BEFORE THE
STATE OF WISCONSIN
LABOR AND INDUSTRY REVIEW COMMISSION

In the matter of the contribution liability,
or status, under Chapter 108, Stats., of

CHARLES A HARVEY, Applicant

UNEMPLOYMENT INSURANCE CONTRIBUTION LIABILITY DECISION
Account No. 298544 PL, Hearing No. S9100691MW


Pursuant to the timely petition for review filed in the above-captioned matter, the Commission has considered the petition and all relief requested. The Commission has reviewed the applicable records and finds that the Appeal Tribunal's findings of fact and conclusions of law are supported thereby. The Commission therefore adopts the findings and conclusions of the Appeal Tribunal as its own.

DECISION

The decision of the Appeal Tribunal is affirmed. Accordingly, Charles. A. Harvey is personally liable for the unpaid contributions, penalties and interest as set forth in the Appeal Tribunal Decision.

Dated and mailed December 18, 1992
132 - CD3922   ER 451

/s/ Pamela I. Anderson, Chairman

/s/ Richard T. Kreul, Commissioner

/s/ James R. Meier, Commissioner

MEMORANDUM OPINION

The employer has petitioned for Commission review of the adverse Appeal Tribunal Decision which found the employer personally liable for delinquent unemployment taxes pursuant to section 108.22 (9) of the Statutes. The employer concedes that it was an officer/employe of the corporation and held at least a 20 percent ownership interest in the corporation in the period at issue and had control or supervision of or responsibility for filing unemployment reports or making unemployment contribution payments during the period at issue. The employer disputes the Appeal Tribunal's finding regarding the final two requirements for imposing personal liability under section 108.22 (9), namely, that the employer wilfully failed to make contributions and that the Department made proper collection efforts against the corporation.

The employer first disagrees with the Appeal Tribunal's finding that, except for the fourth quarter of 1990, the corporation was able to make required payments to the Department and wilfully failed to do so. The Commission does not dispute the employer's position that it had substantial debt for a number of years and was frequently in arrears with taxing authorities, including the IRS, Wisconsin Unemployment Compensation Department, Department of Revenue and the corporation's landlord and suppliers. However, the fact remains that from the second quarter of 1988 through the third quarter of 1990, the employer chose to make payments to other institutes other than the Department. That was a choice the employer had the right to make but by doing so it wilfully failed to pay required contribution payments to the Department. As noted by the Appeal Tribunal, wilfullness as it relates to failing to make required contribution payments does not mean that the failure was with bad faith or evil design. The term wilful, as used in section 108.22 (9) simply means that there was an intentional choice to make payment of available funds to a creditor other than the Department. The Commission has previously adopted this definition of wilfullness in Thaddeus Black and Pamela Black , LIRC Decision dated February 14, 1990.

The second argument advanced by the employer is that the Department failed to make proper collection efforts because it released a levy that it imposed on the employer's account in August of 1990. The employer's basic argument is that the corporation was and had been in such precarious financial straits for so long, it was irresponsible of the Department to release the levy since its poor payment record made it obvious that it would never meet its obligations to the Department. However, as the employer itself points out, at the time the Department released its levy, the employer had been engaged in attempts to raise equity. Thus, it was not necessarily irresponsible for the Department to release a levy in the hopes that the employer would be able to raise equity and thereby meet its financial obligations.

In addition, the Commission has previously held in the aforementioned Black case, that the Department need not resort to the most drastic of collection measures in order to be held to have followed proper collection proceedings. The Department must be left with flexibility to use available resources in a way in which it believes most productive to obtaining payment and at the same time not putting businesses in the position of having to declare bankruptcy or the like in order to satisfy obligations. The Commission believes that the Initial Determinations, the Department's numerous installment arrangements with the employer, the numerous notices warning the employer of future legal actions for failing to make payments, the notice of filing of a warrant and the Department's levy of the corporation's account clearly constituted proper proceedings for the collection of amounts due.

Finally, the employer argues that it did not receive proper notice that it could be held personally liable for the corporate debts. However, the employer received numerous notices that contributions were due and was informed that further legal action would be taken, without notice, if amounts due were not paid. There is no requirement that the employer be notified of potential personal liability prior to the imposition of that personal liability, as long as the imposition of such personal liability is pursuant to section 108.22 (9) of the Statutes. Here, the criteria set forth in section 108.22 (9) of the Statutes has been met and the employer is therefore personally liable for the unpaid contributions including penalties and interest as set forth in the Appeal Tribunal Decision.

cc:
Attorney Michael J Mathis
Enforcements


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