Railroad
For decades, Bowers has been a trusted partner to the railroad industry.
We partner with your organization on all tax, assurance, and accounting needs, in addition to railroad-specific topics including 45G tax credit, payroll, railroad retirement benefits, sales tax, and valuations. Bowers Railroad Group is the premier accounting, financial planning, and business consulting services group for the short-line railroad industry.
Our expertise is based on our analysis and accumulated knowledge of the short-line railroad industry. In that time, we have served more than 150 railroad clients.
Our Services
We have built a comprehensive set of services that enable us to understand and meet any railroad or railroad supplier’s needs, at any stage.
45G Railroad Track Maintenance
Tax Credit:
We assist clients in optimizing the value of their 45G tax credits available to their company.
Financial Reporting:
The railroad industry involves large-scale capital investments and complex financial transactions, which require accurate and transparent financial reporting.
Mergers and Acquisitions:
We advise railroads on mergers, acquisitions, and other business transactions. We provide financial due diligence, including reviewing financial statements, assessing financial risks, and evaluating potential synergies and cost savings.
Tax Compliance:
Railroad companies are subject to various taxes, including income tax, property tax, and sales tax. With a nationwide client base and preparation of over 400 out-of-state tax returns, we have deep experience with multi-state tax issues, strategy, and resolution. With expertise in federal, state, and local tax laws we help railroad companies comply with tax laws and regulations, minimizing their tax liabilities while avoiding penalties and fines.
Grant Administration
With the increase in grant funding available to railroads, Bowers can help you navigate your financial and tax implications resulting from these funds. In addition, depending on how the grants were administered, there may be additional compliance audits surrounding the receipt of these funds.
Payroll
Bowers will help you navigate the different requirements and work with the payroll company to set up the taxes to be withheld and calculated correctly, as well as go the extra step to assist with paying and reporting that many payroll companies are not comfortable with.
Capital Planning:
Business valuation is a critical component of capital planning. Railroad companies use valuation to assess their financial position and determine the best strategies for allocating capital, including investment in new projects, maintenance of existing infrastructure, and shareholder returns.
Have you considered the importance of a trusted business valuation partner?
Bowers has seen many clients in the railroad industry gain great value from our business valuation services. These services go well beyond exit strategy and sales of the business.
Investment Decisions:
Business valuation provides investors with an objective assessment of a railroad company’s financial worth. Investors use this information to make investment decisions, such as whether to buy or sell shares, invest in new projects, or acquire other companies.
Litigation Support:
Business valuation is often required in litigation involving railroad companies. Valuation experts may be called upon to provide expert testimony in disputes related to shareholder disputes, bankruptcy, breach of contract, or intellectual property.
Mergers and Acquisitions:
Valuation is a critical part of the merger and acquisition process. It helps railroad companies determine the fair value of the target company, negotiate a fair price, and assess the potential synergies and cost savings of the transaction.
What Makes the Railroad Industry’s Financials So Different?
If you are a financial professional and new to the railroad industry, one of the biggest changes you will experience is managing payroll and employee benefits. You may wonder: Why is it so different?
While the Social Security system was just in the planning stage in the 1930s, over three-quarters of railroad industry employees were covered by some type of private pension plan by 1927. Since railroad benefits were already established, railroad workers wished to maintain a separate railroad retirement system and broaden the existing programs outside the national plan. As a result, legislation was enacted in 1934, 1935, and 1937 establishing a railroad retirement system separate from the Social Security program.
Due to this legislation, the Railroad Retirement Board (RRB), an independent agency in the executive branch of the federal government, came to be.
The RRB’s primary function is to administer comprehensive retirement-survivor and unemployment-sickness benefit programs for the nation’s railroad workers and their families, under the Railroad Retirement and Railroad Unemployment Insurance Acts.
In fiscal year 2022, the RRB paid retirement-survivor benefits of approximately $13.4 billion to about 506,000 beneficiaries*. The RRB also paid net unemployment-sickness benefits of $94 million to approximately 23,000 claimants. At the end of fiscal year 2022, the average annuity paid to retired rail employees was $3,145 a month, spouse benefits averaged $1,160 a month, and benefits for aged widow(er)s averaged $1,985 a month.
*Statistics provided by: U.S Railroad Retirement Board & Social Security Administration
To get a jump start on navigating Railroad Retirement and Payroll Systems, contact Chelsea Sweet, our Outsourced Controller and Railroad Specialist!
Find legal representation with experience working with the Surface Transportation Board
The Surface Transportation Board is an independent federal agency that is charged with the economic regulation of various modes of surface transportation, primarily freight rail.
There are a few law firms that specialize in this service, we have worked with several and are happy to refer you to one.
Find a payroll company that can execute RRB reporting, RRR, and payroll setup
Most payroll companies are going to be set up for Social Security. While overeager sales reps want to assure you that their systems can accommodate the difference, actual set up and integration often times proves futile.
Bowers will help you navigate the different requirements and work with the payroll company to set up the taxes to be withheld and calculated correctly, as well as go the extra step to assist with paying and reporting that many payroll companies are not comfortable with.
“North Shore Railroad Company & Affiliates has been a client of Bowers for 12 years. We have utilized Bowers’ services in many different areas including: auditing, valuation, acquisition preparation, tax preparation, corporate succession planning and financial guidance. Bowers’ staff is extremely knowledgeable in the railroad industry, and they give thorough and thoughtful responses and explanations. Their services are timely and impeccable. In short, Bowers is a top notch accounting services firm for our industry.”
Diana L. Williams, Treasurer/Controller - North Shore Railroad Company & Affiliates
Select and onboard the appropriate accounting software
Depending on your needs and wants, different accounting software might be a better fit. The most important part of setting up bookkeeping for a railroad is understanding the need for a unique chart of accounts.
Railroads are not going to have a Cost of Goods Sold section, but they do have a very important need of separating out Maintenance of Way Expenses from Maintenance of Equipment, Transportation, and Administrative costs. So, once you pick out a software that fits what you need, setting it up correctly is always imperative.
