec. 345.2(b).
Section 345.103 provides that an employer's rate of contributions
shall be based upon his ``experience'' as defined in Subpart D. It
revises the present Sec. 345.2(a).
Section 345.105 is a new section and sets forth the statutory
exception that exempts employee representatives, as defined in part 205
of this chapter, from paying contributions on their salaries. It also
provides that contributions are the sole obligation of the employer and
may not be deducted from the employee's wages.
Section 345.106 is a new section and contains definitions relevant
to this part.
Subpart B--Reporting and Collecting Contributions
Section 345.110 follows Sec. 345.4 of the previous regulation and
provides that the reports of compensation filed under part 209 of this
chapter shall be used to establish an employee's compensation record
under the RUIA.
Section 345.111 is essentially the same as previous Sec. 345.5 and
provides for the filing of quarterly contribution
[[Page 20071]]
reports by employers. It eliminates annual reports and provides that an
affiliated group of employers may file a consolidated quarterly
contribution report.
Section 345.112 provides that an employer's final contribution
report shall be filed within 60 days after the last payment of wages.
It is essentially the same as previous Sec. 345.6.
Section 345.113 provides that the contribution report must be filed
by a responsible officer of the employer. It is the same as previous
Sec. 345.7.
Section 345.114 provides that the quarterly contribution report
must be filed on a form approved by the Board unless the failure to use
such form was due to reasonable cause and not due to willful neglect.
It follows previous Sec. 345.8.
Section 345.115 provides that an employer shall file the quarterly
contributions report with the Chief Financial Officer on or before the
last day of the month following the end of the quarter. It is
essentially the same as the present Sec. 345.9 except that the
provisions for waiving interest or penalty resulting from a late report
are found in Secs. 345.122 and 345.123, respectively.
Section 345.116 simplifies previous Sec. 345.10 and provides that
payment or deposit of contributions due shall be in accordance with
instructions provided by the Board.
Section 345.117 permits rounding to the nearest cent when paying
contributions. It reflects a provision found in the RUIA and is
identical to the previous Sec. 345.11.
Section 345.118 provides that an employer who underpays or overpays
his contributions may take an interest free adjustment on the
contribution report due after discovery of the error. It is essentially
the same as previous Sec. 345.12, except that it contains a
clarification providing that if an employer fails to adjust an
underpayment in accordance with the section, he shall be liable for
interest on the underpayment from the time the adjustment should have
been made until the underpayment is made.
Section 345.119 provides that if an employer cannot adjust an
overpayment of contributions as provided for in Sec. 345.118, he may
claim a refund for the overpayment. No claim for refund shall be
honored if filed more than three years after the contribution report
containing the error was required to be filed, or more than two years
after payment of the erroneous contribution, whichever is later. This
section follows previous Sec. 345.13, but clarifies that no interest
shall be paid on the refund and that any claim for refund shall be
offset by any contributions due the Board by the employer claiming the
refund. However, where the overpayment of contributions is the result
of Board error in computing an employer's contribution rate under
Subpart D, the Board will pay interest in accord with section 6621 of
the Internal Revenue Code.
Section 345.120 revises previous Sec. 345.14 and provides that if
any contribution is not paid when due, the Board may assess the amount
due (whether or not the deficiency is adjustable as an underpayment
under Sec. 345.118). The assessment is the creation of an account
receivable by the Chief Financial Officer. The amount assessed may be
collected, after notice and demand, by any remedy available under law,
but must be collected within 10 years after assessment. In collecting
an assessment, the Board may use any remedy available under the
Internal Revenue Code for collecting railroad retirement taxes.
Section 345.121 is the same as previous Sec. 345.15, which permits
the Board to make an assessment of contributions (jeopardy assessment)
before the return of contributions is due in order to protect the
interest of the United States.
Section 345.122 follows previous Sec. 345.15, which provides that
interest of one percent a month, or fraction thereof, shall accrue on
contributions not paid on time or not adjusted in a timely manner under
Sec. 345.118. Because the interest provision in the RUIA is really a
penalty provision, that is, it assesses a fixed rate regardless of the
market rate of interest, a new provision is added that permits the
Chief Financial Officer to waive interest when equity warrants.
Section 345.123 follows previous Sec. 345.19 and provides for
penalties for delinquent and false contribution reports.
Section 345.124 is a new section and provides that an employer may
seek administrative review of any determination made by the Chief
Financial Officer with regard to amounts due under this part. A request
for review, however, does not stay the employer's obligation to make or
continue to file reports as required under this part.
Section 345.125 revises previous Sec. 345.24 to alleviate the
burden on employers to keep supporting records back to 1939. Under the
regulation, an employer must keep records that support his contribution
reports for five calendar years after the date the report was required
to be filed.
Section 345.126 is identical to previous Sec. 345.18 and provides
that any amount due from an employer under this part is a lien on the
employer's property in favor of the United States.
Subpart C--Individual Employer Records
Section 345.201 provides that effective January 1, l990, the Board
will establish a ``record'' for each employer composed of the
employer's contribution and benefit ``experience'' and his share of the
system ``experience'' to determine the employer's experience-based
contribution rate.
Section 345.202 provides that two or more employers under common
control may consolidate their respective employer records and be
treated as one employer.
Section 345.203 provides that in the event of a merger of two
employers, the surviving employer's record shall consist of the
combination of the individual employer records of the employers
participating in the merger.
Section 345.204 embodies the so-called ``successor employer rule''
and provides that in the case of sale or transfer of assets by an
employer, the record of the selling employer shall be transferred to
the purchaser. If less than substantially all the assets are sold or
transferred, the record shall be transferred in accordance with the
agreement of sale, subject to Board approval.
Section 345.205 provides that a reorganization that does not
involve a merger does not affect the employer records of the entities
involved in the reorganization.
Section 345.206 provides that an employer who first pays
compensation after December 31, 1989, shall continue to maintain an
employer record during the period of inactivity.
Section 345.207 provides that in the case of an employer who
permanently ceases operations (defunct employer), that employer's net
cumulative contribution balance and net cumulative benefit balance
shall be transferred to the system unallocated charge balance, that is,
the employer's ``experience'' is spread among all employers.
Section 345.208 provides that the Board shall publish annually
notice of the system unallocated charges and credits.
Subpart D--Contribution Rates
Section 345.301 provides that effective January 1, l993, each
employer's contribution rate will be computed based upon his benefit
and
[[Page 20072]]
contribution experience as computed under this subpart.
Section 345.302 defines the words and phrases used in computing
experience-rated contributions.
Section 345.303 sets forth in a step-by-step manner the computation
of the experience rate.
Section 345.304 provides that new employers, as defined therein,
shall have a phased-in experience rate and sets forth the computation
of this rate.
Section 345.305 provides that annually the Board shall notify each
employer of his contribution rate as computed under this subpart and of
the components that make up that rate.
Section 345.306 provides that upon request the Board will make
available to each employer the data used to determine the employer's
contribution rate.
Section 345.307 provides a procedure under which an employer may
protest his rate. Such procedure may include a hearing, and any final
decision of the Board is subject to judicial review. During pendency of
the appeal, the employer shall pay at the protested rate. Should the
employer prevail in the protest, he will be refunded the overpaid
contributions or may take a credit in the amount of the overpayment
against future contributions due as provided for in Sec. 345.118 of
this part.
Subpart E--Benefit Charging
Section 345.401 provides that all benefits paid to an employee for
his or her days of unemployment or sickness will be charged to the base
year employer of the employee.
Section 345.402 provides that unemployment benefits paid for days
of unemployment resulting from a strike or work stoppage will not be
charged to the employee's base year employer, but shall be charged to
the system unallocated charge balance.
Section 345.403 explains how benefits paid are charged if the
employee had more than one base year employer.
Section 345.404 provides that benefits previously charged shall be
adjusted if later recovered by the Board because they were erroneously
paid. However, no adjustment shall be made where recovery of the
benefits has been waived, or to the extent that recovery is not made
because the debt is determined uncollectible or because it was
compromised.
Section 345.405 provides that the Board will notify an employer
when a claim for benefits is made and when such benefits are paid. In
addition, each quarter the Board will provide each employer with a
report of its cumulative benefit balance.
Section 345.406 provides that the cumulative benefit balance of a
defunct employer shall be added to the system unallocated charge
balance.
On August 18, 1995, the Board published this rule as a proposed
rule (60 FR 43300), inviting comments on or before October 17, 1995. No
comments were received.
In reviewing the proposed rule prior to its publication as a final
rule, clarification of certain provisions, as enumerated below, was
found necessary.
The second sentence of Step 1 of Sec. 345.302(j), which explains
the computation of the pooled charge ratio, was changed to remove: ``,
345.304, or 345.308 * * *, whichever is applicable''. A ``pooled
charge'' is added only to the contribution rate computed under
Sec. 345.303 and is not added to a new employer rate of computation, as
computed under Sec. 345.304, except to the extent that a new employer
rate, as phased in, reflects its experience with respect to periods
after the period during which it has an initial contribution rate, as
computed in Sec. 345.304(b). Also, there is no Sec. 345.308.
The first sentence of Sec. 345.302(k), relating to computation of
pooled credits, was amended to add the language ``, as computed under
Sec. 345.303 of this part,'' to clarify that a new employer is not
entitled to a pooled credit since a new employer's rate is computed
under the special provisions of Sec. 345.303(b) and not under the
regular formula found in Sec. 345.303(a), which provides for the
application of the pooled credit at Step 3.
The first sentence of Sec. 345.302(n), relating to surcharge rates,
was amended to add the language ``, as computed under Sec. 345.303 of
this part,'' to clarify that a surcharge rate, when applicable, will be
added only at Step 6 of Sec. 345.303(a) and not to the rate, if any, as
computed under Sec. 345.304(b).
The Labor Member of the Railroad Retirement Board does not support
the authority contained in Sec. 345.118(c)(3) of the regulation for the
payment of interest, under certain circumstances, to railroad employers
who have overpaid their contributions due under the Railroad
Unemployment Insurance Act. There is no express statutory language in
the Railroad Unemployment Insurance Act authorizing the payment of
interest, but rather, the authority is derived from a provision in the
Internal Revenue Code, which is incorporated by reference. The Labor
Member is of the opinion that the regulation should follow the current
regulation of the Railroad Retirement Board, which does not provide for
the payment of interest. In addition to the lack of express statutory
authority for the payment of interest, the Labor Member believes that
it is inequitable to authorize the payment of interest to railroad
employers who have overpaid their contributions when there is no
authority for the Railroad Retirement Board to pay interest to
beneficiaries who have been underpaid benefits under the Railroad
Retirement and Railroad Unemployment Insurance Acts.
The Board has determined that this is not a major rule under
Executive Order No. 12866; therefore no regulatory impact analysis is
required. The information collection requirements contained in this
rule have been approved by the Office of Management and Budget under
control numbers 3220-0008 and 3220-0012.
List of Subjects in 20 CFR Part 345
Railroad employers, Railroad unemployment benefits.
For the reasons set out in the preamble, title 20, chapter II of
the Code of Federal Regulations is amended as follows:
1. Part 345 is revised to read as follows:
PART 345--EMPLOYERS' CONTRIBUTIONS AND CONTRIBUTION REPORTS
Subpart A--General Provisions and Definitions
Sec.
345.101 Requirement for contribution.
345.102 Multiple employer limitation.
345.103 Rate of contribution.
345.104 Employees and employee representatives not liable.
345.105 Definitions.
Subpart B--Reporting and Collecting Contributions
345.110 Reports of compensation of employees.
345.111 Contribution reports.
345.112 Final contribution reports.
345.113 Execution of contribution reports.
345.114 Prescribed forms for contribution reports.
345.115 Place and time for filing contribution reports.
345.116 Payment of contributions.
345.117 When fractional part of cent may be disregarded.
345.118 Adjustments.
345.119 Refunds.
345.120 Assessment and collection of contributions or
underpayments of contributions.
345.121 Jeopardy assessment.
345.122 Interest.
345.123 Penalty for delinquent or false contribution reports.
345.124 Right to appeal.
345.125 Records.
345.126 Liens.
[[Page 20073]]
Subpart C--Individual Employer Records
345.201 Individual employer record defined.
345.202 Consolidated employer records.
345.203 Merger or combination of employers.
345.204 Sale or transfer of assets.
345.205 Reincorporation.
345.206 Abandonment.
345.207 Defunct employer.
345.208 System records.
Subpart D--Contribution Rates
345.301 Introduction.
345.302 Definition of terms and phrases used in experience-rating.
345.303 Computation of rate.
345.304 New-employer contribution rates.
345.305 Notification and proclamations.
345.306 Availability of information.
345.307 Rate protest.
Subpart E--Benefit Charging
345.401 General rule.
345.402 Strikes or work stoppages.
345.403 Multiple base year employers.
345.404 Adjustments.
345.405 Notices to base year employers.
345.406 Defunct employer.
Authority: 45 U.S.C. 362(l).
Subpart A--General Provisions and Definitions
Sec. 345.101 Requirement for contribution.
Every employer, as defined in part 301 of this chapter, shall pay
to the Railroad Retirement Board a contribution with respect to the
compensation paid to an employee in any calendar month for service by
such employee (except for service to a local lodge or division of a
railway labor organization). For the purposes of this part, the term
``compensation'' is defined in part 302 of this chapter. The
compensation subject to contribution is the gross amount of
compensation paid to an employee for service in any month, not to
exceed the amount of the monthly compensation base (MCB), as defined in
part 302 of this chapter. The amount of contribution payable by each
employer is to be computed and paid pursuant to the provisions of this
part.
Sec. 345.102 Multiple employer limitation.
(a) The contributions required by this part shall not apply to any
amount of the aggregate compensation paid to such employee by all such
employers in such calendar month which is in excess of the MCB; and
(b) Each employer (other than a subordinate unit of a national-
railway-labor-organization employer) shall be liable for that portion
of the contribution with respect to such compensation paid by all such
employers which the compensation paid by the employer to such employee
bears to the total compensation paid in such month by all such
employers to such employee.
(c) In the event that the compensation paid by such employers to
the employee in such month is less than the MCB, each subordinate unit
of a national-railway-labor-organization employer shall be liable for
such portion of any additional contribution as the compensation paid by
such employer to such employee in such month bears to the total
compensation paid by all national-railway-labor-organization employers
to such employee in such month.
Sec. 345.103 Rate of contribution.
(a) Each employer will have an experience-rated rate of
contribution computed by the Board under the provisions of section
8(a)(1)(C) of the Railroad Unemployment Insurance Act. See Subpart D of
this part.
(b) Notwithstanding paragraph (a) of this section the rate of
contribution applicable to an employer that first becomes subject to
this part after December 31, 1989, will be computed by the Board in
accordance with section 8(a)(1)(D) of the Railroad Unemployment
Insurance Act. See Subpart D of this part.
Sec. 345.104 Employees and employee representatives not liable.
The amount of contributions for which an employer is liable under
this part shall not be deducted from an employee's compensation, and
the Board will not recognize any agreement under which an employee
assumes liability for such contributions. Employee representatives
under part 205 of this chapter are not employees for purposes of the
Railroad Unemployment Insurance Act and are not liable for payment of
contributions under this part.
Sec. 345.105 Definitions.
(a) Chief Financial Officer. References in this part to the Board's
Chief Financial Officer mean the Chief Financial Officer, Railroad
Retirement Board, 844 North Rush Street, Chicago, Illinois 60611. The
Chief Financial Officer shall be responsible for assessing, collecting,
and depositing contributions due from employers under this part.
(b) Monthly compensation base. For the purposes of this part, the
monthly compensation base (MCB) is the maximum monthly amount of
compensation per employee that is subject to contribution pursuant to
this part. On or before December 1 of each year, the Board will compute
the amount of the MCB in accordance with section 1(i) of the Railroad
Unemployment Insurance Act and part 302 of this chapter, and will
publish notice of the amount so computed in the Federal Register within
10 days after such computation has been made. Information as to the
amount of the MCB should be requested from the Board's Chief Financial
Officer.
(c) Month defined. (1) For the purposes of this part, if the date
prescribed for filing a report or paying a contribution is the last day
of a calendar month, each succeeding calendar month or fraction thereof
during which the failure to file or pay the contribution continues
shall constitute a month.
(2) If the date prescribed for filing the report or paying the
contribution is a date other than the last day of a calendar month, the
period that terminates with the date numerically corresponding thereto
in the succeeding calendar month and each such successive period shall
constitute a month. If, in the month of February, there is no date
corresponding to the date prescribed for filing the report or paying,
the period from such date in January through the last day of February
shall constitute a month. Thus, if a report is due on January 30, the
first month shall end on February 28 (or 29 if a leap year), and the
succeeding months shall end on March 30, April 30, etc.
(3) If a report is not timely filed or a contribution is not timely
paid, the fact that the date prescribed for filing the report or paying
the contribution, or the corresponding date in any succeeding calendar
month, falls on a Saturday, Sunday, or a legal holiday is immaterial in
determining the number of months.
(d) Reference to forms. Any reference in this part to any
prescribed reporting or other form of the Board includes a reference to
any other form of the Board prescribed in substitution for such
prescribed form.
(e) Showing reasonable cause. For purposes of this part if an
employer exercised ordinary business care and prudence and was
nevertheless unable to file the return within the prescribed time, then
the delay is due to reasonable cause. A failure to pay any amount due
under this part within the prescribed time will be considered to be due
to reasonable cause to the extent that the employer has made a
satisfactory showing that he exercised ordinary business care and
prudence in providing for payment but nevertheless was unable to pay on
time.
[[Page 20074]]
Subpart B--Reporting and Collecting Contributions
Sec. 345.110 Reports of compensation of employees.
The provisions of part 209 of this chapter shall be applicable to
the reporting of compensation under the Railroad Unemployment Insurance
Act to the same extent and in the same manner as they are applicable to
the reporting of compensation under the Railroad Retirement Act.
Sec. 345.111 Contribution reports.
(a) General. (1) Except as provided in paragraph (a)(2) of this
section, every employer shall, for each calendar quarter of each year,
prepare a contribution report, in duplicate, on Form DC-1.
(2) Contribution reports of employers who are required by State law
to pay compensation on a weekly basis shall include with respect to
such compensation all payroll weeks in which all or the major part of
the compensation falls within the period for which the reports are
required.
(b) Compensation to be reported on Form DC-1. Employers shall enter
on the employer's quarterly contribution report, prior to any additions
or subtractions, the amount of creditable compensation appearing on
payrolls or other disbursement documents for the corresponding quarter
as the amount of creditable compensation from which the contribution
payable for that quarter is to be computed.
(Approved by the Office of Management and Budget under control
number 3220-0012)
Sec. 345.112 Final contribution reports.
Upon termination of employer status, as determined under part 301
of this chapter, the last contribution report of the employer shall be
so indicated by checking the box on the Form DC-1 entitled ``Final
Report''. Such contribution report shall be filed with the Board on or
before the sixtieth day after the final date for which there is payable
compensation with respect to which contribution is required. The period
covered by each such contribution report shall be plainly written
thereon, indicating the final date for which compensation is payable.
There shall be executed as part of each such final contribution report
a statement giving the address at which compensation records will be
kept and the name of the person keeping the records.
(Approved by the Office of Management and Budget under control
number 3220-0012)
Sec. 345.113 Execution of contribution reports.
Each contribution report on Form DC-1 shall be signed by:
(a) The individual, if the employer is an individual;
(b) The president, vice president, or other duly authorized
officer, if the employer is a corporation; or
(c) A responsible and duly authorized member or officer having
knowledge of its affairs if the employer is a partnership or other
unincorporated organization.
Sec. 345.114 Prescribed forms for contribution reports.
Each employer's contribution report, together with any prescribed
copies and supporting data, shall be filled out in accordance with the
instructions and regulations applicable thereto. The prescribed forms
may be obtained from the Board. An employer will not be excused from
making a contribution report for the reason that no form has been
furnished to such employer. Application should be made to the Board for
the prescribed forms in ample time to have the contribution report
prepared, verified, and filed with the Board on or before the due date.
Contribution reports that have not been so prepared will not be
accepted and shall not be considered filed for purposes of Sec. 345.115
of this part. In case the prescribed form has not been obtained, a
statement made by the employer disclosing the period covered and the
amount of compensation with respect to which the contribution is
required may be accepted as a tentative contribution report if
accompanied by the amount of contribution due. If filed within the
prescribed time, the statements so made will relieve the employer from
liability for any penalty imposed under this part for the delinquent
filing of the contribution report provided that the failure to file a
contribution report on the prescribed form was due to reasonable cause
and not due to willful neglect, and provided further, that within 30
days after receipt of the tentative report such tentative report is
supplemented by a contribution report made on the proper form.
(Approved by the Office of Management and Budget under control
number 3220-0012)
Sec. 345.115 Place and time for filing contribution reports.
Each employer shall file its contribution report with the Chief
Financial Officer, Railroad Retirement Board, 844 North Rush Street,
Chicago, Illinois, 60611. The employer's contribution report for each
quarterly period shall be filed on or before the last day of the
calendar month following the period for which it is made. If such last
day falls on Saturday, Sunday, or a national legal holiday, the report
may be filed on the next following business day. If mailed, reports
must be postmarked on or before the date on which the report is
required to be filed.
Sec. 345.116 Payment of contributions.
(a) The contribution required to be reported on an employer's
contribution report is due and payable to the Board without assessment
or notice, at the time fixed for filing the contribution report as
provided for in Sec. 345.115 of this part.
(b) An employer shall deposit the contributions required under this
part in accord with instructions issued by the Railroad Retirement
Board. At the direction of the Board, the Secretary of the Treasury
shall credit such contributions to the Railroad Unemployment Insurance
Account in accord with section 10 of the Railroad Unemployment
Insurance Act and to the Railroad Unemployment Insurance Administration
Fund in accord with section 11 of the Railroad Unemployment Insurance
Act.
Sec. 345.117 When fractional part of cent may be disregarded.
In the payment of employers' contributions to the Board a
fractional part of a cent shall be disregarded unless it amounts to
one-half cent or more, in which case it shall be increased to one cent.
Sec. 345.118 Adjustments.
(a) In general. If more or less than the correct amount of an
employer's contribution is paid with respect to any compensation,
proper adjustments with respect to the contributions shall be made,
without interest, in subsequent contribution payments by the same
employer, as provided for in this section.
(b) Compensation adjustment. A compensation adjustment is the
amount of any adjustment reported by an employer on Form BA-4. See part
209 of this chapter.
(c) Adjustment of contributions. (1) All adjustments of
contributions based on compensation adjustments shall be accounted for
by the employer on the contribution report for the same quarter in
which the Form BA-4 reflecting the compensation adjustments is filed
with the Board.
(2) If less than the correct amount of contributions is paid for
any previous calendar quarter or calendar year because of an error that
does not
[[Page 20075]]
constitute a compensation adjustment as defined in paragraph (b) of
this section, the employer shall adjust the error by--
(i) Reporting the additional contribution on the next report filed
after discovery of the error; and
(ii) Paying the amount thereof to the Board at the time such report
is filed.
(3) If more than the correct amount of contributions is paid for
any previous calendar quarter or calendar year because of an error that
does not constitute a compensation adjustment as defined in paragraph
(b) of this section, the employer shall adjust the error by applying
the excess payment as a credit against the contribution due on the next
report filed after discovery of the error. However, if the overpayment
cannot be adjusted because the employer is no longer required to file a
report or because the overpayment to be adjusted exceeds the amount of
contribution due on the employer's next report, the employer may file
for a refund of the amount which cannot be adjusted as provided for in
this section. If the overpayment is the result of an incorrect
contribution rate as determined by the Board, the employer may file for
a refund of the amount of overpayment or may take an adjustment as
provided for in this section.
(d) Limitations on adjustments. No overpayment shall be adjusted
under this section after the expiration of three years from the time
the contribution report was required to be filed, or two years from the
time the contribution was paid, whichever of such periods expires the
later, or if no contribution report was filed, two years from the time
the contribution was paid. Any underpayment not adjusted within the
time limits as set forth in paragraph (c) of this section shall be
adjusted on the employer's next contribution report or reported
immediately on a supplemental return. Interest shall accrue on such
underpayment as provided for in Sec. 345.122 of this part from the time
the adjustment should have been made under paragraph (c) of this
section to date of payment. However, no underpayment shall be adjusted
under this section after the receipt from the Board of formal notice
and demand.
Sec. 345.119 Refunds.
(a) In general. If more than the correct amount of the employer's
contribution is paid with respect to any compensation and the
overpayment may not be adjusted in accordance with Sec. 345.118 of this
part, the amount of the overpayment shall be refunded in accordance
with this section.
(b) When permitted. A claim for refund may be made only when the
overpayment cannot be adjusted in accordance with the procedure set
forth in Sec. 345.118.
(c) Form of claim. A claim for refund shall be directed to the
Chief Financial Officer and shall set forth all grounds in detail and
all facts alleged in support of the claim, including the amount and
date of each payment to the Board of the contribution to the Board, and
the period covered by the contribution report on which such
contribution was reported.
(d) Claim by fiduciary. If an executor, administrator, guardian,
trustee, or receiver files a claim for refund, evidence to establish
the legal authority of the fiduciary shall be annexed to the claim
filed by such fiduciary under this section.
(e) Time limit. No refund shall be allowed after the expiration of
three years from the time the contribution report was required to be
filed or two years from the time the contribution was paid, whichever
of such periods expires the later, or if no contribution report was
filed, two years from the time the contribution was paid.
(f) Interest. Interest shall be payable on any contribution
refunded at the overpayment rate provided for in section 6621 of the
Internal Revenue Code of 1986 from the date of the overpayment to a
date preceding the date of the refund check by not more than 30 days.
(g) Refunds reduced by underpayments. Any overpayment claimed or a
refund under this section shall be reduced by the amount of any amount
of any contributions previously assessed under Sec. 345.120 of this
part, which has not already been collected.
Sec. 345.120 Assessment and collection of contributions or
underpayments of contributions.
(a) If any employer's contribution is not paid to the Board when
due or is not paid in full when due, the Board may, as the
circumstances warrant, assess the contribution or the deficiency and
any interest or penalty applicable under this part (whether or not the
deficiency is adjustable as an underpayment under Sec. 345.118 of this
part).
(b) The amount of any such assessment will be collected in
accordance with the applicable provisions of law. If any employer
liable to pay any contribution neglects or refuses to pay the same
within ten days after notice and demand, the Board may collect such
contribution with such interest and other additional amounts as are
required by law, by levy, by administrative offset as authorized by 31
U.S.C. 3716 and in accordance with the procedures set forth in part 367
of this chapter, or by a proceeding in court, but only if the levy is
made or proceeding begun:
(1) Within 10 years after assessment of the contribution; or
(2) Prior to the expiration of any period, including extension
thereof, for collection agreed upon by the Chief Financial Officer and
the employer.
(c) All provisions of law, including penalties, applicable with
respect to any tax imposed by the provisions of the Railroad Retirement
Tax Act and the regulations thereunder, insofar as not inconsistent
with the provisions in this part, shall be applicable with respect to
the assessment and collection of contributions under this part.
Sec. 345.121 Jeopardy assessment.
(a) Whenever in the opinion of the Board it becomes necessary to
protect the interests of the Government by effecting an immediate
reporting and collection of an employer's contribution, the Board will
assess the contribution whether or not the time otherwise prescribed by
law for filing the contribution report and paying such contribution has
expired, together with all penalties and interest thereon. Upon
assessment, such contribution, and any penalty, and interest provided
for under this part shall be immediately due and payable, and the Board
shall thereupon issue immediately a notice and demand for payment of
the contribution, penalty, and interest.
(b) The collection of the whole or any part of the amount of the
jeopardy assessment may be stayed by filing with the Board a bond in an
amount equal to the amount with respect to which the stay is desired,
and with such sureties as the Board may deem necessary. Such bond shall
be conditioned upon the payment of the amount (together with interest
and any penalties thereon) the collection of which is stayed, at the
time at which, but for the jeopardy assessment, such amount would be
due. In lieu of surety or sureties the employer may deposit with the
Board bonds or notes of the United States, or bonds or notes fully
guaranteed by the United States as to principal and interest, having a
par value not less than the amount of the bond required to be
furnished, together with an agreement authorizing the Board in case of
default to collect or sell such bonds or notes so deposited.
Sec. 345.122 Interest.
(a) Rate. If the employer's contribution is not paid to the Board
[[Page 20076]]
when due and is not adjusted under Sec. 345.118 of this part, interest
accrues at the rate of 1 percent per month, or fraction of a month.
Interest on past due contributions from the due date thereof until the
date paid will be assessed after payment of the contributions, and
notice and demand made upon the employer for payment thereof, in any
case in which payment of the contribution is made before assessment
under Sec. 345.120.
(b) Waiver of interest. The Chief Financial Officer may waive, in
whole or in part, any interest imposed by paragraph (a) of this section
if in his or her judgment--
(1) There was a reasonable cause and not willful neglect for the
late filing, late payment or underpayment, such as: the serious illness
or death of an individual with the sole authority to execute the return
and payment; fire, casualty, or natural disaster at the place where the
railroad unemployment insurance records are kept; or reasons outside
the employer's control, such as, the failure of the employer's bank to
comply with the employer's filing and payment instructions;
(2) The amount of interest attributed to the delinquency is totally
disproportionate to the period of the delay and the amount of
contributions paid; and
(3) The employer's past record for timely compliance with railroad
unemployment insurance reporting and payment requirements warrants such
action considering such factors as the number and extent of delays
associated with late reports, payments, and underpayments.
Sec. 345.123 Penalty for delinquent or false contribution reports.
(a) Delinquent reports. Unless waived under paragraph (b) of this
section, the failure to file a contribution report on or before the due
date shall cause a penalty to accrue of five percent of the amount of
such contribution if the failure is for not more than one month, with
an additional five percent for each additional month or fraction
thereof during which such failure continues, not exceeding 25 percent
in the aggregate.
(b) Waiver of penalty. The Chief Financial Officer may waive all or
a portion of the penalty imposed under paragraph (a) of this section
consistent with the criteria applicable to waiver of interest as
provided for in Sec. 345.122(b) of this part.
(c) Penalty on net amount. For the purpose of paragraph (a) of this
section the amount of contribution required to be shown on Form DC-1
shall be reduced by the amount of any part of the contribution that is
paid on or before the date prescribed for the payment of the
contribution and by the amount of any credit against the contribution
that may be claimed upon the DC-1.
(d) False reports. If a fraudulent contribution report is made, a
penalty equal to 50 percent of the amount of any underpayment shall be
imposed on the employer.
Sec. 345.124 Right to appeal.
(a) Except as otherwise provided, an employer may seek
administrative review of any determination with respect to any
contribution, interest, or penalty made under this part by filing a
request for reconsideration with the Chief Financial Officer within 30
days after the mailing of notice of such determination. An employer
shall have a right to appeal to the Board from any reconsideration
decision under this section by filing notice of appeal to the Secretary
to the Board within 14 days after the mailing of the decision on
reconsideration. Upon receipt of a notice of an appeal the Board may
designate one of its officers or employees to receive evidence and
report to the Board under the procedures set forth in part 319 of this
chapter.
(b) Request for reconsideration. Any appeal filed under this part
shall not relieve the employer from filing any reports or paying any
contribution required under this part nor stay the collection thereof.
Upon the request of an employer, the Board may relieve the employer of
any obligation required under this part pending an appeal. Unless
specifically provided by the Board, such relief shall not stay the
accrual of interest on any disputed amount as provided for in
Sec. 345.122 of this part.
Sec. 345.125 Records.
Every employer subject to the payment of contributions for any
calendar quarter shall, with respect to each such quarter, keep such
permanent records as are necessary to establish the total amount of
compensation payable to its employees, for a period of at least five
calendar years after the date the contribution report to which the
compensation relates was required to be filed, or the date the
contribution is paid, whichever is later. The record should be in such
form as to contain the information required to be shown on the
quarterly contribution report. All records required by the regulations
in this part shall be kept at a safe and convenient location accessible
to inspection by the Board or any of its officers or employees, or by
the Inspector General of the Railroad Retirement Board. Such records
shall be at all times open for inspection by such officers or
employees.
(Approved by the Office of Management and Budget under control
number 3220-0012)
Sec. 345.126 Liens.
If any employer, after demand, neglects or refuses to pay a
contribution required under this part, the amount of such contribution
(including any interest, penalties, additional amount, or additions to
such contribution, together with any costs that may accrue in addition
thereto) shall be a lien in favor of the United States upon all
property and rights to property, whether real or personal, belonging to
such employer.
Subpart C--Individual Employer Records
Sec. 345.201 Individual employer record defined.
Effective January 1, 1990, the Board will establish and maintain a
record, hereinafter known as an Individual Employer Record, for each
employer subject to this part. As used in this subpart, ``Individual
Employer Record'' means a record of each employer's benefit ratio;
reserve ratio; 1-year compensation base; 3-year compensation base;
unallocated charge; reserve balance; net cumulative contribution
balance; and cumulative benefit balance. See Sec. 345.302 of this part
for a definition of these terms. Whenever a new employer begins paying
compensation with respect to which contributions are payable under this
part, the Board will establish and maintain an individual employer
record for such employer.
Sec. 345.202 Consolidated employer records.
(a) Establishing a consolidated employer record. Two or more
employers that are under common ownership or control may request the
Board to consolidate their individual employer records into a joint
individual employer record. Such joint individual employer record shall
be treated as though it were a single employer record. A request for
such consolidation shall be made to the Director of Unemployment and
Sickness Insurance, and such consolidation shall be effective
commencing with the calendar year following the year of the request.
(b) Discontinuance of a consolidated employer record. Two or more
employers that have established and maintained a consolidated employer
record will be permitted to discontinue such consolidated record only
if the
[[Page 20077]]
individual employers agree to an allocation of the consolidated
employer record and such allocation is approved by the Director of
Unemployment and Sickness Insurance.
Sec. 345.203 Merger or combination of employers.
In the event of a merger or combination of two or more employers,
or an employer and non-employer, the individual employer record of the
employer surviving the merger (or any person that becomes an employer
as the result of the merger or combination) shall consist of the
combination of the individual employer records of the entities
participating in the merger.
Sec. 345.204 Sale or transfer of assets.
(a) In the event property of an employer is sold or transferred to
another employer (or to a person that becomes an employer as the result
of the sale or transfer) or is partitioned among two or more employers
or persons, the individual employer record of such employer shall be
prorated among the employer or employers that receive the property
(including any person that becomes an employer by reason of such
transaction or partition), in accordance with any agreement among the
respective parties (including an agreement that there shall be no
proration of the employer record). Such agreement shall be subject to
the approval of the Board.
(b) There shall be no transfer of the employer record where an
employer abandons a line of track in accordance with the provisions of
the Interstate Commerce Act and the applicable regulations thereunder,
and a new entity, found by the Board to be an ``employer'' under part
301 of this chapter, is formed to operate or continue service over such
line; the Board will assign to such entity a new-employer contribution
rate in accordance with section 8(a)(1)(D) of the RUIA and Sec. 345.304
of this part.
Sec. 345.205 Reincorporation.
The cumulative benefit balance, net cumulative contribution
balance, 1-year compensation base, and 3-year compensation base of an
employer that reincorporates or otherwise alters its corporate identity
in a transaction not involving a merger, consolidation, or unification
will attach to the reincorporated or altered identity.
Sec. 345.206 Abandonment.
If an employer abandons property or discontinues service but
continues to operate as an employer, the employer's individual employer
record shall continue to be calculated as provided in this subpart
without retroactive adjustment.
Sec. 345.207 Defunct employer.
If the Board determines that an employer has permanently ceased to
pay compensation with respect to which contributions are payable under
this part, the Board will, on the date of such determination, transfer
the employer's net cumulative contribution balance as a subtraction
from, and the cumulative benefit balance as an addition to, the system
unallocated charge balance and will cancel all other accumulations of
the employer. The Board's determination that an employer is defunct
will be based on evidence indicating that the employer has ceased all
operations as an employer and has terminated its status as an employer.
In making its determination, the Board will consider evidence as
described in part 202 of this chapter with respect to termination of
employer status under the Railroad Retirement Act. Mere failure of an
employer to pay contributions due under this part does not indicate
that such employer is defunct.
Sec. 345.208 System records.
Effective January 1, 1990, the Board will establish and maintain
records necessary to determine pooled charges, pooled credits, and
unallocated charges for the experience rating system and will publish a
notice with respect thereto no later than October 15 of each year. See
Sec. 345.302 of this part for the definition of these terms.
Subpart D--Contribution Rates
Sec. 345.301 Introduction.
(a) General. Effective January 1, 1993, each employer that is
subject to this part will have an experience-rated rate of contribution
computed as set forth in Sec. 345.303 of this part. A transitional rate
of contribution applies to each such employer for 1991 and 1992, in
accordance with section 8(a)(1)(B) of the RUIA. An employer that first
becomes subject to section 8 of the RUIA after December 31, 1989 will
have a ``new-employer'' contribution rate as computed in Sec. 345.304
of this part. An employer's experience-rated contribution rate will be
not less than 0.65 percent nor more than 12.5 percent. Not later than
October 15 of each year, the Board will notify each employer of its
experience-rated contribution rate for the following calendar year.
(b) Components of an experience-rated contribution rate. An
employer's experience-rated contribution rate for each calendar year
beginning with 1993 will be based upon the following charges:
(1) An allocated charge based upon the amount of benefits paid to
employees of such employer; this charge is explained in subpart E of
this part;
(2) An unallocated charge based upon a proportionate share of the
system unallocated charge balance, the computation of which is
explained in Sec. 345.302(p) of this part;
(3) A pooled charge, also referred to as risk-sharing, to cover the
cost of benefit payments that are chargeable to a base year employer
but are not captured by the contribution rate assigned to such employer
because it is paying contributions at the maximum rate of contribution;
the formula for computing the pooled charge is set forth in
Sec. 345.302(j) of this part;
(4) A surcharge of 1.5, 2.5, or 3.5 percent, or a pooled credit,
depending on the balance to the credit of the Account as of June 30 of
a given year; and
(5) An addition of 0.65 percent to the rate of contribution to
cover the expenses incurred by the Board in administering the RUIA.
(c) Maximum rate of contribution. Notwithstanding any provision of
this part, an employer's contribution rate for any calendar year shall
be limited to 12 percent, except when a surcharge of 3.5 percent is in
effect with respect to that calendar year. If a 3.5 percent surcharge
is in effect, the maximum contribution limit with respect to that
calendar year is 12.5 percent. The surcharge rate for a calendar year
will be 3.5 percent when the balance to the credit of the Account is
less than zero. The Board will compute the surcharge rate in accordance
with Sec. 345.302(n) of this part.
Sec. 345.302 Definition of terms and phrases used in experience-
rating.
(a) Account. The Railroad Unemployment Insurance Account
established by section 10 of the Railroad Unemployment Insurance Act
(RUIA) and maintained by the Secretary of the Treasury in the
unemployment trust fund established pursuant to section 904 of the
Social Security Act. Benefits paid under the RUIA for an employee's
days of unemployment or days of sickness are paid from this Account.
(b) Benefit ratio. This ratio is computed for each employer as of
any given June 30 by dividing all benefits charged to the employer
under subpart E of this part during the 12 calendar quarters ending on
such June 30 by the employer's three-year compensation base as of such
June 30, as computed under paragraph (q) of this section. The
[[Page 20078]]
ratio is computed to four decimal places.
(c) Benefits. Benefits are money payments paid or payable by the
Board to a qualified employee with respect to his or her days of
unemployment or days of sickness, as provided by the RUIA.
(d) Compensation. This term has the meaning given in part 302 of
this chapter.
(e) Contributions. Contributions are the money payments paid or
payable by an employer subject to this part with respect to the
compensation paid or payable to employees of such employer.
(f) Cumulative benefit balance. An employer's cumulative benefit
balance as of any given June 30 is determined by adding:
(1) The net amount of the benefits charged to the employer under
subpart E on or after January 1, 1990, and
(2) The cumulative amount of the employer's unallocated charges on
and after January 1, 1990, as computed under paragraph (r) of this
section.
(g) Fund. The Railroad Unemployment Insurance Administration Fund
established by section 11 of the RUIA and maintained by the Secretary
of the Treasury in the unemployment trust fund established pursuant to
section 904 of the Social Security Act. The costs incurred by the Board
in administering the RUIA are paid from the Fund.
(h) Net cumulative contribution balance. The Board will determine
an employer's net cumulative contribution balance as of any given June
30, as follows:
(1) Step 1. Compute the sum of all contributions paid by the
employer pursuant to this part after December 31, 1989; add that
portion of the tax, if any, imposed under 26 U.S.C. 3321(a) that is
attributable to the surtax rate under section 7106(b) of the Railroad
Unemployment Insurance and Retirement Improvement Act of 1988 (Pub. L.
100-647) and any repayment taxes paid by the employer pursuant to 26
U.S.C. 3321(a) after the outstanding balance of loans made under
section 10(d) of the RUIA before October 1, 1985, plus interest, has
been paid;
(2) Step 2. Subtract an amount equal to the amount of such
contributions deposited, pursuant to section 8(i) of the RUIA, to the
credit of the Fund; and
(3) Step 3. Add an amount equal to the aggregate amount by which
such contributions were reduced in prior calendar years as a result of
pooled credits, if any, under paragraph (k) of this section.
(i) One-year compensation base. An employer's one-year compensation
base is the aggregate amount of compensation with respect to which the
employer is liable for contributions under this part in the four
calendar quarters ending on such June 30.
(j) Pooled charge ratio. The pooled charge ratio, when applicable,
is a pro-rata increase in the rate of contribution assigned to each
employer that is not already paying contributions at the maximum rate.
A pooled charge will become applicable to each such employer during a
calendar year when the Account loses income because one or more other
employers are paying contributions at the maximum rate (12 or 12.5
percent) rather than at the higher experience-based rate that their
benefit charges would otherwise require. The pooled charge ratio thus
picks up the cost of benefits paid to employees of employers whose rate
of contribution is capped at the maximum rate. The pooled charge ratio
for a calendar year is the same for all employers whose rate is less
than the maximum and is computed as follows:
(1) Step 1. For each employer paying contributions at the maximum
contribution limit under Sec. 345.301(c) of this part, compute the
amount of contributions that such employer would have paid if its
experience-based rate were applied to its one-year compensation base as
of the preceding June 30 and by then deducting from such amount the
amount derived by applying the maximum contribution rate to the same
one-year compensation base. For the purposes of this computation, the
experience-based rate is the rate computed for such employer under
Sec. 345.303 of this part.
(2) Step 2. After the amount is computed for each employer in
accordance with Step 1 of this paragraph (j), add the amounts for all
such employers. The aggregate amount so computed represents the amount
of contributions not collected by the Account because of the maximum
contribution limit.
(3) Step 3. For each employer whose experience-based rate of
contribution, as computed at Step 3 of Sec. 345.303(a) of this part, is
less than zero, the percentage rate by which the employer's rate was
raised in order to bring that rate to the minimum rate of zero is
multiplied by the employer's 1-year compensation base. The total of the
amounts so computed is subtracted from the aggregate amount computed in
Step 2 of this paragraph (j).
(4) Step 4. Divide the net aggregate amount computed at Step 3 of
this paragraph (j) by the system compensation base as of the preceding
June 30, excluding from such base the one-year compensation base of
each employer whose experience-based contribution rate, computed at
Step 6 of Sec. 345.303(a) of this part, exceeds the maximum
contribution limit. The result is the pooled charge ratio for the
current calendar year. This ratio is computed to four decimal places.
(k) Pooled credit ratio. Effective January 1, 1991, and on the
first of each subsequent calendar year, the Board will reduce each
employer's rate of contribution, as computed under Sec. 345.303 of this
part, by the amount of the pooled credit ratio, if any, applicable to
such calendar year. This ratio is computed by reference to the accrual
balance to the credit of the Account as of the preceding June 30. The
Board will determine the amount of the pooled credit ratio, as follows:
(1) Step 1. First, the Board computes the accrual balance to the
credit of the Account as of the close of business on the preceding June
30 in the same manner as under Step 1 of paragraph (n) of this section.
There will be a pooled credit ratio for the calendar year if that
balance is in excess of the greater of $250 million or of the amount
that bears the same ratio to $250 million as the system compensation
base as of that June 30 bears to the system compensation base as of
June 30, 1991, as computed in accordance with paragraph (o) of this
section.
(2) Step 2. If there is such an excess amount, divide that excess
amount by the system compensation base as of the June 30 preceding the
calendar year. The result is the pooled credit ratio applicable to each
employer for the calendar year involved in the computation. This ratio
is computed to four decimal places.
(l) Reserve balance. An employer's reserve balance is computed as
of any given June 30 by subtracting its cumulative benefit balance as
of such June 30 from its net cumulative contribution balance as of such
June 30. An employer's net cumulative benefit balance is computed under
paragraph (f) of this section and its net cumulative contribution
balance under paragraph (h) of this section. An employer's reserve
balance may be either positive or negative, depending upon whether its
net cumulative contribution balance exceeds its cumulative benefit
balance.
(m) Reserve ratio. This ratio is computed for each employer as of
any given June 30 by dividing its reserve balance as of June 30 by its
one-year compensation base as of such June 30. An employer's reserve
balance is computed under paragraph (l) of this section and its one-
year compensation base under paragraph (i) of this section.
[[Page 20079]]
This ratio is computed to four decimal places; it may be either a
positive or negative figure, depending on whether the employer's
reserve balance is a positive or negative figure.
(n) Surcharge rate. Effective January 1, 1991, and on the first of
each subsequent calendar year, the Board will add to each employer's
rate of contribution, as computed under Sec. 345.303 of this part, a
surcharge rate of 1.5, 2.5, or 3.5 percent if the accrual balance to
the credit of the Account, as of the preceding June 30, falls within
the range of balances set forth in Steps 1 and 2 of this paragraph (n).
The Board will determine which surcharge rate, if any, is in effect for
a calendar year by means of the following computation:
(1) Step 1. First, the Board computes the accrual balance to the
credit of the Account as of the close of business on the preceding June
30. Such balance will include any amounts in the Account attributable
to loans made under section 10(d) of the Act before October 1, 1985,
but not the obligation of the Account to repay such loans with
interest. For this purpose, the Account will be deemed to include any
balance to the credit of the Fund that exceeds $6 million. The
surcharge rate, as specified in Step 2 of this paragraph (n), will
apply if that balance is less than the greater of $100 million or of
the amount that bears the same ratio to $100 million as the system
compensation base as of that June 30 bears to the system compensation
base as of June 30, 1991, as computed in accordance with paragraph (o)
of this section.
(2) Step 2. If the balance to the credit of the Account is less
than the greater of the amounts referred to in the last sentence of
Step 1 of this paragraph (n), but is equal to or more than the greater
of $50 million or of the amount that bears the same ratio to $50
million as the system compensation base as of that June 30 bears to the
system compensation base as of June 30, 1991, then the surcharge rate
for the calendar year shall be 1.5 percent. If the balance to the
credit of the Account is less than the greater of the amounts referred
to in this Step 2, but greater than or equal to zero, then the
surcharge rate for the calendar year shall be 2.5 percent. If the
balance to the credit of the Account is less than zero, the surcharge
rate for the calendar year shall be 3.5 percent.
(o) System compensation base. The system compensation base as of
June 30 of each year is the total of the amounts of the one-year
compensation bases of all base year employers, computed in accordance
with paragraph (i) of this section. Not later than October 15 of each
year, the Board will compute the amount of the system compensation base
and will publish notice of such amount in the Federal Register as soon
as practicable thereafter.
(p) System unallocated charge balance. This balance, as computed
initially for the period January 1 through June 30, 1990 and updated as
of June 30 of each subsequent calendar year, represents the net amount
of expenditures from, and income to, the Account that cannot be
allocated as benefit charges, or adjustments, to the cumulative benefit
balances of individual base year employers. The Board computes this
balance, as of June 30 of each year, as follows:
(1) Step 1. Compute the aggregate amount of all interest paid by
the Account on loans from the Railroad Retirement Account after
September 30, 1985, pursuant to section 10(d) of the RUIA, during the
12-month period ending on June 30;
(2) Step 2. Add the amount of unemployment benefits paid by reason
of strikes or work stoppages growing out of labor disputes and the
cumulative benefit balance of any defunct employer;
(3) Step 3. Add the aggregate amount of any other benefit payment
that is not chargeable to a base year employer pursuant to subpart E of
this part and any other expenditure not chargeable to the Fund;
(4) Step 4. Subtract the aggregate amount of income to the Account
received as a proportionate part of the earnings of the unemployment
trust fund, computed in accordance with section 904(e) of the Social
Security Act, and all income to the Account received as fines or
penalties collected under the RUIA;
(5) Step 5. Subtract the aggregate amount of all transfers from the
Fund to the Account pursuant to section 11(d) of the RUIA;
(6) Step 6. Subtract the aggregate amount of any other cash receipt
to the Account that cannot be treated as an adjustment to the benefit
charges of a base year employer;
(7) Step 7. Subtract the net cumulative contribution balance of any
defunct employer, calculated as of the date on which the Board
determines that such employer is defunct. After the Board has computed
the amount of the system unallocated charge balance as of June 30 of
each year, the Board will publish notice of such amount in the Federal
Register on or before October 15 of such year.
(q) Three-year compensation base. An employer's three-year
compensation base as of any given June 30 is the aggregate amount of
compensation with respect to which the employer is liable for
contributions under this part in the 12 calendar quarters ending on
such June 30.
(r) Unallocated charge. An employer's unallocated charge as of any
given June 30 is the amount that, as of such June 30, bears the same
ratio to the system unallocated charge balance as the employer's 1-year
compensation base bears to the system compensation base. The system
unallocated charge balance is computed under paragraph (p) of this
section and the system compensation base under paragraph (o) of this
section.
Sec. 345.303 Computation of rate.
(a) With respect to compensation in a calendar year that begins
after December 31, 1992, the Board will compute, by October 15, 1992,
and by October 15 of each subsequent year, a contribution rate for each
employer (other than a new employer) in accordance with the following
8-step process:
(1) Step 1. Compute the employer's benefit ratio as of the
preceding June 30;
(2) Step 2. Compute the employer's reserve ratio as of the
preceding June 30 and subtract it from the benefit ratio;
(3) Step 3. Subtract the pooled credit ratio (if any) for the
calendar year;
(4) Step 4. Multiply the Step 3 result by 100, in order to obtain a
percentage rate, and then round such rate to the nearest 100th of one
percent. If the rate so computed is zero or less than zero, the
percentage rate will be deemed zero at this point;
(5) Step 5. Add 0.65 (the administrative charge) to the percentage
rate computed through Step 4.
(6) Step 6. Add the surcharge rate (if any) for the calendar year;
(7) Step 7. Add the pooled charge ratio (if any) for the calendar
year, as computed to four decimal places and multiplied by 100;
(8) Step 8. If the rate computed through Step 7 is greater than 12
percent (or 12.5 percent if a surcharge of 3.5 percent is in effect for
the calendar year), reduce the percentage rate so computed to 12
percent or 12.5 percent, if appropriate.
(b) The percentage rate computed under paragraph (a) of this
section is the employer's rate of contribution for the calendar year in
question.
(c)(1) Any computation that is to be made under this section on the
basis of a 12-quarter period ending on a given June 30 shall be made on
the basis of a period beginning on January 1, 1990, or on the first day
of the first calendar quarter that begins after the date on which the
employer first began to pay compensation subject to this part, or on
July 1 of the third calendar year
[[Page 20080]]
preceding that June 30, whichever date is later, and ending on that
June 30.
(2) The amount computed under paragraph (c)(1) of this section
shall be increased to an amount that bears the same ratio to the amount
so computed as 12 bears to the number of calendar quarters on which the
computation is based.
Sec. 345.304 New-employer contribution rates.
(a) An employer whose coverage under the RUIA becomes effective
after December 31, 1989, is considered a ``new employer'' for the
purposes of this part and will be assigned a contribution rate as
computed under this section. The Board shall determine where an
employer is a new employer and, if so, the effective date of its
coverage under the RUIA and its rate of contribution with respect to
compensation paid to employees on and after such effective date.
(b) Initial contribution rate. The rate of contribution with
respect to compensation paid in calendar months before the end of the
first full calendar year that the employer is subject to this section
shall be the average contribution rate paid by all employers during the
three calendar years preceding the calendar year before the calendar
year in which the compensation is paid. The Board will compute the
average contribution rate by dividing the aggregate contributions paid
by all employers during those three calendar years by the aggregate
compensation with respect to which such contributions were paid and by
then multiplying the resulting ratio, as computed to four decimal
points, by 100.
(c) Second contribution rate. The rate of contribution with respect
to compensation paid in months in the second full calendar year shall
be the smaller of the maximum contribution limit under the RUIA or the
percentage rate computed as follows:
[GRAPHIC] [TIFF OMITTED] TR03MY96.047
(d) Third contribution rate. The rate of contribution with respect
to compensation paid in months in the third full calendar year shall be
the smaller of the maximum contribution limit under the RUIA or the
percentage rate computed as follows:
[GRAPHIC] [TIFF OMITTED] TR03MY96.048
(e) Subsequent calendar years. The rate of contribution with
respect to months after the third full calendar year shall be
determined under Sec. 345.303 of this part.
(f) Meaning of symbols. For the purpose of the formulas in
paragraphs (c) and (d) of this section, ``R'' is the applicable
contribution rate being computed; ``A2'' is the contribution rate that
would have been determined under paragraph (b) of this section if the
employer's second calendar year had been its first full calendar year;
``A3'' is the contribution rate that would have been determined under
paragraph (b) of this section, if the employer's third calendar year
had been such employer's first full calendar year; ``B'' is the
contribution rate for the employer as determined under Sec. 345.303 of
this part for the employer's second full calendar year; and ``C'' is
the contribution rate for the employer as determined under Sec. 345.303
of this part for the employer's third full calendar year.
(g) Special rule for certain computations. For purposes of
computing ``B'' and ``C'' in the formulas in this section, the
percentage rate computed under Sec. 345.303 shall not be reduced under
Step 8 of that section; and any computations that, under Sec. 345.303,
are to be made on the basis of a 4-quarter or 12-quarter period ending
on a given June 30 shall be made on the basis of a period commencing
with the first day of the first calendar quarter that begins after the
date on which the employer first began paying compensation subject to
this part and ending on that June 30, and the amount so computed shall
be increased to an amount that bears the same ratio to the amount so
computed as four or twelve, as appropriate, bears to the number of
calendar quarters in the period on which the computation was based.
Sec. 345.305 Notification and proclamations.
(a) Quarterly notifications to employers. Not later than the last
day of any calendar quarter that begins after March 31, 1990, the Board
will notify each employer of its cumulative benefit balance and its net
cumulative contribution balance as of the end of the preceding calendar
quarter, as computed in accordance with Sec. 345.302(f) and (h) of this
part as of the last day of such preceding calendar quarter rather than
as of a given June 30 if such last day is not a June 30.
(b) Annual notifications to employers. Not later than October 15,
1990, and October 15 of each year thereafter, the Board will notify
each employer of its benefit ratio, reserve ratio, one-year
compensation base, three-year compensation base, unallocated charge,
and reserve balance as of the preceding June 30, as computed in
accordance with this part, and of the contribution rate applicable to
the employer for the following calendar year as computed under the
applicable section of this part.
(c) Proclamations. Not later than October 15, 1990, and October 15
of each year thereafter, the Board shall proclaim--
(1) The balance to the credit of the Account as of the preceding
June 30 for purposes of computing the pooled credit ratio and the
surcharge rate of contribution;
(2) The balance of any advances to the Account under section 10(d)
of the RUIA after September 30, 1985, that has not been repaid with
interest as provided in such section as of September 30 of that year;
(3) The system compensation base as of that June 30;
(4) The system unallocated charge balance as of that June 30; and
(5) The pooled credit ratio, the pooled charge ratio, and the
surcharge rate of contribution, if any, applicable in the following
calendar year.
(d) Publication and notice. As soon as practical after the Board
has determined and proclaimed the amounts specified in paragraph (c) of
this section, the Board will publish notice of such amounts in the
Federal Register. The notifications to employers under paragraphs (a)
and (b) of this section will be sent to the employer official
designated to receive them.
Sec. 345.306 Availability of information.
Upon request of an employer subject to this part, the Board will
make available to such employer any information that is necessary to
verify the accuracy of its rate of contribution, as determined by the
Board, including information necessary to verify the accuracy of the
data maintained by the Board in the employer's individual employer
record.
Sec. 345.307 Rate protest.
(a) Request for reconsideration. An employer may appeal a
determination of a contribution rate computed under this part by filing
a request for reconsideration with the Director of Unemployment and
Sickness Insurance within 90 days after the date on which the Board
notified the employer of its rate of contribution for the next ensuing
calendar year. Within 45 days of the receipt of a request for
reconsideration the Director shall issue a decision on the protest.
(b) Appeal to the Board. An employer aggrieved by the decision of
the Director of Unemployment and Sickness Insurance under paragraph (a)
of this section may appeal to the Board. Such
[[Page 20081]]
appeal shall be filed with the Secretary to the Board within 30 days
after the date on which the Director notified the employer of the
decision on reconsideration. The Board may decide such appeal without a
hearing or, in its discretion, may refer the matter to a hearings
officer pursuant to part 319 of this chapter.
(c) Decision of the Board final. Subject to judicial review
provided for in section 5(f) of the RUIA, the decision of the Board
under paragraph (b) of this section is final with respect to all issues
determined therein.
(d) Waiver of time limits. A request for reconsideration or appeal
under this section shall be forfeited if the request or appeal is not
filed within the time prescribed, unless reasonable cause, as defined
in this part, for failure to file timely is shown.
(e) Rate pending review. Pending review of the protested rate, the
employer shall continue to pay contributions at such rate. Any
adjustment in the contributions paid at such rate as the result of an
appeal shall be in accordance with Sec. 345.118 of this part.
Subpart E--Benefit Charging
Sec. 345.401 General rule.
Effective January 1, 1990, all benefits paid to an employee for his
or her days of unemployment or days of sickness will be charged to the
base year employer of such employee, except as hereinafter provided in
this part. The Board will make the charge by adding the gross amount of
the benefits payable to an employee on the basis of a claim for
benefits to that employee's base year employer's cumulative benefit
balance. The benefit charge does not depend on whether the employee
receiving the benefit payment is a current employee of the base year
employer.
Sec. 345.402 Strikes or work stoppages.
If benefits are payable to an employee for days of unemployment
resulting from a strike or work stoppage growing out of a labor
dispute, the Board will charge the benefit payment to the system
unallocated charge balance, not to the cumulative benefit balance of
the employee's base year employer. For the purposes of this section,
the phrase ``strike or work stoppage growing out of a labor dispute''
does not include an employee's protected refusal to work under section
212(b) of the Federal Railroad Safety Act of 1970 (45 U.S.C. 441(b)).
Sec. 345.403 Multiple base year employers.
(a) General rules for benefit charging. All benefits paid to an
employee who had more than one base year employer shall be charged to
the cumulative benefit balances of such employers, as follows:
(1) If the employer at the time of the claim is the same as the
last employer in the base year, benefits will be charged in reverse
chronological order, but the amount charged to each base year employer
shall not exceed the amount of compensation paid by such employer to
the employee in the base year;
(2) In all other cases, benefits will be charged in the same ratio
as the compensation paid to such employee by the employer bears to the
total of such compensation paid to such employee by all such employers
in the base year; benefit charging in accordance with this method shall
apply whether the base year employment was with successive employers or
with concurrent employers.
(b) Excess benefit payments. If, in applying the rule in paragraph
(a)(1) of this section, there remain benefit payments, in whole or in
part, that cannot be charged to any base year employer, the amount of
benefits paid in excess of those chargeable under paragraph (a)(1)
shall be charged to the system unallocated charge balance.
(c) Board records as basis for charging multiple base year
employers. Where an employee has more than one base year employer, the
Board will use records compiled on the basis of employer reports filed
under Sec. 345.110 of this part for the purpose of determining whether
the employer at the time of the claim for benefits is the last employer
in the base year and for other purposes related to benefit charging
under this subpart. If, in a particular case, such records do not
contain all the data necessary to determine the charge, the Board will
request the necessary data from the base year employers who may be
liable for the charge.
Sec. 345.404 Adjustments.
(a) Recovery of benefits charged to base year employer. Where the
Board recovers a benefit payment that it had previously charged, in
whole or in part, to one or more base year employers, the Board will
subtract the amount of the recovery from the cumulative benefit
balances of the employers of the employee to whom such amount was paid
as a benefit in proportion to the amount by which each such employer's
cumulative benefit balance was increased as a result of the payment of
the benefit.
(b) Recovery of other benefit payments. Where the Board recovers a
benefit payment that was not charged, in whole or in part, to any base
year employer, or was made before January 1, 1990, the Board will treat
the amount of the recovery as a subtraction from the system unallocated
charge balance.
(c) Payment of interest or other debt collection-related charges.
The Board will not adjust a base year employer's cumulative benefit
balance to reflect payment by a debtor of interest or other charges
assessed by the Board under Sec. 200.7 of this chapter with respect to
the collection of a debt arising from a benefit payment charged to such
employer and later found to be recoverable by the Board.
(d) Limitations. The Board will adjust a base year employer's
cumulative benefit balance only when the Board actually recovers, by
cash payment or setoff, a debt that represents a benefit payment that
was charged, in whole or in part, to such employer. No adjustment shall
be made--
(1) If the Board waives recovery of a debt in accordance with part
340 of this chapter, or
(2) If the Board finds that a debt is uncollectible, or
(3) To the extent of the amount not recovered by the Board by
reason of a compromise settlement of a debt.
Sec. 345.405 Notices to base year employers.
(a) Prepayment notification. When the Board receives an employee's
claim for unemployment or sickness benefits, the Board will give the
employee's base year employer notice of the claim and an opportunity to
provide information to the Board with respect to the employee's
eligibility for benefits for the period of time covered by the claim.
(b) Notice of claim determination. After the base year employer has
had an opportunity to provide information in accordance with the
prepayment notification process described in paragraph (a) of this
section, the office of the Board that is adjudicating the employee's
claim for benefits will determine whether to pay or to deny benefits on
the claim. Such office will send notice to the base year employer
showing what determination was made on the claim. If benefits are found
to be payable, the amount of the payment will be charged to the
cumulative benefit balance of the base year employer in accordance with
the provisions of this subpart. If the base year employer disagrees
with the payment of benefits, it may request reconsideration in
accordance with part 320 of this chapter.
(c) Quarterly notice of benefit charges. As soon as practical
following the end of each calendar quarter, the Board will send to each
employer a report of its cumulative benefit balance computed as
[[Page 20082]]
of the end of such quarter. The computation of such balance will
reflect the following:
(1) The total amount of unemployment and sickness benefit payments
made after December 31, 1989, that have been charged to the employer as
the base year employer of the employees who received the benefits;
minus
(2) The total amount realized in recovery of such benefits; plus
(3) The total amount of the unallocated charges assigned to such
base year employer after December 31, 1989; minus
(4) The total amount realized in recovery of such unallocated
charges.
Sec. 345.406 Defunct employer.
Whenever the Board determines, pursuant to Sec. 345.207 of this
part, that an employer is defunct, the Board will add the amount of
such employer's benefit charges, as shown in its cumulative benefit
balance, to the system unallocated charge balance.
Dated: April 26, 1996.
By Authority of the Board.
For The Board.
Beatrice Ezerski,
Secretary to the Board.
[FR Doc. 96-10983 Filed 5-2-96; 8:45 am]
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