This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (1998).







Richard E. Reiss & Associates, Ltd.,





Commissioner of Economic Security,




Filed July 11, 2000


Parker, Judge*


Department of Economic Security

File No: 293899



Neal J. Shapiro, Bernick and Lifson, P.A., 1200 The Colonnade, 5500 Wayzata Boulevard, Minneapolis, MN 55416-1270 (for relator)


Kent E. Todd, Minnesota Department of Economic Security, 390 North Robert Street, St. Paul, MN 55101 (for respondent)



            Considered and decided by Toussaint, Chief Judge, Halbrooks, Judge, and Parker, Judge.

U N P U B L I S H E D  O P I N I O N


            On January 23, 1998, the Department of Economic Security (department) issued a determination holding that relator Richard E. Reiss & Associates, Ltd. (Associates) was the successor to Richard E. Reiss & Company, Ltd. (Company) and would acquire Company’s experience rating.  Relator continued to appeal the department’s determination until the commissioner’s representative affirmed the decision on November 13, 1998.  Relator did not appeal that commissioner’s representative’s decision to this court.

On October 1, 1998, the department reminded relator that it used only taxable payroll upon which taxes had been paid by September 30 of that year to calculate an employer’s tax rate and warned relator that failure to pay the taxes by that date would result in a higher 1999 employer tax rate.  On December 18, 1998, the department notified relator that its 1999 employer tax rate was 5.2%.  The tax-rate notice explained that the tax rate was calculated using taxable payroll of $3,030,900.63, not $5,023,052.31, because relator had not paid the taxes on $1,992,151.68 of taxable payroll by September 30, 1998. There is no evidence that relator relied on any instructions from the department not to pay taxes on the wages while Associates appealed the department’s successorship determination.  Relator protested the experience-rate and tax-rate calculations on January 12, 1999, but the department affirmed the calculations on March 31, 1999.

Relator appealed and requested a hearing.  The reemployment insurance judge affirmed the department’s tax-rate calculations, and relator appealed to the commissioner.  Following the commissioner’s representative’s affirmation of the department’s calculations, relator petitioned this court for a writ of certiorari.  Relator contends the department improperly computed its employer-tax rate by failing to follow the formula required by Minn. Stat. § 268.051, subd. 3 (1998), and that it did not pay the taxes on the wages of $1,992,151.68 because the employer was appealing the department’s determination that the employer was successor to Richard E. Reiss & Company, Ltd.  Because the department followed the clear and unambiguous language of Minn. Stat. § 268.051, subd. 3, in calculating relator’s employer-tax rate, we affirm.



“On appeal, this court reviews the decision of the Commissioner’s representative, not the decision of the reemployment insurance judge.”  Fujan v. Ruffridge-Johnson Equip., 535 N.W.2d 393, 395 (Minn. App. 1995) (citing Tuff v. Knitcraft Corp., 526 N.W.2d 50, 51 (Minn. 1995)).  We must defer to the commissioner’s findings of fact so long as the evidence reasonably supports them, but we exercise independent judgment and authority over questions of law.  Smith v. Employers’ Overload Co., 314 N.W.2d 220, 221 (Minn. 1981).  Statutory construction and interpretation presents a question of law, which this court reviews de novo.  See St. Otto’s Home v. Minnesota Dep’t of Human Servs., 437 N.W.2d 35, 39-40 (Minn. 1989) (requiring de novo review of agency decision involving questions of law); Arvig Tel. Co. v. Northwestern Bell Tel. Co., 270 N.W.2d 111, 114 (Minn. 1978) (explaining statutory interpretation presents legal question).

Courts interpret statutes to ascertain and effectuate legislative intent.  Minn. Stat. § 645.16 (1998); Klein Bancorporation, Inc. v. C.I.R., 581 N.W.2d 863, 866 (Minn. App. 1998), review denied (Minn. Sept. 22, 1998).  “We presume plain and unambiguous statutory language manifests legislative intent.” Klein Bancorporation, Inc., 581 N.W.2d at 866 (citation omitted).  When a statute is free of ambiguity, we look only at its plain language.  Tuma v. Commissioner of Econ. Sec., 386 N.W.2d 702, 706 (Minn. 1986).  “The obligation to pay taxes is a purely statutory creation, and taxes can be levied, assessed, and collected only in the method expressly established by statute.”  Id. (citing State v. Bies, 258 Minn. 139, 146, 103 N.W.2d 228, 234 (1960)).

            To calculate the tax rate of an employer qualifying for an experience rating, the commissioner is required to add “the minimum tax rate to the employer’s experience rating.”  Minn. Stat. § 268.051, subd. 2(a) (1998).  Relator contends the department incorrectly computed Associates’ experience rating by departing from the formula in Minn. Stat. § 268.051, subd. 3.  Minn. Stat. § 268.051, subd. 3 (1998), provides:

                                    (a) For each calendar year, the commissioner shall compute an experience rating for an employer who has been subject to this chapter for at least the 12 calendar months prior to July 1 of the prior calendar year.  The experience rating shall be the ratio obtained by dividing 1-1/4 times the total benefits charged to the employer’s account during the period the employer has been subject to this chapter but not less than 12 or more than 60 calendar months ending on June 30 of the prior calendar year by the employer’s total taxable payroll for the same period.


                        (b) For purposes of paragraph (a), only that taxable payroll upon which taxes have been paid on or before September 30 of the prior calendar year may be used in computing an employer’s experience rating.


                                    (c) The experience rating shall be computed to the nearest one-tenth of a percent, to a maximum of 8.9 percent.


(Emphasis added.)  The language of Minn. Stat. § 268.051, subd. 3, is clear and unambiguous.  Therefore, we need only determine whether the department followed this language in calculating relator’s 1999 tax rate.

In its December 18, 1998, tax-rate notice, the department explained that relator’s 5.2% applicable tax rate for 1999 was calculated using taxable payroll of $3,030,900.63 ($5,023,052.31 total reported payroll – $1,992,151.68 unpaid taxable payroll) and $121,513.57 total benefits charged.  The department deducted $1,992,151.68 from the taxable payroll because taxes on those wages were not paid by September 30, 1998.  See Minn. Stat. § 268.051, subd. 3(b) (1998) (restricting commissioner to using taxable payroll for which taxes have been timely paid).  The record supports the commissioner’s representative’s finding that relator failed to pay taxes on wages of $1,992,151.68 by September 30, 1998.

However, relator contends both Associates and Company had fully paid their individual tax liabilities by September 30, 1998, because Associates was not informed it would be required to pay Company’s tax liabilities until October 1, 1998.  On that date, the department sent relator a letter estimating that unpaid tax amounts would result in a higher tax rate of approximately two percent in 1999 because the “tax rate computation formula only uses taxable wages upon which the tax has been paid.”  However, the department had notified relator on January 23, 1998, that Associates was Company’s successor and would acquire Company’s experience rating record.  Although relator continued to appeal the department’s determination until November 13, 1998, the record shows relator was informed it was inheriting Company’s experience rate in January of that year.

While relator contends Minn. Stat. § 268.051 does not require an employer to pay its predecessor’s taxes while appealing a successorship determination, the statutory scheme does not excuse an employer of that obligation either.  In addition, there is no evidence that relator relied on any instructions from the department not to pay taxes on the wages while the successorship issue was being appealed.  Therefore, relator decided not to pay taxes on $1,992,551.68 in wages on its own initiative and at its own peril.  Because the department followed the clear and unambiguous language of Minn. Stat. § 268.051, subd. 3, the commissioner’s representative correctly affirmed the department’s calculation of relator’s 1999 tax rate.


* Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.