Foley Is Co-Counsel in U.S. Supreme Court Tax Victory for Canadian National Railway

Foley & Lardner LLP was co-counsel in a Supreme Court tax victory on June 21 for U.S. subsidiaries of Canadian National Railway. The Supreme Court ruled in a 5-4 decision that three of CN’s U.S. railroad subsidiaries, and their employees, are entitled to refunds of Railroad Retirement Tax on CN stock distributed to employees when they exercised stock options. Railroad Retirement Tax is the rail industry equivalent of Social Security Tax paid by most employees. Railroad Retirement Tax is imposed only on “money remuneration,” and the Court ruled that CN stock is not “money” for this purpose. The case had made its way starting in 2011 through IRS administrative proceedings and then court litigation, culminating in CN’s Supreme Court win. The CN companies, together with their employees, will receive tax refunds of over $13 million plus interest, representing tax on the CN shares over a period of eight years.

The Canadian National companies were represented in the Supreme Court by Foley & Lardner LLP partners Dick Riley, David Ralston and Bill McKenna and senior counsel Jon Garlough, and Gibson Dunn & Crutcher LLP partner Tom Dupree (argued) and associate Rajiv Mohan. Because of the Supreme Court win on June 21, these lawyers were recognized as “Legal Lions” for the week by the widely read Law360 legal news website.

The case is Wisconsin Central Ltd. v. United States, Supreme Court No. 17-530. Click here for the decision on the Supreme Court website.