STATE OF WISCONSIN
LABOR AND INDUSTRY REVIEW COMMISSION
P O BOX 8126, MADISON, WI 53708-8126 (608/266-9850)

MICHAEL A PHARO, Appellant

UNEMPLOYMENT INSURANCE CONTRIBUTION LIABILITY DECISION
Account No. 518300, Hearing No. S9900158MD


An administrative law judge (ALJ) for the Division of Unemployment Insurance of the Department of Workforce Development issued a decision in this matter. A timely petition for review was filed.

The commission has considered the petition and the positions of the parties, and it has reviewed the evidence submitted to the ALJ. Based on its review, the commission agrees with the decision of the ALJ, and it adopts the findings and conclusion in that decision as its own.

DECISION

The decision of the administrative law judge is affirmed. Accordingly, the appellant is personally liable for such amounts for the periods set forth therein.

This matter is remanded to the department for recalculation of the appellant's liabilities, consistent with this decision.

Dated and mailed December 28, 2001
america . ssd : 105 : 1  ER 451

/s/ David B. Falstad, Chairman

/s/ James A. Rutkowski, Commissioner

MEMORANDUM OPINION

Personal liability for a corporation's unpaid unemployment insurance contributions may be imposed, if certain conditions are met. The first is that the individual be an officer, employee, member, or manager who holds at least 20 percent of the ownership interest of the corporation. The statute specifically states that the ownership interest includes ownership or control, directly or indirectly, by legally enforceable means or otherwise. After the resignation in July of 1995 of Mr. Leach, the appellant operated the business. Pursuant to a July 18, 1995 shareholder resolution, the appellant was authorized from that point to act as president of the corporation. Upon Mr. Leach's resignation, the appellant changed the locks in the office and said he was taking over the corporation. This is sufficient to establish the requisite ownership or control for purposes of personal liability under Wis. Stat. § 108.22(9).

The second condition for imposition of personal liability is that the individual have control or supervision of or responsibility for making payment of contributions. The appellant had check-signing authority for the corporation. In addition, the appellant conceded that he and a second individual ran the business after the appellant became acting president. The appellant conceded further that he made payroll payments, and the record establishes also that the appellant filed quarterly reports to the department for the first three quarters of 1996. This evidence is sufficient to establish responsibility for the payment of contributions.

The third condition for imposition of personal liability is that the individual have willfully failed to make required tax payments or ensured that such payments are made. The appellant received a salary from the corporation. In addition, he was expressly aware that unemployment contributions remained unpaid, as he was aware of levy proceedings by the department against the corporation. Further, the appellant conceded that he received collection letters from the department regarding unpaid contributions. The appellant asserted that other individuals previously associated with the corporation had received some of the notices in question; those individuals countered that they turned over to the appellant any such notices. Knowledge of the liability, and failure to pay it when the means were available to do so, is enough to establish wilful failure under the statute.

It is also necessary, before personal liability may be imposed, that the department have instituted proper proceedings against the corporation for the amounts in question. With regard to this corporation, the record establishes various collection letters and notices to the corporation, and including the issuance of warrants against the corporation, prior to the personal liability proceedings here.

For the above reasons, the commission believes the administrative law judge properly imposed personal liability against the appellant in this case. The appellant questions the length of time between the hearing and the administrative law judge's decisions in these cases. The record was complex and lengthy, however, and the commission has conducted an independent review of the record in its entirety. The appellant also asserts that the decision reflects not the testimony given, but rather the notes of the administrative law judge. The appellant is correct; every administrative law judge prepares his or her decision based upon the notes taken at hearing. Synopses are not even prepared until a case has been appealed to the commission. This in no way affects the decision- making process by the administrative law judge. Finally, the appellant asserts there is no evidence to support the "piercing of the corporate veil" in these cases. The statute itself pierces that veil, however, by imposing personal liability in certain circumstances.

cc: 
Attorney Peter W. Zeeh
American Security & Protection, Inc.


Appealed to Circuit Court. Affirmed November 14, 2002.  Appealed to the Court of Appeals. Affirmed, unpublished per curiam opinion, January 29, 2004.

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