                                 CODE OF VIRGINIA

BONDING OF NONPROFIT ORGANIZATIONS (§ 60.2-502)

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&#8217;s taxable
wages paid for employment as defined in subdivision 4 of subsection A of &#xA7;
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 &#xA7; 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 &#xA7; 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&#8217;s deposit at the prior level. Any cash remaining from the
sale of such securities shall be a part of the organization&#8217;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&#8217;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.

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