909 F.3d 366
11th Cir.2018Background
- CSX Corporation paid RRTA taxes in 2009 on (1) stock transfers/options to employees and (2) employee relocation/moving benefits, then sought a refund.
- The district court granted summary judgment to the government, treating both stock compensation and relocation benefits as taxable "compensation" under the RRTA, 26 U.S.C. § 3231(e)(1).
- The RRTA defines "compensation" as "any form of money remuneration paid to an individual for services rendered as an employee" but excludes amounts paid as advances/reimbursements/allowances for "traveling or other bona fide and necessary expenses" if substantiated per the statute.
- The parties agreed Wisconsin Central Ltd. v. United States is dispositive on stock options; the Eleventh Circuit relied on that decision.
- The Eleventh Circuit reviewed statutory interpretation de novo, rejected the government’s narrow (short-term travel only) reading of the business-expense exclusion, and remanded for determination whether CSX met the statutory substantiation/requirements.
Issues
| Issue | Plaintiff's Argument (CSX) | Defendant's Argument (Government) | Held |
|---|---|---|---|
| Whether stock/options are "money remuneration" under RRTA | Stock/options are not "money remuneration," so not RRTA compensation | Stock transfers are compensation subject to RRTA | Court: Stock/options are not "money remuneration"; not taxable under RRTA (followed Wisconsin Central) |
| Whether relocation/moving benefits are "money remuneration" under RRTA | Argued relocation benefits need not be cash to be excluded; preservation unclear | Government argued such in-kind benefits fall outside RRTA cash-focused scope | Court: Did not decide whether in-kind relocation is "money remuneration" (issue may be unpreserved); declined to resolve broadly |
| Whether relocation/moving benefits fall within § 3231(e)(1)(iii) exclusion for advances/reimbursements/allowances for "traveling or other bona fide and necessary expenses" | § 3231(e)(1)(iii) plain text covers travel and "other bona fide and necessary expenses" including relocations; therefore such payments can be excluded if statutory requirements met | § 3231(e)(1)(iii) should be read to cover only short-term travel; moving expenses addressed elsewhere (e.g., § 3231(e)(5) cross‑refs) and should not be excluded under (e)(1)(iii) | Court: Read (e)(1)(iii) according to plain, broad text; relocation/moving expenses that meet the statutory form and substantiation requirements are excluded from RRTA compensation; remanded to determine compliance with statutory requirements |
Key Cases Cited
- Wisconsin Cent. Ltd. v. United States, 138 S. Ct. 2067 (2018) (RRTA "money remuneration" limited to cash/medium of exchange; stock options not taxable under RRTA)
- BNSF Railway Co. v. United States, 775 F.3d 743 (5th Cir. 2015) (held § 3231(e)(1)(iii) limited to travel-related expenses; contrasted by this decision)
- United States v. Ron Pair Enters., 489 U.S. 235 (1989) (plain statutory language controls interpretation)
- Comm’r v. Tellier, 383 U.S. 687 (1966) ("necessary" construed to mean "appropriate or helpful" in tax context)
- J.E.M. Ag Supply, Inc. v. Pioneer Hi‑Bred Int’l, Inc., 534 U.S. 124 (2001) (overlapping statutes can both be given effect; overlap does not imply repeal)