February 3, 2005, Introduced by Reps. Gonzales, Bieda, Farrah, Vagnozzi, Gleason, Condino, Murphy and Brown and referred to the Committee on Employment Relations, Training, and Safety.
A bill to amend 1936 (Ex Sess) PA 1, entitled
"Michigan employment security act,"
by amending section 15 (MCL 421.15), as amended by 1996 PA 498.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 15. (a) Contributions unpaid on the date on which they
are
due and payable, as prescribed by the commission agency,
shall bear interest at the rate of 1% per month, computed on a day-
to- day basis for each day the delinquency is unpaid, from and
after that date until payment plus accrued interest is received by
the
commission agency. Amounts illegally obtained or previously
withheld
from payment and damages that are recovered by the
commission
agency under section 54(a)
and (b) and sections 54a to
54c
of this act shall bear interest at the rate of 1% per month,
computed on a day-to-day basis for each day the amounts remain
unpaid
until payment plus accrued interest is received by the
commission
agency. The interest on
unpaid contributions, exclusive
of penalties, shall not exceed 50% of the amount of contributions
due at due date. Interest and penalties collected pursuant to this
section
shall be paid into the contingent fund. The commission
agency may cancel any interest and any penalty when it is shown
that the failure to pay on or before the last day on which the tax
could have been paid without interest and penalty was not the
result
of negligence, intentional disregard of the rules of the
commission
agency, or fraud.
(b)
The commission agency may make assessments against an
employer,
claimant, employee of the commission agency, or third
party who fails to pay contributions, reimbursement payments in
lieu of contributions, penalties, forfeitures, or interest as
required
by this act. The commission agency shall immediately
notify
the employer, claimant, employee of the commission agency,
or third party of the assessment in writing by first-class mail. An
assessment
by the commission agency against a claimant, an
employee
of the commission agency, or a third party under this
subsection shall be made only for penalties and interest on those
penalties for violations of section 54(a) or (b) or sections 54a to
54c. The assessment, which shall constitute a determination, shall
be
final unless the employer, claimant, employee of the commission
agency, or third party files with the commission agency
an
application for a redetermination of the assessment in accordance
with
section 32a. A review by the commission agency or an appeal
to
a referee or the appeal board
of review on the assessment
shall not reopen a question concerning an employer's liability for
contributions or reimbursement payments in lieu of contributions,
unless the employer was not a party to the proceeding or decision
where the basis for the assessment was determined. An employer may
pay an assessment under protest and file an action to recover the
amount paid as provided under subsection (d). Unless an assessment
is
paid within 15 days after it becomes final, the commission
agency may issue a warrant under its official seal for the
collection of an amount required to be paid pursuant to the
assessment.
The commission agency, through its authorized
employees, under a warrant issued, may levy upon and sell the
property of the employer that is used in connection with the
employer's business, or that is subject to a notice to withhold,
found within the state, for the payment of the amount of the
contributions including penalties, interests, and the cost of
executing the warrant. Property of the employer used in connection
with the employer's business shall not be exempt from levy under
the warrant. Wages subject to a notice to withhold shall be exempt
to the extent the wages are exempt from garnishment under the laws
of
this state. The warrant shall be returned to the commission
agency together with the money collected by virtue of the warrant
within the time specified in the warrant which shall not be less
than
20 or more than 90 days after the date of the warrant. The
commission
agency shall proceed upon
the warrant in all respects
and with like effect and in the same manner as prescribed by law in
respect to executions issued against property upon judgments by a
court
of record. The state, through the commission agency
or some
other officer or agent designated by it, may bid for and purchase
property sold under the provisions of this subsection. If an
employer,
claimant, employee of the commission agency, or third
party, as applicable, is delinquent in the payment of a
contribution, reimbursement payment in lieu of contribution,
penalty,
forfeiture, or interest provided for in this act, the
commission
agency may give notice of
the amount of the delinquency
served either personally or by mail, to a person or legal entity,
including the state and its subdivisions, that has in possession or
under control a credit or other intangible property belonging to
the
employer, claimant, employee of the commission agency,
or
third party, or who owes a debt to the employer, claimant, employee
of
the commission agency, or third party at the time of the
receipt of the notice. A person or legal entity so notified shall
not transfer or make a disposition of the credit, other intangible
property, or debt without retaining an amount sufficient to pay the
amount
specified in the notice unless the commission agency
consents to a transfer or disposition or 45 days have elapsed from
the receipt of the notice. A person or legal entity so notified
shall
advise the commission agency within 5 days after receipt of
the notice of a credit, other intangible property, or debt, which
is in its possession, under its control, or owed by it. A person or
legal entity that is notified and that transfers or disposes of
credits or personal property in violation of this section is liable
to
the commission agency for the value of the property or the
amount of the debts thus transferred or paid, but not more than the
amount specified in the notice. An amount due a delinquent
employer,
claimant, employee of the commission agency, or third
party
subject to a notice to withhold shall be paid to the
commission
agency upon service upon the
debtor of a warrant issued
under this section.
(c) In addition to the mode of collection provided in
subsection (b), if, after due notice, an employer defaults in
payment of contributions or interest on the contributions, or a
claimant,
employee of the commission agency, or third party
defaults
in the payment of a penalty or interest on a penalty, the
commission
agency may bring an action
at law in a court of
competent jurisdiction to collect and recover the amount of a
contribution, and any interest on the contribution, or the penalty
or interest on the penalty, and in addition 10% of the amount of
contributions or penalties found to be due, as damages. An
employer,
claimant, employee of the commission agency, or third
party adjudged in default shall pay costs of the action. An action
by
the commission agency against a claimant, employee of the
commission
agency, or third party under
this subsection shall be
brought only to recover penalties and interest on those penalties
for violations of section 54(a) or (b) or sections 54a to 54c.
Civil actions brought under this section shall be heard by the
court at the earliest possible date. If a judgment is obtained
against an employer for contributions and an execution on that
judgment is returned unsatisfied, the employer may be enjoined from
operating and doing business in this state until the judgment is
satisfied. The circuit court of the county in which the judgment is
docketed or the circuit court for the county of Ingham may grant an
injunction
upon the petition of the commission agency. A copy of
the petition for injunction and a notice of when and where the
court shall act on the petition shall be served on the employer at
least 21 days before the court may grant the injunction.
(d) An employer or employing unit improperly charged or
assessed contributions provided for under this act or a claimant,
employee
of the commission agency, or third party improperly
assessed a penalty under this act and who paid the contributions or
penalty under protest within 30 days after the mailing of the
notice of determination of assessment, may recover the amount
improperly collected or paid, together with interest, in any proper
action
against the commission agency. The circuit court of in
the county in which the employer or employing unit or claimant,
employee
of the commission agency, or third party resides, or, in
the case of an employer or employing unit, in which is located the
principal office or place of business of the employer or employing
unit,
shall have has original jurisdiction of and action to
recover contributions improperly paid or collected or a penalty
improperly assessed whether or not the charge or assessment has
been
reviewed by the commission agency or heard or reviewed by a
referee
or the appeal board of
review. The court shall not have
jurisdiction of the action unless written notice of claim is given
to
the commission agency at least 30 days before the institution
of the action. In an action to recover contributions paid or
collected or penalties assessed, the court shall allow costs to
such an extent and in a manner as it may consider proper. Either
party
to the action shall have has the right of appeal, as is now
provided by law, in other civil actions. An action by a claimant,
employee
of the commission agency, or third party against the
commission
agency under this subsection
shall be brought only to
recover penalties and interest on those penalties improperly
assessed
by the commission agency under section 54(a) or (b) or
sections 54a to 54c. If a final judgment is rendered in favor of
the plaintiff in an action to recover the amount of contributions
illegally
collected or charged, the treasurer of the commission
agency, upon receipt of a certified copy of the final judgment,
shall pay the amount of contributions illegally collected or
charged or penalties assessed from the clearing account, and pay
interest as may be allowed by the court, in an amount not to exceed
the actual earnings of the contributions as may have been found to
have been illegally collected or charged, from the contingent fund.
(e) Except for liens and encumbrances recorded before the
filing of the notice provided for in this section, all
contributions, interest, and penalties payable under this act to
the
commission agency from an employer, claimant, employee of the
commission
agency, or third party that
neglects to pay the same
when due shall be a first and prior lien upon all property and
rights to property, real and personal, belonging to the employer,
claimant,
employee of the commission agency, or third party. The
lien shall continue until the liability for that amount or a
judgment arising out of the liability is satisfied or becomes
unenforceable by reason of lapse of time. The lien shall attach to
the property and rights to property of the employer, claimant,
employee
of the commission agency, or third party, whether real
or personal, from and after the date that a report upon which the
specific tax is computed is required by this act to be filed.
Notice of the lien shall be recorded in the office of the register
of deeds of the county in which the property subject to the lien is
situated, and the register of deeds shall receive the notice for
recording. This subsection shall apply only to penalties and
interest
on those penalties assessed by the commission agency
against
a claimant, employee of the commission agency, or third
party for violations of section 54(a) or (b) or sections 54a to
54c.
If there is a distribution of an employer's assets pursuant to
an order of a court under the laws of this state, including a
receivership, assignment for benefit of creditors, adjudicated
insolvency, composition, or similar proceedings, contributions then
or thereafter due shall be paid in full before all other claims
except for wages and compensation under the worker's disability
compensation
act of 1969, Act No. 317 of the Public Acts of 1969,
being
sections 418.101 to 418.941 of the Michigan Compiled Laws
1969 PA 317, MCL 418.101 to 418.941. In the distribution of estates
of decedents, claims for funeral expenses and expenses of last
sickness shall also be entitled to priority.
(f) An injunction shall not issue to stay proceedings for
assessment or collection of contributions, or interest or penalty
on contributions, levied and required by this act.
(g)
A person or employing unit , that acquires the
organization,
trade, business, or 75% 10% or
more of the
employees, payroll, trade, inventory, services, or other assets
from
an employing unit, as a successor defined described in
section
41(2), is liable for contributions and interest due to the
commission
agency from the transferor
at the time of the
acquisition
in an amount not to exceed the reasonable value of the
organization,
trade, business, or employees, payroll, trade,
inventory, services, or other assets acquired, less the amount of a
secured interest in the assets owned by the transferee that are
entitled to priority. The transferor or transferee who has, not
less
than 10 days before the acquisition, requested from the
commission
agency in writing a
statement certifying the status of
contribution liability of the transferor shall be provided with
that statement and the transferee is not liable for any amount due
from the transferor in excess of the amount of liability computed
as
prescribed in this subsection and certified by the commission
agency. At least 2 calendar days, not including a Saturday, Sunday,
or legal holiday, before the acceptance of an offer, the
transferor, or the transferor's real estate broker or other agent
representing the transferor, shall disclose to the transferee on a
form
provided by the commission agency, the amounts of the
transferor's outstanding unemployment tax liability, unreported
unemployment tax liability, and the tax payments, tax rates, and
cumulative benefit charges for the most recent 5 years, a listing
of all individuals currently employed by the transferor, and a
listing of all employees separated from employment with the
transferor in the most recent 12 months. This form shall specify
such
other information, as determined by the commission agency,
as would be required for a transferee to estimate future
unemployment compensation costs based on the transferor's benefit
charge
and tax reporting and payment experience with the
commission
agency. Failure of the
transferor, or the transferor's
real estate broker or other agent representing the transferor, to
provide accurate information required by this subsection is a
misdemeanor
punishable by imprisonment for not more than 90 days ,
or a fine of not more than $2,500.00, or both. In addition, the
transferor, or the transferor's real estate broker or other agent
representing the transferor, is liable to the transferee for any
consequential damages resulting from the failure to comply with
this subsection. However, the real estate broker or other agent is
not liable for consequential damages if he or she exercised good
faith in compliance with the disclosure of information. The remedy
provided the transferee is not exclusive, and is not to be
construed to reduce any other right or remedy against any party
provided for in this or any other act. Nothing in this subsection
shall be construed to decrease the liability of the transferee as a
successor
in interest , or to prevent the transfer of a rating
an experience account balance as provided in this act. The
foregoing
provisions are in addition to the remedies the
commission
agency has against the
transferor.
(h) If a part of a deficiency in payment of the employer's
contribution to the fund is due to negligence or intentional
disregard
of the rules of the commission agency rules, but
without intention to defraud, 5% of the total amount of the
deficiency, in addition to the deficiency and in addition to all
other
interest charges and penalties provided herein under this
act, shall be assessed, collected, and paid in the same
manner as
if
it were a deficiency. If a part of
a deficiency is determined
in an action at law to be due to fraud with intent to avoid payment
of contributions to the fund, then the judgment rendered shall
include an amount equal to 50% of the total amount of the
deficiency, in addition to the deficiency and in addition to all
other
interest charges and penalties provided herein under this
act.
(i) If an employing unit fails to make a report as reasonably
required
by the rules of the commission pursuant to this act
agency
rules, the commission agency
may make an estimate of
the
liability of that employing unit from information it may
obtain
obtains and , according
to that estimate so made, assess
the employing unit for the estimated contributions, penalties, and
interest
due. The commission agency shall have the power only
after
not assess an employing unit until a default continues for
30
days and after the commission agency has determined that
the
default of the employing unit is willful.
(j) An assessment or penalty with respect to contributions
unpaid
is shall not effective be made or collected for any
period before the 3 calendar years preceding the date of the
assessment.
(k) The rights respecting the collection of contributions and
the
levy of interest and penalties and damages made available to
the
commission by agency
under this section is additional are
in
addition to other powers and rights
vested in the commission
agency in pursuance of the other provisions of
this act. The
commission
is not precluded from exercising agency may exercise
any
of the collection remedies provided for by under
this act
even though an application for a redetermination or an appeal is
pending final disposition.
(l) A person recording a lien provided for in under
this
section
shall pay a fee of $2.00 for recording to record a lien
and
a fee of $2.00 for recording to
record a discharge of a lien.
Enacting section 1. This amendatory act does not take effect
unless all of the following bills of the 93rd Legislature are
enacted into law:
(a) Senate Bill No.____ or House Bill No. 4174(request no.
01676'05).
(b) Senate Bill No.____ or House Bill No. 4175(request no.
01677'05).
(c) Senate Bill No.____ or House Bill No. 4176(request no.
01678'05).
(d) Senate Bill No.____ or House Bill No. 4178(request no.
01680'05).