45 U.S.C. § 358 — Contributions

(a) Employer^* contribution.

(1) In general. (A) General rule: (i) Contribution rate generally: Each employer must pay a contribution based on having employees in its service. The rate is a percentage (set by whichever of subparagraphs (B), (C), or (D) applies) of an employee's monthly pay, but only counting pay up to the "monthly compensation base^*" for that month, as computed under section 351(i). (ii) Multiple employer limit: If an employee^* works for more than one employer in a calendar month, (I) the contribution rule doesn't apply to any part of the employee's total pay from all those employers that's above the monthly compensation^* base; and (II) each employer (other than a subordinate unit of a national-railway-labor-organization employer) must pay its share of the contribution, based on what fraction of the employee's total pay from all employers it paid. If the total pay from all such employers is less than the monthly compensation base, each subordinate unit of a national-railway-labor-organization employer instead pays its share of any additional contribution based on its share of the total pay.

(B) Transitional rule, covering 1988 through 1992: (i) For 1988, 1989, and 1990 (except as (vi) below provides), the rate is 8%. (ii) For 1991, the rate is the smaller of the maximum contribution limit in paragraph (20), or a rate found this way: take twice "A" (the 1988–1990 rate) plus "B" (the employer's own experience-based 1991 rate under (C)), and divide by 3. (iii) For 1992, the rate is the smaller of the maximum contribution limit, or: take "A" plus twice "C" (the employer's own experience-based 1992 rate under (C)), and divide by 3. (iv) In these formulas: "R" is the resulting rate; "A" is the rate from (i); "B" is the employer's (C) rate for 1991; "C" is the employer's (C) rate for 1992. (v) When computing B and C: if the (C) rate would be more than the maximum contribution limit, don't cap it for this purpose; and any calculation normally based on a 4-quarter or 12-quarter period ending on a particular June 30 should instead be based on the period from January 1, 1990, to that June 30, then scaled up proportionally to match a full 4- or 12-quarter period. (vi) Special rule for public commuter railroads: For 1989 and 1990, Amtrak and any publicly funded, publicly operated commuter rail carrier^* (as of November 10, 1988) pays a contribution equal to the benefits paid out because of that carrier, plus 0.65% of the pay that would otherwise set its contribution under (i).

(C) Experience-rated contributions, for years after 1992, in 8 steps: Step 1 — compute the employer's "benefit ratio" as of the prior June 30 (defined in paragraph (2)), to four decimal places. Step 2 — subtract the employer's "reserve ratio" as of the prior June 30 (defined in paragraph (4)), to four decimal places. Step 3 — subtract that year's "pooled credit ratio," if any (defined in paragraph (12)), to four decimal places. Step 4 — multiply the result by 100 to get a percentage, rounded to the nearest hundredth of a percent; if the result is zero or negative, the rate is 0%. Step 5 — add 0.65 percentage points, representing the part of the contribution that goes to the fund^* under subsection (i). Step 6 — add that year's surcharge rate, if any (defined in paragraph (14)). Step 7 — add that year's "pooled charge ratio," if any (defined in paragraph (13)), to four decimal places, multiplied by 100. Step 8 — if the resulting rate is higher than the maximum contribution limit (paragraph (20)), reduce it down to that limit; whatever is left after that reduction is the contribution rate.

(D) New employers, meaning those first subject to this chapter after December 31, 1989: (i) First year: the rate is the average contribution rate paid by all employers over the 3 calendar years before the year before the pay year — found by dividing total contributions paid by total compensation in those 3 years, then multiplying by 100, to 4 decimal places. (ii) Second year: the rate is the smaller of the maximum contribution limit, or a formula: twice the first-year rate ("A1") plus the employer's own (C) rate for its second year ("B"), divided by 3. (iii) Third year: the rate is the smaller of the maximum contribution limit, or: the rate that would have applied in year 3 under (i) ("A3") plus twice the employer's (C) rate for year 3 ("C"), divided by 3. (iv) From the fourth year on, the rate is set under subparagraph (C), the standard experience-rated formula. (v) Definitions: "R" is the resulting rate; "A1" is the rate under (i) using the employer's actual first full year; "A2" is what the (i) rate would have been if the employer's second year had been treated as its first; "A3" is the same idea for the third year; "B" is the employer's (C) rate for its second full year; "C" is the employer's (C) rate for its third full year. (vi) Computing B and C: the (C) rate used here is not capped by the (C)(viii) maximum-limit reduction; and any calculation normally based on a 4- or 12-quarter period ending on a given June 30 instead starts from the first full quarter after the employer began paying compensation, running to that June 30, then scaled up to match a full period.

(2) Benefit ratio: An employer's benefit ratio as of a given June 30 equals the benefits charged to it under paragraph (15) during the prior 12 calendar quarters, divided by its "3-year compensation base" (paragraph (3)) as of that date.

(3) 3-year compensation base: the total pay on which the employer paid contributions during those same 12 calendar quarters.

(4) Reserve ratio: An employer's reserve ratio as of a given June 30 equals its "reserve balance" (paragraph (6)) divided by its "1-year compensation base" (paragraph (5)). It can be positive or negative depending on whether the reserve balance is positive or negative.

(5) 1-year compensation base: the total pay on which the employer paid contributions during the most recent 4 calendar quarters.

(6) Reserve balance: an employer's "cumulative benefit balance" (paragraph (7)) subtracted from its "net cumulative contribution balance" (paragraph (8)), both as of the same June 30. This can be positive or negative.

(7) Cumulative benefit balance: add together (A) the net benefits charged to the employer since January 1, 1990, under paragraph (15), and (B) the employer's share of unallocated charges for the same period (paragraph (9)).

(8) Net cumulative contribution balance, in three steps: Step 1 — add up (i) all contributions the employer paid under this subsection, (ii) the part of the tax under 26 U.S.C. § 3321(a) tied to the surtax under section 516(b) of the 1988 Railroad Unemployment Insurance and Retirement Improvement Act, and (iii) any taxes paid under 26 U.S.C. § 3321(a) after loans made under section 360(d) (before October 1, 1985), plus interest, were repaid — all since January 1, 1990. Step 2 — subtract the part of those contributions that went to the fund under subsection (i). Step 3 — add back any amount by which the employer's contributions were reduced in earlier years because of pooled credits under (1)(C)(iii).

(9) Unallocated charge: an employer's share of the "system unallocated charge balance" (paragraph (10)), in the same proportion as its 1-year compensation base (paragraph (5)) bears to the system-wide compensation base (paragraph (11)).

(10) System unallocated charge balance, computed in steps: Step 1 — add up all interest the account^* paid on loans from the Railroad Retirement Account (made after September 30, 1985, under section 360(d)) during the last 4 calendar quarters. Step 2 — add any amounts added to this balance under paragraphs (15) and (16). Step 3 — add any other account expenditures in that period that aren't charged to a specific employer under paragraph (15) or to the fund under section 361. Step 4 — subtract all account income under section 360(a)(iv) or (a)(vii) in that period. Step 5 — subtract all transfers to the account under section 361(d) in that period. Step 6 — subtract all other income the account received in that period that isn't assigned to individual employers. Step 7 — subtract the net cumulative contribution balance of any employer whose balance was cancelled under paragraph (16) in that period, as of the cancellation date.

(11) System compensation base: the sum of every employer's and employee representative's 1-year compensation base (paragraph (5)) as of the same June 30.

(12) Pooled credit ratio, in steps: Step 1 — find the account's balance as of the prior June 30 (counting pre-October-1985 loan money under section 360(d), but ignoring the duty to repay those loans and their interest); if the railroad unemployment insurance administration fund balance on that date is over $6,000,000, count the excess as part of the account balance too. There is a pooled credit ratio for the year only if that combined balance exceeds the greater of $250,000,000, or a scaled-up version of $250,000,000 matching how the system compensation base has grown since June 30, 1991. Step 2 — if there is an excess, divide it by the system compensation base as of the prior June 30; that's the pooled credit ratio.

(13) Pooled charge ratio, in steps: Step 1 — for each employer whose (1)(C) rate, computed through Step 6, was above the maximum contribution limit, multiply that employer's 1-year compensation base (as of the prior June 30) by the difference between (i) its uncapped rate and (ii) the maximum contribution limit. Step 2 — add up those amounts for every such employer. Step 3 — for each employer whose (1)(C) rate, computed through Step 3, was below zero, multiply the percentage it had to be raised (to bring it up to 0) by that employer's 1-year compensation base, and subtract the total of those amounts from the Step 2 total. Step 4 — divide the Step 3 result by the system compensation base as of the prior June 30, minus the 1-year compensation bases of employers whose rates (through Step 6) went over the maximum contribution limit; that's the pooled charge ratio.

(14) Surcharge rate, in steps: Step 1 — same account-balance calculation as in (12) Step 1; there's a surcharge for the year only if that balance is less than the greater of $100,000,000, or a scaled-up version matching system growth since June 30, 1991. Step 2 — (i) if the balance is below that Step-1 threshold but at or above a similarly scaled $50,000,000 threshold, the surcharge rate is 1.5%; (ii) if it's below that $50,000,000-based threshold but still zero or positive, the surcharge rate is 2.5%; (iii) if the balance is negative, the surcharge rate is 3.5%.

(15) Chargeable benefits: (A) In general: Starting January 1, 1990, benefits paid to an employee for unemployment or sickness are charged to that employee's "base year^*" employer, added to that employer's cumulative benefit balance — except benefits paid because of a strike or labor dispute, which go to the system unallocated charge balance instead. (B) Adjustments: Any money recovered for an overpaid, wrongly paid, or reimbursed benefit and credited to the account gets subtracted from the cumulative benefit balances of the employers whose employees received it, split in proportion to how much each employer's balance went up from that payment. (C) Multiple employers: (i) If an employee had more than one base-year employer, benefits are charged (I) in reverse order of when the employee worked for each employer, if the most recent employer is the one at the time of the claim, capped at what that employer actually paid the employee in the base year; or (II) otherwise, split among the employers in proportion to how much each paid the employee in the base year. (ii) If an employer's balances were cancelled under paragraph (16) (a "defunct employer"), any benefits that would have been charged to it instead go to the system unallocated charge balance.

(16) Defunct employer: If the Board^* decides, under its own regulations, that an employer has permanently stopped paying compensation subject to contributions, the Board — as of that decision date — moves the employer's net cumulative contribution balance out of (subtracting it from) the system unallocated charge balance, moves its cumulative benefit balance into (adding it to) that same system balance, and cancels everything else tied to that employer.

(17) Individual employer record: (A) Starting January 1, 1990, the Board keeps a record for each employer, plus the records needed to figure pooled charges, pooled credits, and unallocated balances system-wide. Whenever a new employer starts paying covered compensation, the Board opens a record for it. (B) This "individual employer record" means a record of an employer's benefit ratio, reserve ratio, 1-year and 3-year compensation bases, unallocated charge, reserve balance, net cumulative contribution balance, and cumulative benefit balance.

(18) Joint employer records: Under Board regulations, two or more employers can apply to combine their records into one joint record, treated as if it were a single employer's record, or later split it back apart.

(19) Mergers, consolidations, or other changes in identity: (A) With other employers: If an employer combines with another employer through a merger, consolidation, unification, or reorganization, and the combination doesn't split up the employer's property, the two records are combined into a joint record — either because the parties asked for it under paragraph (18), or because the Board decides joint treatment makes sense. (B) With nonemployers: If an employer combines with an entity that isn't an employer, the employer's record simply attaches to the combined entity. (C) Sale of assets: If an employer's property is sold, transferred, or split among multiple employers or entities, its cumulative benefit balance, net cumulative contribution balance, and 1-year and 3-year compensation bases are divided among the recipients (including any new employers created by the deal) in a fair way the Board sets by regulation. (D) Reincorporation: If an employer reincorporates or otherwise changes its corporate identity without a merger, consolidation, or unification, its balances and compensation bases simply carry over to the new entity. (E) Abandonment: If an employer abandons property or stops providing service but keeps operating as an employer, its record keeps being calculated normally, with no retroactive changes.

(20) Maximum contribution limit: Normally 12% for a calendar year. If a 3.5% surcharge under paragraph (14) applies that year, the limit rises to 12.5%.

(21) Special computation rules: (A) Any 12-quarter-period calculation under paragraph (1)(C) runs from the latest of: January 1, 1990; the first full quarter after the employer started paying covered compensation; or the July 1 that's three years before the relevant June 30 — through that June 30. (B) The result is then scaled up proportionally to represent a full 12-quarter period.

(b) Employee representative^* contribution: Each employee representative pays a contribution on their pay for representative work, up to the monthly compensation base (section 351(i)), figured the same way as an employer's rate under (a) — treating the employee organization that employs the representative as if it were an "employer" under this chapter.

(c) Board's annual proclamation: (1) By October 15, 1990, and every October 15 after that, the Board must publicly announce: (A) the account balance as of the prior June 30, for the pooled-credit and surcharge calculations; (B) the balance of any post-September-1985 loan advances under section 360(d) still unpaid with interest as of that September 30; (C) the system compensation base as of that June 30; (D) the system unallocated charge balance as of that June 30; and (E) the pooled credit ratio, pooled charge ratio, and surcharge rate (if any) that will apply the next year. (2) As soon as practical afterward, the Board must publish a notice of these figures in the Federal Register.

(d) Notifications to employers: (1) By the end of each calendar quarter starting after March 31, 1990, the Board must tell each employer and employee representative its net cumulative contribution balance and cumulative benefit balance as of the end of the prior quarter. (2) By October 15, 1990, and every October 15 after, the Board must tell each employer and employee representative its benefit ratio, reserve ratio, 1-year and 3-year compensation bases, unallocated charge, and reserve balance as of the prior June 30, plus the contribution rate that will apply to it the next year.

(e) Verifying accuracy: Despite any other law, an employer or employee representative can ask the Board for the information needed to check that its contribution rate (or any part of it, including its individual employer record) is accurate, as long as it pays the Board's cost of providing that information. Money paid this way is credited and deposited into the fund.

(f) Rounding: When paying a contribution, ignore a fractional part of a cent unless it's half a cent or more, in which case round up to the next full cent.

(g) Fixing incorrect payments: If an employer or representative pays more or less than the correct contribution, the Board's regulations govern how to fix it through adjustments to that same employer's or representative's future contribution payments, without interest.

(h) Refunds and collections when adjustment isn't possible: The statute here specifically says an overpayment or underpayment that "cannot be adjusted under subsection (d) of this section" is instead refunded from the account, or collected, in whatever manner and timing the Board's regulations set, subject to the usual statute of limitations.

(i) Collecting and depositing contributions: The Board collects the contributions required under this chapter and deposits them with the U.S. Treasury Secretary. Of that money, 0.65% of the total compensation it's based on goes to the fund; the rest goes to the account.

(j) Timing and late payment: Contributions must be collected and paid quarterly, or on another schedule the Board's regulations set, as long as it doesn't conflict with this chapter. They can never be deducted from an employee's own pay. If a contribution isn't paid on time, interest of 1% per month (or part of a month) is added, starting from the due date until it's paid — except for adjustments made under this chapter's own rules. Any interest collected this way goes to the account.

(k) Other laws and Board authority: Every legal provision that normally applies to taxes under the Railroad Retirement Tax Act (26 U.S.C. § 3201 and following) — including penalties — also applies to contributions under this chapter, as long as it fits and doesn't conflict. However, all the powers that law normally gives to federal officers or employees are instead given to the Board or Board staff it picks — except the power to start and carry out criminal prosecutions, which stays with the usual officials. The same remedies available to an employer or employee representative who disputes the amount of their contribution also apply if they argue that the rate the Board set for them under (a) or (b) is inaccurate or otherwise improper.