12-172 C.M.R. ch. 2, § 13 - Successorship
A. Under Section 1228 of the Employment
Security Law, the Bureau may determine, in accordance with paragraph (B) of
subsection
9 of Section 1043, that an individual or
organization is liable as a successor for contributions and interest due and
unpaid by a predecessor employer as of the date that the successor employer
acquired the predecessor's business. This determination must be made in writing
and is appealable. A copy of such determination with notice of appeal rights
must be retained by the Bureau. The factors to be used in determining whether a
successorship has occurred are as follows:
1.
The extent to which the successor's enterprise retains its pre-transfer
identity;
2. The successor's
capacity to produce similar goods and services;
3. Continuity of management;
4. Similarity in methods of production and
distribution;
5. Identity of the
employment force; and
6. The amount
of assets, particularly employment producing or income producing assets,
transferred.
The Bureau will take into account the combination of factors to determine the extent to which the successor has the capacity to perpetuate the business of the predecessor; no single factor is determinative of the issue.
B. The
successor is liable for contributions owed by the predecessor in an amount not
to exceed the reasonable value of the business acquired. The Bureau will assess
the full amount of contributions owed on the presumption that the value of the
business exceeds the amount of the debt for contributions. The successor may
rebut the presumption by presenting evidence to demonstrate a reasonable value
of the business at the time of acquisition. The Bureau's determination of the
value of the business may be appealed.
C. Assessments for contributions owed by the
predecessor must be mailed to the successor employer in accordance with the
time periods established by subsection
6 of Section 1225 of the Employment
Security Law.
D. Prior to making an
assessment against the successor for contributions and interest that were not
paid by the predecessor, the Bureau shall make every effort to collect the
amount owed from the predecessor, including but not limited to the following:
1. Documented attempts to contact the
predecessor by telephone, by mail and in person;
2. Establishing responsible individual
liability against the predecessor in accordance with Section 1225 (1-A) of the
Employment Security Law;
3.
Establishing liens against property owned by the predecessor; and
4. Disclosing the assets of the predecessor
when appropriate.
E.
Under Section 1228 of the Employment Security Law, interest on the amount of
contributions owed and unpaid by the predecessor shall not continue to accrue
against the successor after the date of acquisition of the predecessor's
assets.
F. If the predecessor makes
payments on its debt to the Bureau after the successor has also so paid the
Bureau, the amounts so paid by the successor with respect to the successorship
shall first be applied to delinquent amounts owed by the successor, if any, and
any amount remaining shall be reimbursed to the successor in full.
G. If the successor pays the entire amount
owed by the predecessor, the debt will be considered paid in full. No further
interest or penalties may be assessed against the predecessor for nonpayment of
the debt with respect to the successorship, and all existing liens against the
predecessor's property, which relate only to that debt, must be removed. Filing
fees for removal of the liens must be paid in advance by the predecessor. If
the predecessor will not pay the fees, the successor must pay the filing
fees.
H. For purposes of rate
determination under paragraph A of subsection
5 of Section 1221 of the Employment
Security Law, the assignment of or rates and transfers of experience in
successor purchases when there is substantially no common ownership, management
or control between the transferor and transferee, is as follows:
1. A new employer who acquires the business
of the predecessor employer in toto may acquire the experience rate of the
employer or may be assigned the state average contribution rate, whichever is
lower. Upon notification of the transfer, the Bureau will determine whether
there is substantially no common ownership, management or control, relying on
the criteria set forth in paragraph K below. If the Bureau determines that
there is no common ownership, the Bureau will notify the new employer of the
option of acquiring the predecessor's experience rate, or being assigned the
new employer rate. The new employer will have 30 days to notify the Bureau of
its choice. Failure to notify the Bureau will result in the Bureau assigning
the employer the lower of the two rates.
2. An existing employer with an established
experience rate who acquires the business of the predecessor employer in toto
may acquire the experience rate of that predecessor employer, which is then
blended with the successor's established experience rate to form a new rate, or
retain the established experience rate of the successor, whichever is lower.
Upon notification of the transfer, the Bureau will notify the existing employer
of the option of blending the rate or retaining its established rate. The
existing employer will have 30 days to notify the Bureau of its choice. Failure
to notify the Bureau will result in the Bureau assigning the employer the lower
of the two rates.
I. The
acquisition in toto of a business accrues to the ultimate successor. An
ultimate successor is the entity which has the capacity to continue the
predecessor's business even though such successor may have acquired the
predecessor's business or assets through an intermediate party or by other than
a purchase/sale transaction. Where the intermediary acts only as a straw party
and does not operate the business as its own, or have the capacity to do so for
all practical purposes, the predecessor's experience rating record shall be
transferred to the ultimate successor.
J. Under subsection
5 of Section 1221 of the Employment
Security Law, only a successor employer that acquires the business of a
predecessor employer in toto will be entitled to the predecessor's experience
rating record. A successor that acquires only a severable portion of the
predecessor's business, in accordance with paragraph G of subsection
9 of Section 1043, will be assigned the
rate of a new employer pursuant to paragraph A of subsection
4 of Section 1221 of the Employment
Security Law. A severable portion means a part of a business that is separable
from the preceding business but which is capable of maintaining a complete and
independent existence. If the successor that is acquiring the severable portion
of the predecessor's business is an existing employer, the successor will
retain its own rate.
K.
SUTA
Dumping. Under Section 1221 (5-A), when an employer who transfers its
trade or business, or a portion to its trade or business, to another employer
with which there is substantially common ownership, the Bureau may determine
that the parties have engaged in SUTA dumping, which is a transfer that has
been entered into for the purpose of obtaining a lower unemployment rate. For
purposes of identifying such a transfer, the Bureau will consider the following
factors:
1. Substantially common ownership
exists when the transferor and transferee have a relationship that pre-exists
the date of the transfer. This can include but is not limited to a family
relationship, employment relationship, investor relationship or other
relationship that suggests the parties shared a common interest in the economic
success of the transferred business.
2. Substantially common management or control
exists when the transferor and transferee have an intertwined or dependent
relationship such that both parties are involved in the day-to-day operation of
the transferred business.
Notes
State regulations are updated quarterly; we currently have two versions available. Below is a comparison between our most recent version and the prior quarterly release. More comparison features will be added as we have more versions to compare.
No prior version found.