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Reese's Pizzas & More v. Department of Labor and Industry

Commonwealth Court of Pennsylvania

April 11, 2014

Reese's Pizzas and More, Petitioner
v.
Department of Labor and Industry, Office of Unemployment Compensation Tax Services, Respondent

Publication Ordered June 19, 2014.

Appealed from No. 11-R-0034-4. State Agency: Department of Labor and Industry.

Gary T. Nietupski, Erie, for petitioner.

Jennifer M. Irvin, Assistant Counsel, Pittsburgh, for respondent.

BEFORE: HONORABLE BERNARD L. McGINLEY, Judge, HONORABLE ROBERT SIMPSON, Judge, HONORABLE JAMES GARDNER COLINS, Senior Judge. OPINION BY JUDGE SIMPSON.

OPINION

Page 915

ROBERT SIMPSON, Judge

Reese's Pizzas and More, Inc. (Purchaser) petitions for review from an order of the Department of Labor and Industry (Department) denying Purchaser's petition for reassessment of unpaid unemployment compensation (UC) taxes and penalties. The Department found Purchaser liable under Section 308.3(a) of the Unemployment Compensation Law (Law)[1] for unpaid UC contributions owed by Purchaser's predecessor, Joseph A. Monaco, trading and doing business as Two Friends Ristorante (Predecessor). Given the circumstances of the case, Purchaser contends the Department's ruling is contrary to law and public policy. For the reasons that follow, we affirm.

I. Background

In its final decision and order, the Department found the following facts based on the parties' stipulations. In July 2010, Purchaser completed a form PA-100 (relating to enterprise registration) indicating it acquired 51% or more of Predecessor's assets. See Reproduced Record (R.R.) at 7a-12a. Shortly thereafter, Purchaser and Predecessor executed an asset purchase agreement (Sale Agreement). Id. at 13a-31a. The Sale Agreement contained language transferring all of Predecessor's assets free and clear of all claims, liabilities, taxes and liens.

At the time of the Sale Agreement, Purchaser knew that Predecessor faced incarceration for failure to properly pay Pennsylvania state sales and use tax for an extended period of time. However, the parties closed very quickly in order for Predecessor to pay back taxes and stay out of prison. Consequently, Purchaser did not obtain a certificate pursuant to the bulk sales provisions in Section 308.3(a) of the Law.

In February 2011, the Department's Office of UC Tax Services, pursuant to Section 308.3 of the Law, issued Purchaser an assessment notice in the amount of $2,750.45 for UC contributions, interest and penalties owed by Predecessor up to the date of the Sale Agreement. See R.R. at 32a. In particular, the notice provided:

Pursuant to Section 308.3 of the Law, 43 P.S. § 788.3, you are being assessed for unpaid contribution, interest and ... penalty owed by [Predecessor].
You purchased 51% or more of the assets of the above employer, and did not require the employer to present a certificate issued by the Department showing that the employer had paid all contributions, interest and penalties it owed to the date of the transfer of the assets. Section 308.3 provides that a person who purchases 51% or more of the assets of an employer, and does not require a ...

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