Delays in Receiving and Investing Taxes are Reducing Railroad Retirement Program Interest Income.
GENERAL ACCOUNTING OFFICE WASHINGTON DC HUMAN RESOURCES DIV
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In recent years the financial stability of the Account has been seriously impaired. The Board predicts that it may not be able to pay total benefits by 1982. Because of this, we sought to determine how more timely tax deposits could improve the programss cash flow. Since this study began, the Congress has passed the Omnibus Budget Reconciliation Act of 1981 which contains provisions dealing with railroad retirements financial problems. We have examined these provisions and found that they did not included the matters discussed in this report. Even if the legislative provisions improve the financial outlook for the Account, we believe that it is in the best interest of the program to maximize interest earnings to the Account. Our work was conducted primarily at the Boards headquarters in Chicago, Illinois. We reviewed the legislative history of certain sections of the Railroad Retirement Act, as amended interviewed officials of the Board, the Treasury, and the Internal Revenue Service IRS interviewed representatives of several railroads selected at random and reviewed and analyzed pertinent agency records. The Board, Treasury, and the Association of American Railroads AAR reviewed and commented in writing on a draft of this report. We incorporated their comments where appropriate and the text of each agencys comments is in appendixes I through III. In estimating the additional interest income which could have been earned with more frequent deposit requirements, we used the taxable payroll totals railroads reported to the Board and applied the appropriate tax rates to determine payroll taxes paid for fiscal years 1978-80.
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