Owe Railroad Retirement Taxes, Excise Tax – Settle with Former IRS Agents
If you owe railroad retirement taxes or excise taxes feel free to call us today to discuss your different tax options to deal with the Internal Revenue Service.
You can speak directly to tax attorneys, CPAs, or former IRS agents. We can offer different tax solutions to you to help settle or negotiate the back taxes  you owe as a result of these RRT, Excise Taxes
We have over 205 years of professional tax experience and over 60 years of working directly for the Internal Revenue Service and the local, district and regional office of the IRS.
We also taught tax law at IRS.
IRS has the ability to personally impose these taxes against individuals who were responsible for, and  it did not turn this money over to the Internal Revenue Service.
Caution should be used in dealing with Internal Revenue Service because they can reach into the individual’s pocket and seize the money back on behalf of the US government.
Because railroad employers do not come under the social security system, they file different employment tax returns from those used to report FICA wages.
The forms used to report railroad employment taxes are presented below.
Form CT-1
Employer’s Annual Railroad Retirement Tax Return
A railroad employer files an annual CT-1 to report RRTA taxes.
All CT-1 returns are filed with the IRS Cincinnati Campus, and must be filed by the last day of the second month following the end of the calendar year (normally, by February 28th).
The IRS Cincinnati Campus provides information to the RRB to allow the RRB to reconcile railroad employer accounts.
Form CT-2
Employee Representative’s Quarterly Railroad Tax Return
A CT-2 is filed on a quarterly basis by individuals subject to the Tax on Employee Representatives.
Form 941 – Tax Form
Employer’s Quarterly Federal Tax Return
Although railroad employers are not subject to FICA, they are still required to withhold income tax on behalf of their railroad employees; there is no provision on Form CT-l to report the income tax withholding, so railroad employers use Form 941 for this purpose.
It is also conceivable that an employer could have some employees covered by FICA, and other employees covered by RRTA. In this situation the employer would be reporting FICA wages on the Form 941.
Tax Form W-2
Wage and Tax Statement
Railroad employers use Form W-2 to report wage payments to employees and to SSA.  RRTA taxes are shown in Box 14, and Boxes 3, 4, 5, 6 and 7, relating to FICA and Medicare, should be blank.
Tax Form W-3
Transmittal of Income and Tax Statements
Railroad employers use Form W-3 to transmit Forms W-2 to SSA.  Form W-3 provides a box to indicate that the employer is a railroad, alerting SSA to the fact that the information reported reflects RRTA rather than FICA and Medicare.
If an employer has some employees covered under FICA and Medicare as well as RRTA, the Form W-2’s must be segregated by type, and separate Forms  W-3 prepared for each batch.
RRT/ Payroll taxes are an IRS priority
IRS considers RRT & payroll taxes part of the trust fund tax family. IRS considers these payroll taxes a priority since the taxes are really not a direct tax but monies that are held in trust by a company or corporation that has not been turned over IRS. So the highest priority is given collecting trust fund money.
Good Advice
If you are currently in business the best advice we can give you being former IRS agents is to make sure you are at least current for the week, month or current quarter. When IRS sees that your current they are more than likely to offer you a payment plan.
RRT / Payroll Taxes in Trust Fund Cases
It also should be known that these payroll taxes spawn off trust fund taxes . The Trust Fund tax is a result of nonpayment of 941 payroll taxes.
As a result IRS will impose under section 6672 of the IRC code an assessment against those responsible for paying the payroll taxes. This trust fund tax comprises of all the withholding in one half of the employee Social Security.
The responsible persons are not responsible for the employers part of the Social Security, the penalties, the interest or the unemployment taxes.
The position of the IRS
To encourage prompt payment of withheld income and employment taxes, including social security taxes, railroad retirement taxes, or collected excise taxes, Congress passed a law that provides for the TFRP.
These taxes are called trust fund taxes because you actually hold the employee’s money in trust until you make a federal tax deposit in that amount.
The TFRP may apply to you if these unpaid trust fund taxes cannot be immediately collected from the business.
The business does not have to have stopped operating in order for the TFRP to be assessed.
Responsible for the Trust Fund Cases or Railroad Retirement Taxes
The RRT & Trust Fund may be assessed against any person who:
a. is responsible for collecting or paying withheld income and employment taxes, or for
b. paying collected excise taxes, and
c. willfully fails to collect or pay them.
A Responsible Person
A responsible person is a person or group of people who has the duty to perform and the power to direct the collecting, accounting, and paying of trust fund taxes.
This person may be:
1. an officer or an employee of a corporation,
2. a member or employee of a partnership,
3. a corporate director or shareholder,
4. a member of a board of trustees of a nonprofit organization,
5. another person with authority and control over funds to direct their disbursement, or
6. another corporation or third party payer.
Willfulness for Trust Fund or Excise Taxes

For willfulness to exist, the responsible person:
a. must have been, or should have been, aware of the outstanding taxes and
b. either intentionally disregarded the law or was plainly indifferent to its requirements.
Using available funds to pay other creditors when the business is unable to pay the employment taxes is an indication of willfulness.
How IRS conducts there investigation
You may be asked to complete an interview ( form 4180 can be found on our website )in order to determine the full scope of your duties and responsibilities.
Responsibility is based on whether an individual exercised independent judgment with respect to the financial affairs of the business.
An employee is not a responsible person if the employee’s function was solely to pay the bills as directed by a superior, rather than to determine which creditors would or would not be paid.
Figuring the Trust Fund Amount
The amount of the penalty is equal to the unpaid balance of the trust fund tax. The penalty is computed based on:
a. The unpaid income taxes withheld, plus
b. The employee’s portion of the withheld FICA taxes.
For collected taxes, the penalty is based on the unpaid amount of collected excise taxes.
Assessing the Trust Fund
If the IRS determines that you are a responsible person, IRS will provide you a letter stating that we plan to assess the TFRP against you.
You will have 60 days (75 days if this letter is addressed to you outside the United States) from the date of this letter to appeal our proposal. The letter will explain your appeal rights.
Owe Railroad Retirement Taxes, Excise Tax – Settle IRS Tax Debt