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CCH® UNEMPLOYMENT INSURANCE — 4/15/14

Private school administrator not liable for unpaid unemployment contributions, says bankruptcy court

The Department of Workforce Development tried to collect unpaid unemployment contributions from the administrator of a private elementary school that had closed its doors. The administrator had filed a petition under Chapter 13 of the Bankruptcy Code, and the department filed an adversary proceeding for a declaration that her liability was not dischargeable in bankruptcy. The court dismissed the complaint upon finding that the debtor was not personally liable for the unpaid contributions. The pertinent state statute provides that a 20% ownership interest in the corporation is required for the imposition of personal liability, and since the debtor did not own (or control, as contemplated by the statute) 20% of the school, she was not personally liable for the unpaid contributions (DWD v. Lenora Smith Davis, Bankr. (E.D. Wis.), Nos. 12-27587-svk, 13-2419, 3/10/2014).