Appeal from the Order of the Employer Accounts Review Board of the Bureau of Employment Security in case of In Re: Bagley & Huntsberger, Inc., Account No. 16-3692.
Dom W. Greco, for petitioner.
Stephen B. Lipson, Assistant Attorney General, for respondent.
President Judge Bowman and Judges Crumlish, Jr., Wilkinson, Jr., Mencer, Rogers, Blatt and DiSalle. Opinion by Judge DiSalle.
[ 34 Pa. Commw. Page 489]
This case comes before the Court upon a petition for review of a decision by the Employer Accounts Review Board of the Bureau of Employment Security, Commonwealth of Pennsylvania, Department of Labor and Industry (Board). The decision denies a claim for refund filed by Bagley & Huntsberger, Inc. (Employer), for unemployment compensation taxes assessed and paid on the wages of two of its shareholder-officer-employes. We will affirm.
[ 34 Pa. Commw. Page 490]
On November 4, 1976, the Employer filed the claim for refund with the Venango County Supervisor for Field Accounting Service for unemployment compensation tax payments made in the second quarter of 1976. These payments were made on the wages of Curtis E. Bagley (Bagley) and Stephen C. Huntsberger (Huntsberger). Each of these men owns 50% of the Employer's outstanding stock. Each man also serves the Employer in the capacity of officer-employe.
By letter dated November 23, 1976, the Supervisor of Registration Unit for the Bureau of Employment Security notified the Employer that its claim for refund was denied. Thereafter, the Employer requested a final appealable decision from the Board. This request was honored and the Employer's claim for refund was considered by the Board at its January meeting. On January 20, 1976, the Board informed the Employer by letter that its claim would not be granted. The Employer thereupon filed a petition for review.
The narrow question of law with which we are faced is whether the taxation of a corporation, pursuant to Section 301(a)(1) of the Unemployment Compensation Law (Act), Act of December 5, 1936, Second Ex. Sess., P.L. (1937) 2897, 43 P.S. § 781 (a)(1), on wages earned by shareholder-officer-employes, is either a denial of due process under the United States Constitution or a violation of the uniformity requirement of the Pennsylvania Constitution.
The Employer argues that the liability imposed upon it for the wages earned by the shareholder-officer-employes is not founded upon any quid pro quo relationship between the payment of the tax and the benefit received as required by the Fourteenth Amendment to the United States Constitution. This
[ 34 Pa. Commw. Page 491]
position is apparently based upon the fact that under Section 402(h) of the Act, 43 P.S. § 802(h), an unemployed businessman is ineligible to receive benefits. The Employer contends that since, under the decision in Starinieri Unemployment Compensation Case, 447 Pa. 256, 289 A.2d 726 (1972), both Bagley and Huntsberger would be viewed as businessmen in an unemployment claim proceeding and therefore ...