Code of Virginia

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Code of Virginia
Title 60.2. Unemployment Compensation
Chapter 5. Taxation
11/25/2020

§ 60.2-501. Financing of benefits to employees of nonprofit organizations.

A. Benefits paid to employees of nonprofit organizations shall be financed in accordance with the provisions of this section. For the purpose of this section, a nonprofit organization is an organization, or group of organizations, described in § 501(c) (3) of the United States Internal Revenue Code which is exempt from income tax under § 501 (a) of that Code.

B. Any nonprofit organization which, pursuant to subdivision 8 of subsection B of § 60.2-210, is or becomes subject to this title shall pay taxes under the provisions of § 60.2-511, unless it elects, in accordance with this subsection, to pay to the Commission for the unemployment fund an amount equal to the amount of regular benefits and of one-half of the extended benefits paid, that is attributable to service in the employ of such nonprofit organization, and that is for weeks of unemployment which begin during the effective period of such election.

1. Any nonprofit organization which is or becomes subject to this title may elect to become liable for payments in lieu of taxes for a period of not less than one taxable year beginning with January 1 of each year, provided it files with the Commission a written notice of its election within the thirty-day period immediately following such date.

2. Any nonprofit organization which becomes subject to this title may elect to become liable for payments in lieu of taxes for a period of not less than twelve months beginning with the date on which such subjectivity begins by filing a written notice of its election with the Commission not later than thirty days immediately following the date of the determination of such subjectivity.

3. Any nonprofit organization which makes an election in accordance with subdivision 1 or 2 of this subsection shall continue to be liable for payments in lieu of taxes until it files with the Commission a written notice terminating its election not later than thirty days prior to the beginning of the taxable year for which such termination shall first be effective.

4. Any nonprofit organization which has been paying taxes under this title may change to a reimbursable basis by filing with the Commission, not later than thirty days prior to the beginning of any taxable year, a written notice of election to become liable for payments in lieu of taxes. Such election shall not be terminable by the organization for that and the next year.

5. The Commission may for good cause extend the period within which a notice of election, or a notice of termination, shall be filed and may permit an election to be retroactive but not any earlier than January 1 of the current calendar year.

6. The Commission, in accordance with such regulations as it may prescribe, shall notify each nonprofit organization of any determination which it may make of its status as an employer and of the effective date of any election which it makes and of any termination of such election. Such determinations shall be subject to reconsideration, appeal and review in accordance with the provisions of § 60.2-500.

C. Payments in lieu of taxes shall be made in accordance with the provisions of this subsection, including either subdivision 1 or 2.

1. a. At the end of each calendar quarter, or at the end of any other period as determined by the Commission, the Commission shall bill each nonprofit organization, or group of such organizations, which has elected to make payments in lieu of taxes for an amount equal to the full amount of regular benefits plus one-half of the amount of extended benefits paid during such quarter or other prescribed period that is attributable to service in the employ of such organization.

b. If the final adjudication of a disputed claim finds the claimant totally or partially ineligible for benefits, the nonprofit organization shall be liable for any bill resulting from payments made to the claimant during or prior to the appeal process, whether made by erroneous statutory interpretation, administrative error, or incorrect wage reporting.

2. a. Each nonprofit organization that has elected payments in lieu of taxes may request permission to make such payments as provided in this paragraph. Such method of payment shall become effective upon approval by the Commission.

b. At the end of each calendar quarter, or at the end of such other period as determined by the Commission, the Commission shall bill each nonprofit organization for an amount representing one of the following:

(1) One-tenth of one percent of its total payroll for the preceding calendar year.

(2) Such percentage of its total payroll for the immediately preceding calendar year as the Commission shall determine. Such determination shall be based each year on the average benefit costs attributable to service in the employ of nonprofit organizations during the preceding calendar year.

(3) For any organization which did not pay wages throughout the four calendar quarters of the preceding calendar year, such percentage of its payroll during such year as the Commission shall determine.

c. At the end of each taxable year, the Commission may modify the quarterly percentage of payroll thereafter payable by the nonprofit organization in order to minimize excess or insufficient payments.

d. At the end of each taxable year, the Commission shall determine whether the total of payments for such year made by a nonprofit organization is more or less than the total amount of regular benefits plus one-half of the amount of extended benefits paid to individuals during such taxable year based on wages attributable to service in the employ of such organization. Each nonprofit organization whose total payments for such year are less than the amount so determined shall be liable for payment of the unpaid balance to the fund in accordance with subdivision 3 of this subsection. If the total payments exceed the amount so determined for the taxable year, all or a part of the excess may, at the discretion of the Commission, be refunded from the fund or retained in the fund as part of the payments which may be required for the next taxable year.

3. Payment of any bill rendered under subdivision 1 or 2 of this subsection shall be made not later than thirty days after such bill was mailed to the last known address of the nonprofit organization or was otherwise delivered to it, unless there has been an application for review and redetermination in accordance with subdivision 5 of this subsection.

4. Payments made by any nonprofit organization under the provisions of this subsection shall not be deducted or deductible, in whole or in part, from the remuneration of individuals in the employ of the organization.

5. The amount due specified in any bill from the Commission shall be conclusive on the organization unless, not later than thirty days after the bill was mailed to its last known address or otherwise delivered to it, the organization files an appeal with the Commission, setting forth the grounds for such appeal. Proceedings on appeal to the Commission from the amount of a bill rendered under this subsection or a redetermination of such amount shall be in accordance with the provisions of § 60.2-500. The decision of the Commission shall be subject to the provisions of § 60.2-500.

6. Past-due payments of amounts in lieu of taxes shall be subject to the same interest and penalties that, pursuant to § 60.2-519, apply to past-due taxes.

1974, c. 466, § 60.1-89; 1981, cc. 248, 252; 1986, c. 480.

The chapters of the acts of assembly referenced in the historical citation at the end of this section may not constitute a comprehensive list of such chapters and may exclude chapters whose provisions have expired.