COMMITTEE SUBSTITUTE

FOR

H. B. 2496

(By Delegates J. Martin, Mezzatesta and Michael)


(Originating in to the Committee on Finance.)

[February 28, 1995]



A BILL to repeal section fourteen, article twenty, chapter forty- seven of the code of West Virginia, one thousand nine hundred thirty-one, as amended; to repeal section fourteen, article twenty-one of said chapter; to amend and reenact sections four, ten, fifteen and twenty-four, article twenty; sections two, four, eleven, fourteen, fifteen, and twenty- two, article twenty-one; and section two, article twenty- three, all of chapter forty-seven of said code, all relating to licensure and reporting requirements relating to charitable bingo, raffles, raffle boards or games; repealing provisions relating to limitations on permissible amounts of rent which may be received for premises upon which bingo and raffle occasions are held; allowing acceptance of personal checks by licensees; removing certain limitations on prizes awarded during duration of bingo license period; allowing twenty-two and one half percent of gross proceeds to be used to pay expenses; limiting rent payments to the fair market value of the premises; permitting nonprofit entities holding raffle and bingo occasions receiving state or federal funds to elect annual reporting periods which coincide with the licensee's fiscal year; permitting licensed public accountants to compile and review or audit records of licensed entities holding raffle or bingo occasions; deleting requirement for audited financial reports in accordance with certain standards; permitting nonprofit social clubs to hold raffle license; removing certain limitations on awards of raffle prizes; allowing thirty percent of raffle gross proceeds from raffle license be used for payment of expenses; providing that persons donating raffle or game items or services without compensation are not required to be licensed as a wholesaler or distributor.

 Be it enacted by the Legislature of West Virginia:
That section fourteen, article twenty, chapter forty-seven of the code of West Virginia, one thousand nine hundred thirty- one, as amended, be repealed; that section fourteen, article twenty one, of said chapter be repealed; sections four, ten, fifteen, and twenty-four, article twenty; sections two, four, eleven, fifteen, twenty-two, article twenty-one; and section two, article twenty-three, all of said chapter forty-seven be amended and reenacted, all to read as follows:
ARTICLE 20. CHARITABLE BINGO.

§47-20-4. Annual license; conditions on holding of games.

A charitable or public service organization or any of its auxiliaries or other organizations otherwise affiliated with it may apply for an annual license. Only one license per year in the aggregate may be granted to a charitable or public service organization and all of its auxiliaries or other associations or organizations otherwise affiliated with it: Provided, That for purposes of this section the various branches, chapters or lodges of any national association or organization or local churches of a nationally organized church are not considered affiliates or auxiliaries of each other. The commissioner shall by regulation provide for the manner for determining to which organization, whether the parent organization, an affiliate or an auxiliary, the one license allowed under this section is granted. An annual license is valid for one year from the date of issuance and entitles only the licensee to hold no more than two bingo occasions per week. No two or more organizations may hold a joint bingo occasion under any annual licenses. No bingo occasion held pursuant to an annual license may exceed six hours duration.
A licensee shall display its annual bingo license conspicuously at the location where the bingo occasion is held.
All bingo occasions shall be open to the general public: Provided, That no licensee shall permit or allow any individual under the age of eighteen to participate in the playing of any bingo game with knowledge or reason to believe that the individual is under the age of eighteen: Provided, however, That an individual under the age of eighteen may attend the playing of a bingo game when accompanied by and under the supervision of an adult relative or a legal guardian of said individual.
Any licensee may receive and cash personal checks in an amount not to exceed one hundred dollars during the normal operation of a bingo game.
§47-20-10. Limits on prizes awarded -- General provisions.

Except as otherwise provided in section twenty-two of this article, the total value of all prizes awarded by a licensee during the period of a license may not exceed in value eighty- five percent of the gross proceeds collected during that period: Provided, That notwithstanding the foregoing limitation, the average total prizes awarded by a licensee, or in the aggregate by two or more limited occasion licensees holding a joint bingo occasion, for any bingo occasion held pursuant to an annual or limited occasion license, may not exceed seven thousand five hundred dollars in value.
Prizes may be money or merchandise other than beer, nonintoxicating beer, wine, spirits or alcoholic liquor as defined in section five, article one, chapter sixty of this code. If the prizes are merchandise, the value assigned to them is their fair market value at the time of purchase.
§47-20-15. Payment of reasonable expenses from proceeds; net proceeds disbursement.
(a) The reasonable, necessary and actual expenses incurred in connection with the conduct of bingo occasions, not to exceed fifteen twenty-two and one half percent of the gross proceeds collected during a license period, may be paid out of the gross proceeds of the conduct of bingo, including, but not limited to:
(1) Rent paid for the use of the premises: Provided, That a copy of the rental agreement was filed with the bingo license application and any changes thereto were filed within ten days of being made: Provided, however, That in no event may the rent paid for the use of any premises exceed the fair market value of rent for such premises;
(2) The cost of custodial services;
(3) The cost to the licensee organization for equipment and supplies used to conduct the bingo occasion;
(4) The cost to the licensee organization for advertising the bingo occasion;
(5) The cost of hiring security personnel, licensed pursuant to the provisions of article eighteen, chapter thirty of this code; and
(6) The cost of providing child care services to the raffle patrons: Provided, That any proceeds received from the provision of child care services shall be handled the same as raffle proceeds.
(b) The actual cost to the licensee for prizes, not to exceed the amounts as specified in section ten of this article, may be paid out of the gross proceeds of the conduct of bingo.
(c) The cost of any refreshments, souvenirs or any other item sold or otherwise provided through any concession to the patrons may not be paid for out of the gross proceeds from the bingo occasion. The licensee shall expend all net bingo proceeds and any interest earned thereon for the charitable or public service purposes stated in the application within one year after the expiration of the license under which the bingo occasions were conducted. A licensee which does not qualify as a qualified recipient organization may apply to the commissioner at the time it applies for a bingo license or as provided in subsection (e) of this section for permission to apply any or all of its net proceeds to directly support a charitable or public service activity or endeavor which it sponsors.
(d) No gross proceeds from any bingo operation may be devoted or in any manner used by any licensee or qualified recipient organization for the construction, acquisition, improvement, maintenance or repair of real or personal property except that which is used exclusively for one or more charitable or public service purposes or as provided in subdivision (3), subsection (a) of this section.
(e) Any licensee which, in good faith, finds itself unable to comply with the requirements of this provision shall apply to the commissioner for permission to expend its net proceeds for one or more charitable or public service purposes other than that stated in its license application or for permission to expend its net proceeds later than the one-year time period specified in this section. The application shall be on a form furnished by the commissioner and shall include the particulars of the requested changes and the reasons for the changes. The application shall be filed no later than sixty days before the end of the one-year period specified in this section. In the case of an application to extend the time in which the net proceeds are to be expended for a charitable or public service purpose, the licensee shall file such periodic reports with the commissioner as the commissioner directs until the proceeds are so expended.
§47-20-24. Filing of reports.

Each licensee holding an annual license shall file with the tax commissioner a quarterly and an annual financial report summarizing its bingo operations for the time period covered by the report. Each quarterly report shall be filed within twenty days after the end of the quarter which it covers. The annual report shall be filed within thirty days after the expiration of the license under which the operations covered by the report were held. The time period covered by the annual report is the full license year or, at the election of a licensee receiving state or federal funding, the most recently ended state or federal fiscal year.
Each licensee holding a limited occasion license or state fair license shall file with the tax commissioner a financial report summarizing its bingo operations for the license period within thirty days after the expiration of the license under which the operations covered by the report are held. The report shall contain the name, address and social security number of any individual who receives during the course of a bingo occasion prizes the aggregate value of which exceeds one hundred dollars, and other information required by the commissioner: Provided, That any licensee failing to file such report when due shall be liable for a penalty of twenty-five dollars for each month or fraction thereof during which the failure continues, such penalty not to exceed one hundred dollars: Provided, however, That annual financial reports for license years ending after the first day of July, one thousand nine hundred ninety-three, must be audited financial reports as defined by the American institute of certified public accountants if a licensee's gross receipts exceed one hundred thousand dollars: Provided further, That annual financial reports for license years ending after the first day of July, one thousand nine hundred ninety-three, must contain a compilation and review of such financial report by a certified or licensed public accountant, or may be audited by a certified or licensed public accountant, as defined by the American institute of certified public accountants, if a licensee's gross receipts exceed fifty thousand dollars but are less than one hundred thousand dollars.
ARTICLE 21. CHARITABLE RAFFLES.


§47-21-2. Definitions.

For purposes of this article, unless specified otherwise:
(a) "Charitable or public service activity or endeavor" means any bona fide activity or endeavor which directly benefits a number of people by:
(1) Contributing to educational or religious purposes; or
(2) Relieving them from disease, distress, suffering, constraint or the effects of poverty; or
(3) Increasing their comprehension of and devotion to the principles upon which this nation was founded and to the principles of good citizenship; or
(4) Making them aware of or educating them about issues of public concern so long as the activity or endeavor is not aimed at supporting or participating in the campaign of any candidate for public office; or
(5) By lessening the burdens borne by government or voluntarily supporting, augmenting or supplementing services which government would normally render to the people; or
(6) Providing or supporting nonprofit community activities for youth, senior citizens or the disabled; or
(7) Providing or supporting nonprofit cultural or artistic activities; or
(8) Providing or supporting any political party executive committee.
(b) "Charitable or public service organization" means a bona fide, not for profit, tax-exempt, benevolent, educational, philanthropic, humane, patriotic, civic, religious, fraternal or eleemosynary incorporated or unincorporated association or organization; or a volunteer fire department, rescue unit or other similar volunteer community service organization or association; but does not include any nonprofit association or organization, whether incorporated or not, which is organized primarily for the purposes of influencing legislation or supporting or promoting the campaign of any single candidate for public office.
(c) "Commissioner" means the state tax commissioner.
(d) "Concession" means any stand, booth, cart, counter or other facility, whether stationary or movable, where beverages, both alcoholic and nonalcoholic, food, snacks, cigarettes or other tobacco products, newspapers, souvenirs or any other items are sold to patrons by an individual operating the facility. Notwithstanding anything contained in subdivision (2), subsection (a), section twelve, article seven, chapter sixty of this code to the contrary, "concession" includes beverages which are regulated by and shall be subject to the provisions of chapter sixty of this code.
(e) "Conduct" means to direct the actual holding of a raffle by activities including, but not limited to, handing out tickets, collecting money, drawing the winning numbers or names, announcing the winning numbers or names, posting the winning numbers or names, verifying winners and awarding prizes.
(f) "Expend net proceeds for charitable or public service purposes" means to devote the net proceeds of a raffle occasion or occasions to a qualified recipient organization or as otherwise provided by this article and approved by the commissioner pursuant to section fifteen of this article.
(g) "Gross proceeds" means all moneys collected or received from the conduct of a raffle or raffles at all raffle occasions held by a licensee during a license period; this term shall not be deemed to include any moneys collected or received from the sale of concessions at raffle occasions.
(h) "Joint raffle occasion" means a single gathering or session at which a series of one or more successive raffles is conducted by two or more licensees.
(i) "Licensee" means any organization or association granted an annual or limited occasion license pursuant to the provisions of this article.
(j) "Net proceeds" means all moneys collected or received from the conduct of raffle or raffles at occasions held by a licensee during a license period after payment of the raffle expenses authorized by sections eleven, thirteen and fifteen of this article; this term shall not be deemed to include moneys collected or received from the sale of concessions at raffle occasions.
(k) "Non-profit social club" means any corporation or unincorporated association which either belongs to or is affiliated with a nationally recognized fraternal or veterans organization and is licensed by the state alcohol beverage control commission;
(k) (l) Person" means any individual, association, society, incorporated or unincorporated organization, firm, partnership or other nongovernmental entity or institution.
(l) (m) "Patron" means any individual who attends a raffle occasion other than an individual who is participating in the conduct of the occasion or in the operation of any concession, whether or not the individual is charged an entrance fee or participates in any raffle.
(m) (n) "Qualified recipient organization" means any bona fide, not for profit, tax-exempt, as defined in subdivision (p) of this section, incorporated or unincorporated association or organization which is organized and functions exclusively to directly benefit a number of people as provided in subparagraphs (1) through (7), subdivision (a) of this section. "Qualified recipient organization" includes, without limitation, any licensee which is organized and functions exclusively as provided in this subdivision.
(n) (o) "Raffle" means a game involving the selling of tickets to participate in such game entitling the holder or holders to a chance on a prize or prizes.
(o) (p) "Raffle occasion" or "occasion" means a single gathering or session at which a series of one or more successive raffles is conducted by a single licensee.
(p) (q) "Tax-exempt association or organization" means an association or organization which is, and has received from the "Internal Revenue Service" a determination letter that is currently in effect stating that the organization is exempt from federal income taxation under subsection 501(a) and described in subsection 501(c)(3), 501(c)(4), 501(c)(8), 501(c)(10), 501(c)(19) or 501(d) of the Internal Revenue Code of 1986, as amended; or is exempt from income taxes under subsection 527(a) of said code.
§47-21-4. Who may hold raffles; application for license; licenses not transferable.

(a) Except as provided in section three of this article, any charitable or public service organization which has been in existence in this state for at least one year prior to filing an application for a raffle license issued pursuant to section five or section six of this article may hold raffle occasions in accordance with the provisions of this article during such time as it holds a valid license.
(b) A non-profit social club as defined in section two of this article and so licensed by the alcohol beverage control commissioner and which has been in existence in this state for at least one year prior to filing an application for a raffle license issued pursuant to section five or six of this article may hold raffle occasions in accordance with the provisions of this article during the period of the raffle license. Social clubs shall pay an annual license fees as provided in section seven of this article and be subject to all other license provisions of this article. Non-profit social clubs shall also pay an additional fee of twenty cents for every one dollar collected as a result of the holding of a charitable raffle board or game occasion. This fee is in addition to all other taxes and fees imposed on the licensee. This additional fee shall be deposited to the credit of the special revenue account created pursuant to section two-a, article nine-a, chapter eleven of this code.
(c) Application for a raffle license shall be made to the tax commissioner and shall be on a form which shall be supplied by him. The application shall contain the information required by section eight of this article and any other information which the commissioner considers necessary. An application shall be filed not less than sixty days before the date when the applicant intends to hold its first raffle occasion. An application which is not denied within thirty days after filing is considered approved and the commissioner shall, within five days after the expiration of such thirty days, send to the applicant its license.
(d) For purposes of this article, any application for an annual license or a limited occasion license received prior to the effective date of this article is considered filed on such effective date.
(e) No raffle license issued pursuant to this article may be transferred.
§47-21-11. Limits on prizes awarded -- General provisions.

During the period of a license, the total value of all prizes awarded by a licensee shall not exceed in value eighty-five percent of the gross proceeds collected during such period: Provided, That notwithstanding the foregoing limitation, the total prizes awarded by a licensee, or in the aggregate by two or more limited occasion licensees holding a joint raffle occasion, for any raffle occasion held pursuant to a limited occasion license, may not exceed in value seven thousand five hundred dollars.
Prizes may be money, real or personal property or merchandise other than beer, wine, spirits or alcoholic liquor as defined in section five, article one, chapter sixty of this code. If the prizes are real or personal property or merchandise, the value assigned to them is their fair market value at the time of acquisition for the raffle or at the time of purchase.
§47-21-15. Payment of reasonable expenses from proceeds; net proceeds disbursement.

(a) The reasonable, necessary and actual expenses incurred in connection with the conduct of raffle occasions, not to exceed fifteen twenty-two and one half percent of the gross proceeds collected during a license period, may be paid out of the gross proceeds of the conduct of raffle, including, but not limited to:
(1) Rent paid for the use of the premises: Provided, That a copy of the rental agreement was filed with the raffle license application with any modifications thereto to be filed within ten days of being made: Provided, however, That in no event may the rent paid for the use of any premises exceed the fair market value of rent for such premises;
(2) The cost of custodial services;
(3) The cost to the licensee organization for equipment and supplies used to conduct the raffle occasion;
(4) The cost to the licensee organization for advertising the raffle occasion;
(5) The cost of hiring security personnel, licensed pursuant to the provisions of article eighteen, chapter thirty of this code; and
(6) The cost of providing child care services to the bingo patrons: Provided, That any proceeds received from the provision of child care services shall be handled the same as bingo proceeds.
(b) The actual cost to the licensee for prizes, not to exceed the amounts as specified in section eleven of this article, may be paid out of the gross proceeds of the conduct of raffle.
(c) The cost of any refreshments, souvenirs or any other item sold or otherwise provided through any concession to the patrons may not be paid for out of the gross proceeds from the raffle occasion. The licensee shall expend all net raffle proceeds and any interest earned thereon for the charitable or public service purposes stated in the application within one year after the expiration of the license under which the raffle occasions were conducted. A licensee which does not qualify as a qualified recipient organization may apply to the commissioner at the time it applies for a raffle license or as provided in subsection (e) of this section for permission to apply any or all of its net proceeds to directly support a charitable or public service activity or endeavor which it sponsors.
(d) No gross proceeds from any raffle operation may be devoted or in any manner used by any licensee or qualified recipient organization for the construction, acquisition, improvement, maintenance or repair of real or personal property except that which is used exclusively for one or more charitable or public service purposes or as provided in subdivision (3), subsection (a) of this section.
(e) Any licensee which, in good faith, finds itself unable to comply with the requirements of the foregoing provisions of this section shall apply to the commissioner for permission to expend its net proceeds for one or more charitable or public service purposes other than that stated in its license application or for permission to expend its net proceeds later than the one-year time period specified in this section. The application shall be on a form furnished by the commissioner and shall include the particulars of the requested changes and the reasons for the changes. The application shall be filed no later than sixty days before the end of the one-year period specified in this section. In the case of an application to extend the time in which the net proceeds are to be expended for a charitable or public service purpose, the licensee shall file such periodic reports with the commissioner as the commissioner directs until the proceeds are so expended.
§47-21-22. Filing of reports.

Each licensee holding an annual, limited or state fair license shall file with the commissioner a financial report summarizing its raffle operations within thirty days after the expiration date of such license. The time period covered by an annual report is the full license year or, at the election of a licensee receiving state or federal funding, the most recently ended state or federal fiscal year.
The reports required by this section shall contain the name, address and social security number of any individual who received during the course of a raffle occasion prizes the aggregate value of which exceeded one hundred dollars, and other information required by the commissioner: Provided, That any licensee failing to file such report when due shall be liable for a penalty of twenty-five dollars for each month or fraction thereof during which the failure continues, such penalty not to exceed one hundred dollars: Provided, however, That annual financial reports for license years ending after the first day of July, one thousand nine hundred ninety-three, must be audited financial reports as defined by the American institute of certified public accountants if a licensee's gross receipts exceed one hundred thousand dollars: Provided further, That annual financial reports for license years ending after the first day of July, one thousand nine hundred ninety-three, must contain a compilation and review of such financial report by a certified or licensed public accountant, or may be audited by a certified or licensed public accountant, as defined by the American institute of certified public accountants, if a licensee's gross receipts exceed fifty thousand dollars but are less than one hundred thousand dollars.
ARTICLE 23. CHARITABLE RAFFLE BOARDS AND GAMES.

§47-23-2. Definitions.

For purposes of this article, unless specified otherwise:
(a) "Commissioner" means tax commissioner of the state of West Virginia, or his delegate.
(b) "Retail value" means the actual consideration paid to the wholesaler by the retailer for any raffle boards or games.
(c) "Person" means any individual, association, society, incorporated or unincorporated organization, firm partnership or other nongovernmental entity or institution.
(d) "Retailer" means every person engaged in the business of making retail sales of raffle chances except a charitable or public service organization authorized to conduct raffles pursuant to section three, article twenty-one of this chapter.
(e) "Charitable raffle board" or "charitable raffle game" means: (1) A board or other device that has many folded printed slips to be pulled from the board or otherwise distributed without a board on payment of a nominal sum in an effort to obtain a slip or chance that entitles the player to a designated prize; (2) a series of paper cards with perforated break-open tabs, a face value of which is covered or otherwise hidden from view to conceal one or more numbers, letters or symbols, which, on payment of a nominal sum, entitles the player to obtain a chance to a designated prize; or (3) such other similar game which may be defined by the state tax commissioner by legislative rule.
(f) "Sale" means the transfer of the ownership of tangible personal property for a consideration.
(g) "Verification" means a unique manufacture identifiable serial number which is required to be printed on each ticket in a charitable raffle board or charitable raffle game or such other form of identification as may be prescribed by the tax commissioner upon a showing of undue hardship by the taxpayer: Provided, That such other form of identification shall be prescribed by rule in accordance with the provisions of article three, chapter twenty-nine-a of this code.
(h) "Wholesaler" or "distributor" means any person or entity engaged in the wholesale distribution of charitable raffle boards or games or similar boards or devices, as defined by the commissioner, and licensed under the provisions of this article, to distribute said devices to charitable raffle boards or games retailers as defined in this article. It also includes anyone who is engaged in the manufacturing, packaging, preparing or repackaging of charitable raffle boards or games for distribution in this state: Provided, That a person who is not regularly engaged in the business of manufacturing, packaging, preparing or repackaging charitable raffle boards or games and who is donating items or services to a nonprofit entity without compensation shall not be considered a "wholesaler" or "distributor" under this article.