Legislative Update February 2011

Railroad Retirement Tax Reduced for 2011

The Internal Revenue Service has revised the income tax withholding rates and tables used to calculate federal income taxes for U.S. citizens based on provisions of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, which was signed into law by President Obama on December 17. The provision that reduces the
employee Social Security tax rate from 6.2% to 4.2% for 2011 earnings subject to the tax, also affects Railroad Retirement Tier 1 taxes, which are based on Social Security. The Tier 1 tax rate for railroad workers will be cut accordingly, meaning that take-home pay will be increased by 2% of gross earnings in 2011, up to the cap.

Because the shortfall in funding for Tier 1 benefits created by this tax cut will be made up from general federal revenues, BLET National President Dennis Pierce has expressed some concerns that the enactment of this law will break the independence that Railroad Retirement funds have had from Congressional actions because, historically, all monies paid into the fund have been from railroad employers and employees only, with no non-railroad taxpayer monies involved.

President Pierce stated: “There are powerful forces who would like nothing better than to destroy Railroad Retirement and Social Security, and I am concerned that this ‘tax cut’ may make their goal easier to achieve.”

How this affects annuitants:
The following is an excerpt from an e-mail alert issued on February 4, 2011, by Tom Dwyer, President, National Association of Retired and Veteran Railroad Employees (NARVRE).

The Railroad Retirement Board (RRB) implemented the new tax tables beginning with monthly payments received in February 2011 and those tax tables will remain in effect for the remainder of 2011, affecting over 140,000 beneficiaries. The new rates apply to withholding from the non-social equivalent benefit (NSSEB) portion of Tier 1, Tier 2, vested dual benefits, and supplemental annuity payments.

In the absence of a request not to withhold Federal income tax or to withhold tax at specific amounts, the RRB will withhold taxes as if the annuitant were married and claiming 3 allowances. The annual threshold amount for 2011 is $1,587.99. The threshold amount for 2010 was $2,063.51.

Form RRB W-4P, Withholding Certificate for Railroad Retirement Payments, is used by U.S. citizens or legal residents for U.S. tax purposes. Annuitants can use Form RRB W-4P to request:

No Federal taxes be withheld from their railroad retirement payments.
Federal taxes be withheld based on martial status and the number of allowances they want to claim.
An additional amount be withheld from their railroad retirement payments.
Annuitants who wish to adjust withholding from their NSSEB and Tier 2 benefits, vested dual benefits, and supplemental annuity payments must complete Form RRB W-4P and send it to the RRB. An annuitant is not required to file Form RRB W-4P. Copies of the form are available by visiting the RRB’s website at www.rrb.gov, clicking on “Benefit Forms and Publications,” and than clicking on “Income Tax.”

Annuitants who have questions regarding their tax liability should contact the nearest office of the IRS or visit their website at www.irs.gov. You also may contact your tax preparer or accountant for further information.

Source: U.S. Railroad Retirement Board
Hours of Service Interpretation on Interruption of Rest

The BLET has successfully secured an important clarification from the Federal Railroad Administration (FRA) concerning an interpretation of a key provision of an amendment to the Hours of Service (HOS) laws made by the Rail Safety Improvement Act of 2008.

The provision is contained in 49 U.S.C. Section 21103(e), which states that “a railroad carrier, and its officers and agents, shall not communicate with [a] train employee by telephone, by pager, or in any other manner that could reasonably be expected to disrupt the employee’s rest” during statutory off-duty periods of 10 or more consecutive hours and interim periods of release of 4 or more but less than 10 consecutive hours.

Interim interpretations issued by FRA in the summer of 2009 stated that communications initiated by an employee do not constitute disruptions, and this interpretation was communicated to the BLET membership by numerous means. However, after receiving conflicting advice from a now retired official in the FRA’s national office one region of the FRA advised a BLET general committee officer last summer that calls made by employees during their statutory off-duty period for the purpose of ascertaining when their next duty tour would begin constituted an “interruption” of the off-duty period, necessitating that it be restarted. The railroad involved then posted a notice to this effect and began refusing such calls.

Last November, after being unable to resolve this dispute informally, Vice President Steve Bruno, who was Director of Regulatory Affairs at the time, wrote the FRA to formally request that the agency affirm its prior interpretation. Bruno pointed out that the statutory language clearly did not include such a call from an employee as a disruption, reminded FRA that our understanding of the law was uniformly shared by the Railroad Safety Advisory Committee Working Group that had revised the 49 C.F.R. Part 228 HOS recordkeeping requirements, and noted that someone’s “ability to manage rest is enhanced considerably by the predictability of knowing when they are scheduled to report for duty or when they should expect the assignment phone call.”

On January 12 FRA Associate Administrator for Railroad Safety and Chief Safety Officer Jo Strang acknowledged that the “interim interpretations are silent on whether there are any limits to the matters that may be discussed [during an employee-initiated communication], and do not specifically address whether … an employee is permitted to contact the railroad carrier to establish a report-for-duty time [during a statutory off-duty period or period of interim release].” FRA also stated that further clarification of this subject is being considered as FRA moves toward adopting final interpretations, and that no enforcement action would be taken against railroads that accept and respond to such inquiries from their operating employees.

Source: BLET Newsflash Service, http://www.ble.org/pr/news/newsflash.asp?id=5067

Cross-Border Trucking Proposal Unveiled

Remember when the Cross-Border Trucking issue was top priority with the Teamsters back in 2007? (See Legislative Update in Autumn 2007 issue of BLET Auxiliary News.) This issue has always been a concern for train employees as well as truckers, given that cross-border trucking could possibly lead to cross-border trains at some point.

On January 6, 2011, after meeting with members of Congress, Department of Transportation Secretary Ray LaHood released an “initial concept document” for a program to allow Mexico-based truckers long-haul access to the U.S. Teamsters General President James P. Hoffa, as well as leaders of the Owner-Operator Independent Drivers Association (OOIDA), have expressed strong opposition to this proposal, stating that it would threaten U.S. truck drivers’ and warehouse workers’ jobs at a time when unemployment is already high, threaten the traveling public in the U.S., and open our southern border to increased drug trafficking. Although the DOT proposal will raise the bar on safety for Mexican trucks, President Hoffa states that stricter standards are not enough and come at a cost to U.S. taxpayers. The administration proposes that Mexican trucks be checked for U.S. EPA emissions standards and that drug testing take place in U.S. labs.

Additionally, the trade agreements benefit Mexico, but not the U.S., according to Hoffa, who states: “Given the drug violence, there’s no way a U.S. company would want to haul valuable goods into the Mexican interior.” A formal proposal is expected to follow the “initial concept document” in the coming months.