[Code of Federal Regulations]
[Title 26, Volume 15]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR31.3231(a)-1]

[Page 145-146]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 31_EMPLOYMENT TAXES AND COLLECTION OF INCOME TAX AT SOURCE--Table of Contents
 
Subpart C_Railroad Retirement Tax Act (Chapter 22, Internal Revenue Code 
                                of 1954)
 
Sec. 31.3231(a)-1  Who are employers.

    (a) Each of the following persons is an employer within the meaning 
of the act:
    (1) Any carrier, that is, any express carrier, sleeping car carrier, 
or rail carrier providing transportation subject to subchapter I of 
chapter 105 of title 49;
    (2) Any company--
    (i) Which is directly or indirectly owned or controlled by one or 
more employers as defined in paragraph (a)(1) of this section, or under 
common control therewith, and
    (ii) Which operates any equipment or facility or performs any 
service (except trucking service, casual service, and the casual 
operation of equipment or facilities) in connection with--
    (a) The transportation of passengers or property by railroad, or
    (b) The receipt, delivery, elevation, transfer in transit, 
refrigeration or icing, storage, or handling of property transported by 
railroad;
    (3) Any receiver, trustee, or other individual or body, judicial or 
otherwise, when in the possession of the property or operating all or 
any part of the business of any employer as defined in paragraph (a)(1) 
or (2) of this section;
    (4) Any railroad association, traffic association, tariff bureau, 
demurrage bureau, weighing and inspection bureau, collection agency, and 
any other association, bureau, agency, or organization controlled and 
maintained wholly or principally by two or more employers as defined in 
paragraph (a)(1), (2) or (3) of this section and engaged in the 
performance of services in connection with or incidental to railroad 
transportation;
    (5) Any railway labor organization, national in scope, which has 
been or may be organized in accordance with the provisions of the 
Railway Labor Act; and
    (6) Any subordinate unit of a national railway-labor-organization 
employer, that is, any State or National legislative committee, general 
committee, insurance department, or local lodge or division, of an 
employer as defined in paragraph (a)(5) of this section, established 
pursuant to the constitution and bylaws of such employer.
    (b) As used in paragraph (a)(2) of this section, the term 
``controlled'' includes direct or indirect control, whether legally 
enforceable and however exercisable or exercised. The control may be by 
means of stock ownership, or by agreements, licenses, or any other 
devices which insure that the operation of the company is in the 
interest of one or more carriers. It is the reality of the control, 
however, which is decisive, not its form nor the mode of its exercise.
    (c) As used in paragraph (a)(2) of this section, the term casual 
applies when the service rendered or the operation of equipment or 
facilities by a controlled company or person in connection with the 
transportation of passengers or property by railroad is so irregular or 
infrequent as to afford no substantial basis for an inference that such 
service or operation will be repeated, or whenever such service or 
operation is insubstantial.
    (d) The term ``employer'' does not include any street, interurban, 
or suburban electric railway, unless such railway is operating as a part 
of a general steam-railroad system of transportation, but shall not 
exclude any part of the general steam-railroad system of

[[Page 146]]

transportation which is operated by any other motive power.
    (e) The term ``employer'' does not include any company by reason of 
its being engaged in the mining of coal, the supplying of coal to an 
employer where delivery is not beyond the mine tipple and the operation 
of equipment or facilities for such mining or supplying of coal, or in 
any of such activities.
    (f) Any company that is described in paragraph (a)(2) of this 
section is an employer under section 3231. In certain cases, based on 
all the facts and circumstances, it may be appropriate to segregate 
those businesses engaged in rail services and therefore subject to the 
Railroad Retirement Tax Act from those businesses engaged exclusively in 
nonrail services and therefore not subject to the Railroad Retirement 
Tax Act. The factors considered are set forth in guidance published by 
the Internal Revenue Service.

[T.D. 6516, 25 FR 13032, Dec. 20, 1960; 25 FR 14021, Dec. 31, 1960; T.D. 
8582, 59 FR 66191, Dec. 23, 1994]