2016 South Carolina Code of Laws
Title 41 - Labor and Employment
CHAPTER 31 - CONTRIBUTIONS AND PAYMENTS TO THE UNEMPLOYMENT TRUST FUND
Section 41-31-125. Assignment of employment benefit record upon acquisition or reorganization of existing employment unit.

(A) Notwithstanding the provisions of Sections 41-31-100 and 41-31-120, an employing unit must be assigned all or a portion of the employment benefit record of an existing employing unit when there is an acquisition or change in the form or organization of an existing business enterprise, or severable portion of an existing business enterprise, and there is a continuity of control of the business enterprise. The employing unit must be assigned the same rate as the predecessor, or the predecessor who has the highest base rate if there is more than one predecessor employing unit with different base rates.

(1) For purposes of this section control of the business enterprise may occur by means of ownership of the organization conducting the business enterprise, ownership of assets necessary to conduct the business enterprise, security arrangements or lease arrangements covering assets necessary to conduct the business enterprise, including workers, or a contract when the ownership, stated arrangements, or contract provide for or allow direction of the internal affairs or conduct of the business enterprise.

(2) For purposes of this section continuity of control exists if one or more persons, entities, or other organizations controlling the business enterprise remain in control of the business enterprise after an acquisition or change in form or there is a transfer to persons within the first degree of kinship to the transferors. Evidence of continuity of control includes, but is not limited to, changes of an individual proprietorship to a corporation, partnership, limited liability company, association, or estate; a partnership to an individual proprietorship, corporation, limited liability company, association, estate, or the addition, deletion, or change of partners; a limited liability company to an individual proprietorship, partnership, corporation, association, estate, or to another limited liability company; a corporation to an individual proprietorship, partnership, limited liability company, association, estate, or to another corporation or from any form to another form.

(B) An employing unit must not be assigned any portion of the employment benefit record of an existing employing unit upon the acquisition of that established business or of an identifiable and segregable part of that established business if:

(1) the acquiring person was not otherwise an employer at the time of the acquisition;

(2) the person has no substantial commonality of interest, including ownership or management, in the business acquired; and

(3) the department finds that the person acquired the business or an identifiable and segregable part of the business solely or primarily for the purpose of obtaining a lower rate of contributions.

(C) If the experience rating account of the predecessor is equal to or exceeds tax class thirteen, the experience rating account of the predecessor employer in any event must be transferred to the successor employer in accordance with the provisions of Section 41-31-140.

(D)(1) An employing unit that knowingly attempts to violate the provisions of this section must be assessed a penalty in an amount equal to the greater of one thousand dollars or ten percent of the tax determined by the department to be due for each report that is submitted in violation of this section. For the purposes of this section, the terms "knowingly" or "knowing" mean having actual knowledge of or acting with deliberate ignorance of or reckless disregard for the prohibition in this section. This penalty may be recovered in the manner provided in Article 3 of this chapter for the collection of other penalties. Officers and directors of the enterprise comprising the employing unit are individually liable for the penalties assessed pursuant to this subsection.

(2) A contribution tax return preparer who violates this section or provides advice to an employing unit that results in a knowing violation of the provisions of this section is liable for a penalty of not less than one thousand dollars nor more than ten thousand dollars for each report submitted in violation of this section. This penalty may be recovered by the department in an appropriate civil action in any court of competent jurisdiction.

(3) As used in this section, a "contribution tax return preparer" is a person who prepares for compensation, or who employs one or more persons to prepare for compensation, any contribution and wage report or report of change in the status of an employing unit required by this chapter or any claim for credit for a tax imposed by this chapter. For purposes of this definition, the completion of a substantial portion of a report is treated as the preparation of the entire report. The term does not include a person merely because the person furnishes typing, reproducing, or other mechanical assistance, prepares a report of the employer, or an officer or employee of the employer, by whom the person is regularly and continuously employed, prepares as a fiduciary a report for any person, or represents a taxpayer in a hearing regarding an issue arising under this chapter.

(E) The department shall establish procedures to identify the transfer or acquisition of a business for purposes of this section.

HISTORY: 2004 Act No. 245, Section 1, eff May 24, 2004; 2005 Act No. 50, Sections 2.A, 2.B, eff May 3, 2005; 2010 Act No. 234, Section 1, eff January 1, 2011; 2011 Act No. 63, Section 7, eff June 14, 2011.

Effect of Amendment

The 2010 amendment in subsection (A) substituted "of an existing business enterprise" for "thereof"; in subsection (B) substituted "that established business" for "thereof"; in subsection (B)(3) substituted "of the business" for "thereof"; in subsection (C) deleted "in any event" following "predecessor employer"; substituted "department" for "commission" throughout; and made nonsubstantive changes.

The 2011 amendment rewrote subsection (C).