Virginia Law

Article 1. Employer Taxation.

A. The Commission may, upon its own motion or upon application of an employing unit, and after not less than 30 days' notice in writing mailed to the last known address of such employing unit and an opportunity for hearing, make findings of fact, and on that basis, determine whether:

1. An employing unit constitutes an employer;

2. Services performed for or in connection with the business of an employing unit constitute employment for such employing unit; or

3. There has been a transfer as defined in § 60.2-536.1.

B. All testimony at any hearing pursuant to this section shall be recorded but need not be transcribed unless a petition for judicial review from such determination is filed in the manner herein prescribed. At such hearing the interests of the Commonwealth may be represented by the Office of the Attorney General. The Commissioner shall have the power to designate a special examiner to hold such hearings, and may authorize and empower such special examiner to decide any matter so heard, in which event the decision of such special examiner shall be the final decision of the Commission under this section, subject to judicial review under subsection C. The Commissioner or his designee shall promptly inform the appropriate attorney for the Commonwealth of any final decision that an employer transferred or attempted to transfer a trade or business for the primary or sole purpose of obtaining a lower unemployment tax rate, or was advised to do so.

C. Judicial review of any such determination made in subsection B may be initiated within 30 days after mailing notice of such findings and determination to the employing unit or, in the absence of mailing, within 30 days after delivering such notice and determination, in the Circuit Court of the City of Richmond. Such judicial review shall be commenced by the filing of a petition, which need not be verified but which shall state the grounds upon which a review is sought. Service of two copies of such petition upon the Commissioner shall be deemed completed service and such petition shall be filed with the clerk of the court within five days after service thereof. With its answer the Commission shall certify and file with the court all documents and papers and a transcript of all testimony taken in the matter, together with its findings of fact and decision therein. In any judicial proceedings under this article, the Commission's findings of facts, if supported by the evidence and in the absence of fraud, shall be conclusive, and the jurisdiction of the court shall be confined to questions of law. Such actions shall be given preference on the docket over all other cases except cases to which the Commonwealth is a party.

D. An appeal may be taken from the decision of such court to the Court of Appeals, in conformity with Part Five A of the Rules of Supreme Court and other applicable laws. In any such proceedings for judicial review, the Commission shall be represented by the Office of the Attorney General. A determination by the Commission from which no judicial review has been commenced shall be conclusive in any subsequent judicial proceeding involving liability for taxes against the employing unit or its successor under the provisions of subdivision B 1 of § 60.2-210 and of subsection B of § 60.2-523.

Code 1950, §§ 60-58, 60-59; 1968, c. 738, §§ 60.1-70, 60.1-71; 1970, c. 104; 1977, c. 445; 1981, c. 99; 1984, c. 703; 1986, c. 480; 2005, cc. 47, 91; 2012, cc. 65, 161.

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.

A. In the discretion of the Commission, any nonprofit organization that elects to become liable for payments in lieu of taxes shall be required within thirty days after the effective date of its election (i) to execute and file with the Commission a surety bond approved by the Commission or (ii) to deposit with the Commission money or securities. The amount of such bond or deposit shall be determined in accordance with the provisions of this section.

B. The amount of the bond or deposit required by this section shall be a percentage, determined by the Commission, of the organization's taxable wages paid for employment as defined in subdivision 4 of subsection A of § 60.2-213 for the four calendar quarters immediately preceding the effective date of the election, the renewal date in the case of a bond, or the biennial anniversary of the effective date of election in the case of a deposit of money or securities, whichever date is most recent and applicable. If the nonprofit organization did not pay wages in each of such four calendar quarters, the amount of the bond or deposit shall be as determined by the Commission.

C. Any bond deposited under this section shall be in force for a period of not less than two taxable years and shall be renewed with the approval of the Commission, at such time as the Commission may prescribe, but not less frequently than at two-year intervals as long as the organization continues to be liable for payments in lieu of taxes. The Commission shall require adjustments to be made in a previously filed bond as it deems appropriate. If the bond is to be increased, the adjusted bond shall be filed by the organization within thirty days of the date notice of the required adjustment was mailed or otherwise delivered to it. Failure by any organization covered by such bond to pay the full amount of payments in lieu of taxes when due, together with any applicable interest and penalties provided for in subdivision 6 of subsection C of § 60.2-501, shall render the surety liable on such bond to the extent of the bond, as though the surety was such organization.

D. Any deposit of money or securities made in accordance with this section shall be retained by the Commission in an escrow account until liability under the election is terminated, at which time it shall be returned to the organization, less any deductions as hereinafter provided. The Commission may deduct from the money deposited under this section by a nonprofit organization or sell the securities it has so deposited to the extent necessary to satisfy any due and unpaid payments in lieu of taxes and any applicable interest and penalties provided for in subdivision 6 of subsection C of § 60.2-501. The Commission shall require the organization within thirty days following any deduction from a money deposit or sale of deposited securities under the provisions of this subsection to deposit sufficient additional money or securities to make whole the organization's deposit at the prior level. Any cash remaining from the sale of such securities shall be a part of the organization's escrow account. The Commission may review the adequacy of the deposit made by any organization. If, as a result of such review, it determines that an adjustment is necessary, the organization shall be required to make additional deposit within thirty days of written notice of the determination or the Commission shall return to it such portion of the deposit as it no longer considers necessary, whichever action is appropriate. Disposition of income from securities held in escrow shall be governed by the applicable provisions of the state law.

E. If any nonprofit organization fails to file a bond or make a deposit, or to file a bond in an increased amount or to increase or make whole the amount of a previously made deposit, as provided under this subsection, the Commission may terminate such organization's election to make payments in lieu of taxes and such termination shall continue for not less than the four consecutive calendar quarter period beginning with the quarter in which such termination becomes effective; however, the Commission may extend for good cause the applicable filing, deposit or adjustment period by not more than thirty days.

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

If any nonprofit organization is delinquent in making payments in lieu of taxes as required under subsection C of § 60.2-501, the Commission may terminate such organization's election to make payments in lieu of taxes as of the beginning of the next taxable year, and such termination shall be effective for that and the next taxable year.

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

If benefits paid to an individual are based on wages paid by more than one employer and one or more of such employers are liable for payments in lieu of taxes, the amount payable to the fund by each employer that is liable for such payments shall be an amount which bears the same ratio to the total benefits paid to the individual as the total base period wages paid to the individual by such employer bear to the total base period wages paid to the individual by all of his base period employers.

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

A. Two or more employers that have become liable for payments in lieu of taxes, in accordance with the provisions of § 60.2-501, may file a joint application to the Commission for the establishment of a group account for the purpose of sharing the cost of benefits paid that are attributable to service in the employ of such employers. Each such application shall identify and authorize a group representative to act as the group's agent for the purposes of this section. Upon approval of the application, the Commission shall establish a group account for such employers effective as of the beginning of the calendar quarter in which it receives the application and shall notify the group's representative of the effective date of the account. Such account shall remain in effect for not less than two years and thereafter until terminated at the discretion of the Commission or upon application by the group.

B. Upon establishment of the account, each member of the group shall be liable for payments in lieu of taxes with respect to each calendar quarter in the amount that bears the same ratio to the total benefits paid in such quarter that are attributable to service performed in the employ of all members of the group as the total wages paid for service in employment by such member in such quarter bear to the total wages paid during such quarter for service performed in the employ of all members of the group.

C. The Commission shall prescribe such regulations as it deems necessary:

1. With respect to application for establishment, maintenance and termination of group accounts that are authorized by this section;

2. For addition of new members to, and withdrawal of active members from, such accounts; and

3. For the determination of the amounts that are payable under this section by members of the group and the time and manner of such payments.

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

A. The Commonwealth of Virginia shall have the option to:

1. Treat all of its branches of government and all of its instrumentalities as one employer;

2. Treat each branch of government, judicial, executive, and legislative, as an individual employer; or

3. Treat each of its instrumentalities as an individual employer.

4. The option described herein shall be exercised by the Governor.

B. If the option contained in subdivision 1 of subsection A of this section is exercised, the Commonwealth may elect to finance benefits to its employees by either taxes, as set forth in §§ 60.2-526 through 60.2-533, or payments in lieu of taxes.

C. If the option contained in either subdivision 2 or 3 of subsection A of this section is exercised, each such individual employer may elect to finance benefits to its employees by either taxes, as set forth in §§ 60.2-526 through 60.2-533, or payments in lieu of taxes.

D. If the election to make payments in lieu of taxes is exercised, payments shall be made into the fund in an amount equivalent to the amount of regular and extended benefits paid that is attributable to service in the employ of the Commonwealth. If benefits paid to an individual are based on wages paid by more than one employer and one or more employers are liable for payments in lieu of taxes, the amount payable to the fund by each employer that is liable for such payments shall be determined in accordance with the provisions of § 60.2-504.

E. Payments made in lieu of taxes by the Commonwealth into the Unemployment Trust Fund shall be made at such times and in such manner as the Commission may determine and prescribe.

1971, Ex. Sess., c. 235, § 60.1-89.1; 1977, c. 330; 1979, c. 634; 1986, c. 480.

A. Any governmental entity which is an employer by virtue of subdivision 7 of subsection B of § 60.2-210 shall be permitted to join with one or more other governmental entities to form a joint account in accordance with regulations prescribed by the Commission.

B. Each governmental entity which is an employer by virtue of subdivision 7 of subsection B of § 60.2-210 and each joint account formed pursuant to subsection A of this section may elect to finance benefits to its employees by either taxes as set forth in §§ 60.2-526 through 60.2-533, or payments in lieu of taxes. Any such election to make payments in lieu of taxes shall be made in accordance with the provisions of subdivisions 1, 2 and 4 of subsection B of § 60.2-501. Termination of such election to make payments in lieu of taxes shall be made in accordance with subdivision 3 of subsection B of § 60.2-501.

C. If the election to make payments in lieu of taxes is exercised, payments shall be in an amount equivalent to the full amount of regular and extended benefits paid that is attributable to service in the employ of such governmental entity. If benefits paid to an individual are based on wages paid by more than one employer and one or more employers are liable for payments in lieu of taxes, the amount payable to the fund by each employer that is liable for such payments shall be determined in accordance with the provisions of § 60.2-504. Notwithstanding the provisions of this subsection, if the final adjudication of a disputed claim finds the claimant totally or partially ineligible for benefits, the governmental entity shall be liable for any payment made to the claimant during or prior to the appeal process, whether made by erroneous statutory interpretation, administrative error, or incorrect wage reporting.

D. Payments in lieu of taxes by governmental entities as set forth in this section shall be made at such times and in such manner as the Commission may determine and prescribe by regulation.

1977, c. 330, § 60.1-89.2; 1979, c. 634; 1981, c. 248; 1986, c. 480.

A. As used in this section, unless the context requires a different meaning:

"Employer" includes any Indian tribe for which service in employment as defined under this title is performed.

"Employment" includes service performed in the employ of an Indian tribe, as defined in § 3306(u) of the Federal Unemployment Tax Act (FUTA), provided such service is excluded from "employment" as defined in FUTA solely by reason of § 3306(c)(7) of FUTA, and is not otherwise excluded from "employment" under this title. For purposes of this section, any exclusions from employment in § 60.2-219 that relate to services performed in the employ of state or local government shall be applicable to services performed in the employ of an Indian tribe.

"Tribal units" means subdivisions, subsidiaries, or business enterprises wholly owned by an Indian tribe.

B. Benefits based on service included in the definition of employment as provided in subsection A shall be payable in the same amount, on the same terms, and subject to the same conditions as benefits payable on the basis of other service subject under this title.

C. Indian tribes or tribal units subject to this title shall pay taxes as set forth in §§ 60.2-526 through 60.2-533 under the same terms and conditions as all other subject employers, unless they elect to pay into the fund amounts equal to the amount of benefits attributable to service in the employ of the Indian tribe.

D. Indian tribes that elect to make payments to reimburse the fund for benefits paid shall make such election in the same manner and under the same conditions as provided in subsection C of § 60.2-507 pertaining to governmental entities that elect to make payments in lieu of taxes. Indian tribes shall determine if reimbursement for benefits paid will be elected by the tribe as a whole, by individual tribal units, or by combinations of individual tribal units.

E. Indian tribes or tribal units that elect to make payments in lieu of taxes shall be billed for the full amount of benefits attributable to service in the employ of the Indian tribe or tribal unit on the same schedule as nonprofit organizations that have elected to make payments in lieu of taxes as provided in § 60.2-501.

F. At the discretion of the Commission, any Indian tribe or tribal unit that elects to become liable for payments in lieu of taxes shall be required within 30 days after the effective date of its election (i) to execute and file with the Commission a surety bond approved by the Commission or (ii) to deposit with the Commission money or securities on the same basis as nonprofit organizations that are required to post a bond or deposit pursuant to § 60.2-502.

G. Failure of the Indian tribe or tribal unit to make any required payment, including any assessment of interest and penalty, within 90 days of its due date shall cause the Indian tribe to lose the option to make payments in lieu of taxes, as provided in subsection C, for the following tax year unless payment in full is received before tax rates for next tax year are computed.

H. Any Indian tribe that loses the option to make payments in lieu of taxes due to late payment or nonpayment, as described in subsection G, shall have such option reinstated if, after a period of one year, all taxes have been made timely, provided that no taxes, payments in lieu of taxes for benefits paid, penalties or interest remain outstanding.

I. Failure of the Indian tribe or any tribal unit thereof to make required payments, including assessments of interest and penalty, after all collection activities deemed necessary by the Commission have been exhausted, shall cause services performed for such tribe to not be treated as "employment" as provided in subsection A.

J. The Commission may determine that any Indian tribe that loses coverage under subsection I may have services performed for such tribe again included as "employment" as provided in subsection A if all taxes, payments in lieu of taxes, penalties, and interest have been paid.

K. The Commission shall notify the United States Internal Revenue Service and the United States Department of Labor of any termination or reinstatement of coverage made under subsection I or subsection J.

L. Notices of payment and reporting delinquency to Indian tribes or their tribal units shall include information that failure to make full payment within the prescribed time frame:

1. Shall cause the Indian tribe to be liable for taxes under FUTA;

2. Shall cause the Indian tribe to lose the option to make payments in lieu of taxes; and

3. May cause the Indian tribe to be excepted from the definition of "employer," as provided in subsection A, and services in the employ of the Indian tribe, as provided in subsection A, to be excepted from "employment."

M. Extended benefits paid that are attributable to service in the employ of an Indian tribe and not reimbursed by the federal government shall be financed in their entirety by such Indian tribe.

2008, cc. 100, 247.

Any employing unit which is or becomes an employer subject to this title within any calendar year shall be subject to this title during the whole of such calendar year. Any such employing unit shall establish an account with the Commission by the end of the calendar quarter in which it becomes subject to this title.

Code 1950, § 60-82; 1968, c. 738, § 60.1-98; 1986, c. 480; 2020, c. 1261.

A. Except as otherwise provided in this section and § 60.2-510, an employing unit shall cease to be an employer subject to this title as of January 1 of any year subsequent to December 31, 1972, only if:

1. The employer files with the Commission a written application for termination of coverage;

2. The Commission finds that (i) there were no twenty different days, each day being in a different week within the preceding calendar year, or (ii) there were no twenty different days, each day being in a different week within the current calendar year, within which such employing unit employed one or more individuals in employment subject to this title; and

3. The Commission finds that such employing unit did not pay in any calendar quarter in the preceding or current calendar year for service in employment wages of $1,500 or more.

B. Except as otherwise provided in this section and § 60.2-510, an employing unit as defined in subdivisions 1 through 4 of subsection A of § 60.2-213 or § 60.2-214 or § 60.2-215, shall cease to be an employer subject to this title as of January 1 of any year, only if it files with the Commission a written application for termination of coverage and the Commission finds that no services performed for such employing unit constitute employment as defined in subdivisions 1 through 4 of subsection A of § 60.2-213 or § 60.2-214 or § 60.2-215.

C. Any employing unit which is an employer at the end of any calendar year solely by acquisition during such year as provided in subdivision 1 of subsection B of § 60.2-210, shall cease to be an employer subject to this title as of January 1 of the succeeding calendar year without the filing of the written application required of all other employers, if the Commission finds that there were no twenty different days, each day being in a different week within the preceding or current calendar year that such employing unit and its predecessors in title, treated as a single employing unit:

1. Employed one or more individuals subject to this title; and

2. Did not pay in any calendar quarter in the preceding or current calendar year for service in employment wages of $1,500 or more.

D. Whenever any employer, during any completed calendar year, fails to be subject to the payment of taxes solely because no individual has earned wages from such employer during such calendar year, the Commission may, after not less than thirty days' notice in writing mailed to such employer at his last known address, cause such employer to cease to be an employer subject to this title as of January 1 of the calendar year in which such notice is given.

Code 1950, § 60-83; 1956, c. 440; 1968, c. 738, § 60.1-99; 1971, Ex. Sess., c. 235; 1972, c. 764; 1979, c. 636; 1986, c. 480.

A. Any employing unit, not otherwise subject to this title, which files with the Commission its written election to become an employer subject to this title for not less than two calendar years, shall, with the written approval of the Commission, become an employer subject to this title to the same extent as all other employers. Such employer shall be subject as of January 1 of the calendar year for which such election is approved, and shall cease to be subject as of January 1 of any calendar year subsequent to such two calendar years if it has filed with the Commission a written notice to that effect. However, the Commission may, on its own motion, and after ten days' written notice mailed to such employing unit at its last known address, without regard to the two-year calendar period, revoke such written approval. As of the date of such revocation, such employing unit shall cease to be an employer.

B. Any employing unit for which services are performed which do not constitute employment as defined in this title may file with the Commission a written election that all such services performed by individuals in its employ in one or more distinct establishments or places of business shall be deemed to constitute employment for all the purposes of this title for not less than two calendar years. Upon the Commission's written approval, such services shall be deemed to constitute employment subject to this title from the date stated in such approval. Such services shall cease to be deemed employment subject thereto as of January 1 of any calendar year subsequent to such two calendar years, only if at least thirty days prior to such January 1 such employing unit has filed with the Commission a written notice to that effect.

Code 1950, § 60-84; 1968, c. 738, § 60.1-100; 1971, Ex. Sess., c. 235; 1974, c. 660; 1977, c. 330; 1986, c. 480.