COMMITTEE SUBSTITUTE

FOR

Senate Bill No. 241

(By Senators Chafin, Plymale, Ross and Anderson)

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[Originating in the Committee on Judiciary;

reported March 2, 1995.]

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A BILL to amend and reenact sections six, eleven, twelve-a, fifteen, seventeen and twenty-two, article twenty, chapter forty-seven of the code of West Virginia, one thousand nine hundred thirty-one, as amended; and to amend and reenact section three, article twenty-three of said chapter, all relating generally to charitable bingo and raffles; revising the license fee requirements; providing for an exemption from fee and exemption from taxes in certain cases; changing the types of operators eligible to run of bingo games; authorizing concessions sales; allowing for compensation of bingo operator; increasing the number of allowable employees; authorizing the payment of reasonable expenses from proceeds; providing for the disbursement of the proceeds; allowing for expenditures for maintenance and repairs to premises; prohibiting third-party advertising; increasing deadlines for filing reports; and providing for an exemption from certain raffle fees.

Be it enacted by the Legislature of West Virginia:
That sections six, eleven, twelve-a, fifteen, seventeen and twenty-two, article twenty, chapter forty-seven of the code of West Virginia, one thousand nine hundred thirty-one, as amended; and that section three, article twenty-three of said chapter be amended and reenacted, all to read as follows:
ARTICLE 2. CHARITABLE BINGO.
§47-20-6. License fee and exemption from taxes.

(a) A license fee shall be paid to the tax commissioner for annual licenses in the amount of five hundred dollars, except that for volunteer or nonprofit groups who gross less than twenty thousand dollars the fee shall be two hundred dollars and for bona fide senior citizen organizations the fee is fifty dollars. A license fee shall be paid to the tax commissioner for a limited occasion license in the amount of one hundred dollars. A license fee of five hundred dollars shall be paid to the tax commissioner for a state fair license as provided in section twenty-two of this article: Provided, That no license fee shall be charged to unincorporated nonprofit youth athletic organizations and unincorporated nonprofit youth public service organizations such as boy scout and girl scout clubs whose net profits do not exceed three thousand five hundred dollars during the term of the license: Provided, however, That any such organization whose net profits exceed two thousand dollars during the term of a license shall remit, with its annual financial report, the appropriate license fee as otherwise provided for in this section. All revenue from said license fee shall be deposited in the special revenue account established under the authority of section two-a, article nine, chapter eleven of this code and used to support the investigatory activities provided for in said section. The license fee imposed by this section is in lieu of all other license or franchise taxes or fees of this state and no county or municipality or other political subdivision of this state is empowered to impose a license or franchise tax or fee.
(b) The gross proceeds derived from the conduct of a bingo occasion are exempt from state and local business and occupation taxes, income taxes, excise taxes and all special taxes. The licensee is exempt from payment of consumers sales and service taxes and use taxes on all purchases for use or consumption in the conduct of a bingo occasion and is exempt from collecting consumers sales taxes on any admission fees and sales of bingo cards: Provided, That the exemption provided in this subsection does not apply to state fair bingo proceeds.
§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 , 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.
§47-20-11. Operator of bingo games and related concessions.

Except as provided in sections thirteen and twenty-two of this article, only persons, as defined in section two of this article, who are residents of this state and who are active members of the licensee organization or its authorized auxiliary organization may participate in any manner in the conduct of any bingo game or operate any concession in conjunction with a bingo occasion: Provided, That notwithstanding anything contained in this article to the contrary, no individual under the age of eighteen years may directly or indirectly participate in the conduct of a bingo game.
§47-20-12a. Compensation of bingo operator; number of employees.

(a) Within the guidelines set forth in subsections (b), (c) and (d) of this section, a licensee may pay a salary, not to exceed the federal minimum wage, to operators of bingo games who are active members of the licensee organization.
(b) If the licensee's gross receipts from bingo occasions equal or exceed one hundred thousand dollars for the licensee's most recently filed annual financial report, a salary may be paid to not more than five operators.
(c) If the licensee's gross receipts from bingo occasions are less than one hundred thousand dollars, but equal or exceed fifty thousand dollars for the licensee's most recently filed annual financial report, a salary may be paid to not more than three operators.
(d) If the licensee's gross receipts from bingo occasions are less than fifty thousand dollars for the licensee's most recently filed annual financial report, a salary may be paid to no more than two operators.
§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 twenty-five 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;
(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;
(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; and
(7) The cost to the licensee organization for reasonable and necessary maintenance and repair of the premises owned by the licensee organization and utilized to conduct bingo occasions not to exceed ten percent of the twenty-five percent of the gross proceeds authorized for payment of expenses in accordance with subsection (a) of this section.
(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.
§47-20-17. Advertising.

A licensee may advertise its bingo occasions in a manner reasonably necessary to promote the occasion: Provided, That a licensee may not hire any person, as defined in section two of this article, to develop or conduct an advertising campaign to promote any bingo occasion.
§47-20-24. Filing of reports.

Each licensee holding an annual license shall file with the tax commissioner 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 sixty days after the expiration of the license under which the operations covered by the report were held.
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, 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.
§47-23-3. Fees.
Wholesalers or distributors of charitable raffle boards and games to retailers shall be licensed and a license fee in the amount of five hundred dollars shall be paid to the commissioner by each wholesaler or distributor for an annual license. Wholesalers and distributors shall also pay a fee of twenty cents on each dollar of retail value of each charitable raffle board or game sold to a retailer. This fee shall be in addition to any tax imposed pursuant to the provisions of article fifteen, chapter eleven of this code. The fees imposed by this article shall be deposited in accordance with the provisions of section two-a, article nine, chapter eleven of this code: Provided, That no license or other fee provided for in this section shall be charged to any newspaper or other printing or duplicating operation that furnishes charitable raffle boards and games to licensed retailers free of charge.