Categories
02. Employer Liability, Tax Rate, Successorship

Hillman Pallet Co v MESC – 2.05

COURT OF APPEALS HOLDING: 1) Employer’s protest of a determination which informed the employer it was a successor to a predecessor and therefore liable for all, or a share, of the predecessor’s rating account preserved the tax rate issue even though the determination did not specify a rate. 2) Amount of assets retained by seller must be considered in determination of percentage of assets transferred.

Hillman Pallet Co v MESC
Digest no. 2.05

Section 22

Cite asHillman Pallet Co v MESC, unpublished opinion of the Appeals Court of Michigan, issued June 27, 1988 (Docket No. 98600).

Appeal pending: No
Claimant: N/A
Employer: Hillman Pallet Co., Inc.
Docket no.: L83 12948 1830
Date of decision: June 27, 1988

View/download the full decision

COURT OF APPEALS HOLDING: 1) Employer’s protest of a determination which informed the employer it was a successor to a predecessor and therefore liable for all, or a share, of the predecessor’s rating account preserved the tax rate issue even though the determination did not specify a rate. 2) Amount of assets retained by seller must be considered in determination of percentage of assets transferred.

FACTS: Mr. and Mrs. Smith, d/b/a Hillman Pallet Company, owned two sawmills. Plaintiff, Hillman Pallet Co., Inc. purchased part of the Smith’s equipment. A second corporation purchased one sawmill and leased it to plaintiff. The Smiths retained other property, including a sawmill. The MESC issued a determination holding plaintiff a successor employer under Section 41(2) of the Act, liable under Section 15(g), and subject to a share of the Smith’s rating account under Section 22(a). Plaintiff protested, alleging it had not acquired all the assets and should be taxed at the lower “new business rate.”

DECISION: Remanded for further proceedings to determine percent of assets transferred.

RATIONALE: “Our review of the … notice clearly indicates that a challenge to the determination of successorship must be made promptly, because the issue would not be reopened on an appeal of the actual rate imposed. One receiving this notice could reasonable conclude that any appeal must be made now. Plaintiff consistently challenged the rate transfer throughout the proceedings. It is apparent that the Commission’s position throughout was that, once deemed a successor under Section 15(g), plaintiff’s liability under Section 22 was assured.”

“Under Section 22(b), if less than 75% of the assets were transferred, the rating account shall not be assigned without the approval of the transferror and transferee…. However, the referee erred as a matter of law in finding that the amount of retained property was not a consideration and in failing to make a finding on the percentage of assets transferred as required under Section 22(b).”

Digest Author: Board of Review (view original digest here
Digest Updated: 6/91