Section 19, 22(e)(3)
LIABILITY, Successorship, Statutory interpretation, Tax rate
CITE AS: Ha-Marque Fabricators, Inc. v MESC, 178 Mich App 470 (1989); lv den 435 Mich 877 (1990).
Appeal pending: No
Employer: Ha-Marque Fabricators, Inc
Docket No: L82 18210 1893
COURT OF APPEALS HOLDING: A weighted average of the tax rate of the employer's two predecessors which were merged into it must be used to determine the employer's tax rate under Section 19 and 22(e)(3).
FACTS: The employer, based in Illinois, acquired two Michigan subsidiaries and merged them into its operation during a corporate reorganization and then filed a registration report to determine liability with the MESC. MESC assigned a 9% tax rate for 1982. The MESC based its calculations on legislative amendments to the rate calculation provision. The legislature failed to amend Section 22(e)(3) to conform to the other amendments. MESC interpreted the law to require that in mergers the employer should be assigned a total of the former employer's rates.
DECISION: Employer's tax rate must be determined by a weighted average of the merged former employer's rates pursuant to Section 22(e)(3) and 19(a)(6) of the Act.
RATIONALE: "Although in this appeal, the MESC interprets Section 22(e)(3) to mandate a calculation of the employer's contribution rate based on the balances in the employer's experience account, we do not believe that the legislature intended such a construction. While we give respectful consideration to the MESC's interpretation of the statute, we are not bound by it and we decline to follow it here."
"We believe that the circuit court judge correctly interpreted Section 22(e)(3) as requiring that a weighted average approach be applied to determine Ha-Marque's contribution rate ... ."
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