Unemployment Insurance Agency Liens

Hello. I was involved in a recent discussion concerning unemployment tax liens (commonly referred to as MESC liens). The question was this: Do MESC liens expire? As we in the industry know, most liens have a period of expiration. If the lien holder does not attempt to satisfy the debt within a specified time frame, the right to enforce such lien is lost. State, federal, and construction liens all maintain a period of viability, after which time the lien expires. But there is no obvious statutory expiration for unemployment tax liens filed against nonpaying employers. This elusive expiration period will be the topic of this article.

Arts and crafts:

Employers in Michigan are required to contribute to the federal and state employment security system. The Michigan Unemployment Insurance Agency (UIA) is charged with the collection of monies from employers, as well as the day to day administration of such collections. The UIA was formerly known as the Michigan Employment Security Commission (MESC). The name was changed to the UIA in 2003, but many people still refer to the agency using the old MESC labeling.

If an employer becomes delinquent on its unemployment taxes, the UIA, pursuant to MCL 421.15(e), will have a lien against all personal and real property of the delinquent entity. The notice of lien shall be effective upon its filing with the register of deeds in which property of the employer is located. The lien continues until the liability for that amount or a judgment arising out of the liability is satisfied or becomes unenforceable by reason of lapse of time.

Section 421.15(e), as written, does NOT provide a statute of limitations concerning the Unemployment Agency lien. However, I would like to focus on the segment "or until it becomes unenforceable by reason of lapse of time." This segment indicates that the Unemployment Agency lien does in fact have a date of termination. But what is the date?

The answer may be found within the Revenue Division of Department of Treasury, Chapter 205 of the Michigan Compiled Laws, commonly referred to as the "Revenue Act." I direct your attention to MCL 205.1, which reads: the department is the agency of this state responsible for the collection of taxes and is responsible for all the following: (g) .... to supervise and control the collection of all past due money and accounts owed to this state or to any officer, department, commission, board, or agency of this state.

Additionally, MCL 205.29(1) states, in part, that taxes administered under this act shall be a lien in favor of this state for a period of 7 years, and may be extended for an additional 7 years if a refiling is made within 6 months prior to the expiration of the original 7 year period.

It seems to me that MCL 205.29(1) would be applicable to the UIA tax lien, as well. If the Revenue Division of Department of Treasury sits over the collection of taxes owed to the UIA, the UIA being an agency of the State of Michigan, it seems that a statutory provision contained within the Revenue Act (205.29(1)) would control. Adding to this, the UIA statute (421.15(e)), states that a lien will be unenforceable by reason of "lapse of time."

Currently, the title industry treats UIA liens as if they never expire. This is a very safe and very proper approach. However, the Revenue Act seems to profess that the Revenue Division of the Department of Treasury acts as a "supervisor and controller" of monies owed its numerous agencies. If a lien filed under the Revenue Act expires 7 years after its filing, shouldn't the UIA lien expire after 7 years, as well?

My reading of the statutory provisions had inspired me to write this article. I will continue to pursue this question of expiration of UIA liens until I have an accurate result. I thought some of the readers would find this question interesting. Any input or comments are welcome.

dave