Montana Rail Link, Inc. v. United States

Montana Rail Link (“MRL”) appeals the district court’s dismissal of its action to obtain a refund of taxes paid in 1987 and 1988. MRL asserts that § 10206(c) (2) (A)(ii) of the Omnibus Budget Reconciliation Act of 1989 (“OBRA”) violates due process by retroactively barring refund claims by employers who believed that their 401(k) plan contributions were subject to tax under the Railroad Retirement Tax Act (“RRTA”). We affirm the court’s judgment, on the grounds that § 10206(c)(2)(A)(ii) is supported by a legitimate legislative purpose furthered by rational means. See United States v. Carlton, — U.S.-, -, -, 114 S.Ct. 2018, 2022, 2024 , 129 L.Ed.2d 22 (1994).

FACTUAL BACKGROUND

The RRTA serves as the functional equivalent of the Social Security Act for railroad employers. As an employer subject to the RRTA, MRL is required to pay an excise tax on compensation it pays to its employees. Montana Rail Link, Inc. v. U.S., 873 F.Supp. 1415, 1416 (D.Mont.1994); see 26 U.S.C. § 3221 , et seq. MRL is also required to withhold tax the RRTA imposes on the compensation of the employees themselves. These payments go to the Internal Revenue Service (“IRS”). MRL, 873 F.Supp. at 1416 ; see 26…