Total Acquisitions
Employers acquiring a business have the option of receiving the experience rate of the predecessor’s account, or receiving the new employer rate. Such notification to the Commission must be made within 60 days of such acquisition to receive the “new employer” rate. A previously liable successor retains its rate for the year of acquisition based on its own experience. A newly liable successor receives a rate for the year of acquisition based on the option chosen. §60.2-535.
Partial Acquisitions
An employer acquiring a portion of a business must have an authorized officer of the predecessor complete and sign the “Division of Taxable Payroll for Partial Acquisitions,” VEC-FC-45, within thirty days of notification by the Commission that the form is required. The predecessor must furnish the Commission with the division of the payrolls and benefit charges on that portion of the business transferred for the forty-eight-month period immediately preceding the date of acquisition.
If the predecessor does not provide this information within the thirty-day period, the newly liable successor is assigned the rate of the predecessor for the year of acquisition and the maximum rate for subsequent years until his own experience is adequate for a reduced rate. The previously liable successor would continue with its own experience record if the completed form is not furnished. §60.2-515, §60.2-535
SUTA Dumping
Transfers for the purpose of obtaining a lower unemployment compensation tax rate; assignment of rates. A. If an employer shall transfer any trade or business to another employer where, at the time of transfer, there is substantially common ownership, management, or control of the trade or business, then the unemployment experience attributable to the transferred business shall also be transferred to, and combined with the unemployment experience attributable to, the employer to whom such business is transferred. If the sole or primary purpose of such transfer is to obtain a lower unemployment tax rate, that employer shall be subject to the penalties established by §60.2-536.3.
B. If an employer shall transfer any trade or business to a person who is not otherwise an employer at the time of such transfer, and the sole or primary purpose of such transfer is to obtain a lower unemployment tax rate:
1. The unemployment experience of the acquired business shall not be transferred to such person; instead, such person shall be assigned the higher of the transferred business˜ calculated rate or the new employer rate under §60.2-526; and
2. Such person shall be subject to the penalties established by §60.2-536.3.
C. Any person who shall knowingly advise another person to engage in a transfer of any trade or business, where the sole or primary purpose of such transfer is to obtain a lower unemployment tax rate, shall be subject to the penalties established by §60.2-536.3.
D. The Commission shall establish methods to identify and investigate the transfer or acquisition of a business for purposes of this section.
1. For the purposes of determining whether there is “substantially common ownership, management, or control of two or more employers,” the Commission shall consider all relevant facts and circumstances, including the extent of commonality or similarity of: (i) ownership, (ii) any familial relationships, (iii) principals or corporate officers, (iv) organizational structure, (v) day-to-day operations, (vi) assets and liabilities, and (vii) stated business purpose.
2. For the purposes of determining whether a business was transferred solely or primarily to obtain a lower unemployment tax rate, the Commission shall consider the facts and circumstances of the transfer, including: (i) the cost of acquiring the business, (ii) how long such business was continued, and (iii) whether a substantial number of new employees was hired to perform duties unrelated to the business activity conducted prior to the transfer. §60.2-536.2.
Advisory opinion by the Commission
Upon application by an employer who is a party to a transfer or potential transfer of any trade or business, the Commission shall issue an advisory opinion as to whether such transfer constitutes a transfer pursuant to §60.2-536.1, or is solely or primarily for the purpose of obtaining a lower unemployment tax rate. The application shall be under oath or affirmation, in a form prescribed by the Commission, and shall fully set forth all relevant facts regarding the proposed transfer. The Commission may require such additional information and documentary evidence as deemed necessary for a fair and informed opinion. Such opinion shall be issued within 60 days after the Commission has received all of the information and evidence requested.
An employer who proceeds with the transfer of a trade or business in reliance upon a favorable advisory opinion issued under this section shall not subsequently be found to have violated the provisions of §18.2-204.3, and shall not be subject to the penalties of §60.2-536.3, provided such employer has made full disclosure of all relevant facts to the Commission. If an employer disagrees with the Commission’s advisory opinion, it shall have the right to a hearing and decision pursuant to §60.2-500, provided that an application for a hearing is filed with the Commission within 30 days from the date the advisory opinion was mailed. §60.2-536.3.
Violations; penalties
A. If a person knowingly transfers, or attempts to transfer, any trade or business where the sole or primary purpose is to obtain a lower unemployment tax rate, or if a person knowingly advises another person to engage, or attempt to engage, in such transfer, such person shall be subject, in addition to the criminal penalties set forth in §18.2-204.3, to the following additional rate of contributions and civil penalty:
1. If the person is an employer, he shall be assigned the highest rate assignable under this chapter for the calendar year during which such violation or attempted violation occurred, and for the next calendar year immediately following such year. However, if the employer is already at such highest rate for that year, or if the amount of increase in the employer’s rate would be less than two percent for any such year, then an additional rate of contributions of two percent of taxable wages shall be imposed for such year, which shall be paid into the benefit account of the Unemployment Compensation Fund pursuant to §60.2-301.
2. If the person is not an employer, he shall be subject to a civil penalty of $5,000, which shall be paid into the Special Unemployment Compensation Administration Fund pursuant to §60.2-314.
B. Final orders of the Commission with respect to the provisions of §60.2-536.1 may be recorded, enforced, and satisfied as orders or decrees of a circuit court upon certification of such orders by the Clerk of the Commission. Such orders may be appealed pursuant to §60.2-500. §60.2-536.4. Interpretation.
The provisions of §60.2-536.1 through §60.2-536.3 shall be interpreted and applied in such a manner as to meet the requirements contained in Public Law 108-295.