Rothrock Motor Sales v. UC Tax Services – unreported, memorandum decision** – Cmwlth. Court – April 27, 2021
Note: This decision is being posted to the UC listserv, because it shows how an employer’s UC contribution tax rate is calculated.
Held: Court affirmed denial of employer appeal of it UC contribution tax rate, due to employer’s failure to comply with DOLI wage reporting requirements
Under Section 301(a)(1) of the Law, an employer’s tax contribution is calculated by multiplying the employer’s taxable wages paid during a fiscal year by the tax rate assigned by the Department. 43 P.S. § 781(a)(1). Taxable wages are determined by wage reports submitted by employers to verify their employee wages paid during the fiscal year. Section 304 of the Law, 43 P.S. § 784; 34 Pa. Code § 63.52. The Department’s regulations require that wage reports be filed through the UC Management System (UCMS), a Department-run electronic filing system. 34 Pa. Code § 63.52(e). The filing date of a report is the date of receipt by UCMS. Id. § 63.52(f). Payments are to be made concurrently with each report. Section 305 of the Law, 43 P.S. § 785. An employer’s tax contributions are held in a reserve account established and maintained by the Department. Section 302 of the Law, 43 P.S. § 782.
An employer’s tax rate is calculated based on “employer experience,” or its history and regularity of filing reports and paying tax contributions. Employers with high employer experience are eligible for a reduced tax rate; employers with less experience, or employers that fail to either timely file reports or pay tax contributions, are assigned a standard tax rate. See generally Section 301.1 of the Law, 43 P.S. § 781.1.
Employers that qualify for an adjusted tax rate under Section 301.1 of the Law are further categorized into Group 1, 2, or 3, with Group 3 having the most experience. Id. § 781.1(b)(1). An employer retains its group designation once classified under Section 301.1(b)(1); however, it must still meet the requirements of that group to qualify for an adjusted tax rate. A Group 3 employer must make tax contributions for at least one quarter in each of the four fiscal years prior to the tax rate’s effective date. Id. Simply put, high employer experience, accrued by timely reporting and accurate payments, results in a lower tax rate in the next fiscal year, while insufficient experience results in the standard tax rate.
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*An unreported, non-precedential Commonwealth Court case can be cited for its persuasive value but is not binding precedent. See 210 Pa. Code § 69.414(b) and Pa. R.A.P. 3716
