BNSF Railway Co. v. Loos

Summarized by:

  • Court: United States Supreme Court
  • Area(s) of Law: Tax Law
  • Date Filed: March 4, 2019
  • Case #: 17-1042
  • Judge(s)/Court Below: GINSBURG, J., delivered the opinion of the Court, in which ROBERTS, C.J., and BREYER, ALITO, SOTOMAYOR, KAGAN, and KAVANAUGH, JJ., joined. GORSUCH, J., filed a dissenting opinion, in which THOMAS, J., joined.
  • Full Text Opinion

An award compensating for lost wages is subject to taxation under the Railroad Retirement Tax Act (“RRTA”).

Respondent Loos was an employee of Petitioner BNSF Railway Company.  He was injured on the job and, after a lawsuit, was awarded over $126,000 in a jury verdict, $30,000 of which was to count for lost wages. Petitioner moved to withhold a portion of the lost wages sum for taxation purposes.  Under the Railroad Retirement Tax Act (RRTA), both "wages" and “compensation” are taxable.  The RRTA defines “compensation” as “any form of money remuneration paid to an individual for services rendered as an employee.” The Court had addressed the question of whether “compensation” includes back pay for periods of work when the employee was absent in two previous cases—Social Security Bd. v. Nierotko, 327 U.S. 358 (1946) and United States v. Quality Stores, Inc., 572 U.S. 141 (2014). The Court was unconvinced by the Eighth Circuit Court of Appeals’ efforts to distinguish those cases.  On appeal, the Court’s straightforward application of the two cases compelled the conclusion that back pay, even originating from a jury verdict, is still compensation within in the meaning of the statute.  Further, the text of the statute precludes taxation for sick and disability pay, which would render the exclusions superfluous if the Court accepted the Eighth Circuit’s holding.  REVERSED and REMANDED.

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