COMMITTEE SUBSTITUTE

FOR

H. B. 107


(By Mr. Speaker, Mr. Chambers, and Delegate Burk)

(By Request of the Executive)


(Originating in the House Committee on Finance)

[May 18, 1993]


A BILL to repeal sections five and six, article twenty-three, chapter forty-seven of the code of West Virginia, one thousand nine hundred thirty-one, as amended; to amend and reenact section eleven, article twenty-one of said chapter; to amend and reenact sections two, three, eight, nine, ten and eleven, article twenty-three of said chapter; and to further amend said article twenty-three by adding thereto a new section, designated section fourteen, all relating to charitable bingo and charitable raffle boards and games; repealing provisions requiring indicia on charitable raffle boards or games; increasing the limits on prizes awarded in charitable raffles; providing definitions for retail value and winnings for the purpose of imposition of tax; increasing fee on retail value of charitable raffle boards or games; amending definition of charitable raffle board or game; requiring serial numbers or other form of verification to be affixed to charitable boards or games; providing penalties for violations of article; allowing emergency rulemaking for initial promulgation; providing procedures for collection and remittance of tax; requiring deposits of tax to the general revenue fund; requiring withholding by retailers.
Be it enacted by the Legislature of West Virginia:

That sections five and six, article twenty-three, chapter forty-seven of the code of West Virginia, one thousand nine hundred thirty-one, as amended, be repealed; that section eleven, article twenty-one of said chapter be amended and reenacted; that sections two, three, eight, nine, ten and eleven, article twenty-three of said chapter be amended and reenacted; and that said article twenty-three be further amended by adding thereto a new section, designated section fourteen, all to read as follows:
 ARTICLE 21. CHARITABLE RAFFLES.
 § 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 sixty-five seventy-five percent of the gross proceeds collected during such period or the sum of one four hundred thousand dollars as determined and assigned under this section whichever amount shall be less: 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.
 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 face value" means the projected gross income to be received by the retailer from the sale of all raffle chances on or in the charitable raffle boards or games actual consideration paid to the wholesaler by the retailer for any raffle boards or games.
(c) "Indicia" means the impression authorized by the commissioner to serve as such indicia, and shall be of the design and color prescribed by the commissioner.
(d) (c) "Person" means any individual, association, society, incorporated or unincorporated organization, firm partnership or other nongovernmental entity or institution.
(e) (d) "Retailer" means every person engaged in the business of making retail sales of raffle chances.
(f) (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 game which may be defined by the state tax commissioner by legislative rule: Provided, That a "charitable raffle board" or "charitable raffle game" shall not include the sale, by an elementary or secondary school, parent-teacher organization of an elementary or secondary school, youth organization, such as the Girl Scouts of America or the Boy Scouts of America, or any political party executive committee, of chances in an effort, by the person purchasing the chance, to obtain a designated prize Provided, however, That the aggregate value of all such prizes in any given calendar year shall not to exceed three thousand five hundred dollars any device, card, or other game which entitles the player to obtain a chance on a designated prize which is sold by any organization which, in any given calendar year, derives cumulative gross proceeds from the conduct of raffle occasions of seven thousand five hundred dollars or less.
(g) (f) "Sale" means the transfer of the ownership of tangible personal property for a consideration.
(g) "Verification" means a unique minimum 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.
(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.
(i) "Winnings" means any prize paid on a charitable raffle board or game to an individual raffle participant in excess of one hundred dollars in cash.
 § 47-23-3. License fee.
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 shall also pay a fee of six cents twenty cents on each dollar of retail value of each charitable raffle board or game sold to a retailer. There is hereby imposed an excise tax of six percent of the winnings on any charitable raffle boards and games. The tax shall be collected and remitted to the tax commissioner on a monthly basis by the holder of the raffle game. All revenue from said the license fee shall be placed in the special revenue account established under the authority of section two-a, article nine, chapter eleven of this code.: Provided, That the remainder of the fees and taxes imposed by this section shall be deposited in the state general revenue fund.
§ 47-23-8. How fee paid; reports required; due date; records to be kept; inspection of records and stocks; examination of witnesses, summons, etc.

The fee hereby imposed shall be paid by each licensed wholesaler or distributor to the commissioner on or before the fifteenth twentieth day of April, July, October and January for the preceding three calendar months. The measure of the fee shall be determined by multiplying the total amount of the retail face value of all charitable raffle boards and games sold by wholesalers or distributors to retailers during the said three-month period by six percent. All fees due and owing to the commissioner by reason of this article, if paid after the due dates required by this section, shall be subject to the provisions of article ten, chapter eleven of this code. Each wholesaler or distributor shall provide with each quarterly payment of fees a report covering the business transacted in the previous three calendar months and providing such other information as the commissioner may deem necessary for the ascertainment or assessment of the fee imposed by this article. Such report shall be signed under penalty of perjury on such forms as the tax commissioner may prescribe and the wholesaler or distributor shall at the time of filing remit all fees owed or due.

The commissioner may authorize any wholesaler or distributor holding the license required by this article to use any metering device approved by the commissioner, such devices to be sealed by the commissioner, before being used, which device shall be used only in accordance with the regulations prescribed by the commissioner. A wholesaler or distributor shall pay the fee in advance where a metering device is used, in which event such wholesaler or distributor shall deliver the metering device to the commissioner who shall seal the meter in accordance with the prepayment so made.
The reports prescribed herein are required, although a fee might not be due or no business transacted for the period covered by the report.
Each person required to file a report under this article shall make and keep such records as shall be prescribed by the commissioner that are necessary to substantiate the returns required by this article, including, but not limited to, invoices, serial numbers or other verification, inventories, receipts, disbursements and sales, for a period of time not less than three years.
Unless otherwise permitted, in writing, by authority of the commissioner, each delivery ticket or invoice for each purchase or sale of charitable raffle boards or games must be recorded upon a serially numbered invoice showing the name and address of the seller and the purchaser, the point of delivery, the date, quantity, serial number and price of the product sold, and the fee must be set out separately, and such other reasonable information as the commissioner may require. These invoicing requirements also apply to cash sales and a person making such sales must maintain such records as may be reasonably necessary to substantiate his return.
In addition to the commissioner's powers set forth in section five, article ten, chapter eleven of this code, the commissioner shall have authority to inspect or examine the stock of charitable raffle boards and games kept in and upon the premises of any person where charitable raffle boards and games are placed, stored or sold, and he or she shall have authority to inspect or examine the records, books, papers and any equipment or records of manufacturers, wholesalers and distributors or any other person for the purpose of determining the quantity of charitable raffle boards and games acquired or disbursed to verify the truth and accuracy of any statement or report and to ascertain whether the fee imposed by this article has been properly paid.
In addition to the commissioner's powers set forth in section five, article ten, chapter eleven of this code, and as a further means of obtaining the records, books and papers of a manufacturer, wholesaler, distributor or any other person and ascertaining the amount of fees and reports due under this article, the commissioner shall have the power to examine witnesses under oath; and if the witness shall fail or refuse at the request of the commissioner to grant access to the books, records or papers, the commissioner shall certify the facts and names to the circuit court of the county having jurisdiction of the party and such court shall thereupon issue summons to such party to appear before the commissioner, at a place designated within the jurisdiction of such court, on a day fixed, to be continued as the occasion may require for good cause shown and give such evidence and lay open for inspection such books and papers as may be required for the purpose of ascertaining the amount of fee and reports due, if any.
§ 47 - 23 - 9. Penalty for failure to file return when no fee due; crimes.

(a) Penalty for failure to file required return where no fee due. -- In the case of any failure to make or file a return when no fee is due, as required by this article, on the date prescribed therefor, unless it be shown that such failure was due to reasonable cause and not due to willful neglect, there shall be collected a penalty of twenty-five dollars for each month of such failure or fraction thereof.

(b) It shall be a misdemeanor, punishable pursuant to the terms of this article, if any person:
(1) Makes any false entry upon an invoice required to be made under the provisions of this article or with intent to evade the fee imposed by this article presents any such false entry for the inspection of the commissioner;
(2) Prevents or hinders the commissioner from making a full inspection of any place where charitable raffle boards or games subject to the fee imposed by this state are sold or stored or prevents or hinders the full inspection of invoices, books, records or papers required to be kept under the provisions of this article;
(3) Sells any charitable raffle boards or games in this state without there having been first affixed thereto the indicia required by this article;
(4) (3) Being a retailer in this state has in his possession any charitable raffle boards or games not bearing the indicia herein required to be affixed thereto or, whoever fails to produce on demand by the commissioner invoices and verification of all charitable raffle boards and games purchased or received by him within three years prior to such demand, unless upon satisfactory proof it is shown that such nonproduction is due to providential or other causes beyond his control;
(5) (4) Being a retailer in this state, purchases or acquires charitable raffle boards and games from any person other than a wholesaler or distributor licensed under this article; or
(6) (5) Who is not a retailer, wholesaler or distributor of charitable raffle boards or games, as provided by this article, shall have in his possession within the state any charitable raffle boards or games, not bearing the proper indicia of this state such possession shall be inferred to be for the purpose of evading the payment of the fees imposed or due thereon.
(c) Any person convicted of violating the provisions of subsection (b) of this section, shall be confined in the county jail for not less than one year or fined not less than one thousand dollars nor more than ten thousand dollars, or both fined and imprisoned.
(d) Any person who falsely or fraudulently makes, forges, alters or counterfeits any indicia prescribed, or defined, invoice or serial number prescribed by the provisions of this article, or its related rules and regulations, or who knowingly and willfully makes, causes to be made, purchases, receives or has in his possession, any device for forging or counterfeiting any indicia, or has in his possession, any indicia not properly issued by the commissioner or tampers with or alters any stamping device authorized by the commissioner, or uses more than once any indicia provided for and required by this article for the purpose of evading the fee hereby imposed, shall be guilty of a felony, and, upon conviction thereof, shall be sentenced to pay a fine of not less than five thousand dollars nor more than ten thousand dollars or imprisoned in the penitentiary for a term of not less than one year nor more than five years, or both fined and imprisoned.
(e) Whenever the commissioner, or any of his deputies or employees authorized by him, or any peace officer of this state shall discover any charitable raffle boards or games subject to the fee as provided by this article and upon which the fee has not been paid as herein required, such charitable raffle boards and games shall thereupon be deemed to be contraband, and the commissioner, or such deputy or employee or any peace officer of this state, is hereby authorized and empowered forthwith to seize and take possession of such charitable raffle boards or games, without a warrant, and such charitable raffle boards and games shall be forfeited to the state, and the commissioner shall retain the forfeited charitable raffle boards and games until they are no longer needed as evidence in any prosecution of the person from whom the raffle boards and games were seized. The commissioner may within a reasonable time thereafter destroy such charitable raffle boards and games or may affix the indicia required by this article upon each charitable raffle boards or games and sell said charitable raffle boards or games at public auction to the highest bidder: Provided, That such seizure and destruction or public auction shall not be deemed to relieve any person from fine or imprisonment as provided herein for violation of any provisions of this article. Such destruction may be made in any county the commissioner deems most convenient and economical. 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.
(f) Magistrates shall have concurrent jurisdiction with any other courts having jurisdiction for the trial of all misdemeanors arising under this article.
§ 47 - 23 - 10. Transportation of charitable raffle boards and games; forfeitures and sales of charitable raffle boards, charitable raffle games and equipment; criminal sanctions.

Every person who shall knowingly transport charitable raffle boards or games not bearing indicia as required by section six of this article upon the public highways, waterways, airways, roads or streets of this state shall have in his actual possession invoices or delivery tickets for such charitable raffle boards or games which shall show the true name and the complete and exact address of the manufacturer, the true name and complete and exact address of the wholesaler or distributor who is the purchaser, the quantity and description of the charitable raffle boards and games transported and the true name and complete and exact address of the person who has or shall assume payment of the West Virginia state fee, or the tax, if any, of the state or foreign country at the point of ultimate destination. Provided, That any common carrier which has issued a bill of lading for a shipment of charitable raffle boards and games and is without notice to itself or to any of its agents or employees that said charitable raffle boards or games have no proper indicia affixed thereto as required by section six of this article shall be deemed to have complied with this article and the vehicle or vessel in which said charitable raffle boards or games are being transported shall not be subject to confiscation hereunder In the absence of such invoices, delivery tickets or bills of lading, as the case may be, the charitable raffle boards or games so transported, the vehicle or vessel in which the charitable raffle boards or games are being transported and any paraphernalia or devices used in connection with such, are declared to be contraband goods and may be seized by the commissioner, his agents or employees or by any peace officer of the state without a warrant.

Any person who transports charitable raffle boards or games in violation of this section shall be guilty of a misdemeanor, and, upon conviction thereof, shall be fined not less than three hundred dollars nor more than five thousand dollars, or imprisoned in the county jail not more than one year, or both fined and imprisoned.
Charitable raffle boards and games seized under this section shall be forthwith destroyed in the manner provided hereinafter in this section and such destruction shall not relieve the owner of the destroyed charitable raffle boards and games of any action by the commissioner for violations of this or any other sections of this article.
The commissioner shall immediately, after any seizure made pursuant to this section, institute a proceeding for the confiscation thereof in the circuit court of the county in which the seizure is made. The court may proceed in a summary manner and may direct confiscation by the commissioner: Provided, That any person claiming to be the holder of a security interest in any vehicle or vessel, the disposition of which is provided for above, may present his petition so alleging and be heard, and in the event it appears to the court that the property was unlawfully used by a person other than such claimant, and if the said claimant acquired his security interest in good faith and without knowledge that the vehicle or vessel, was going to be so used, the court shall waive forfeiture in favor of such claimant and order the vehicle or vessel returned to such claimant.
 § 47-23-11. Administration; rules.
(a) The commissioner shall promulgate propose for promulgation, rules to administer the provisions of this article in accordance with the provisions of chapter twenty-nine-a of this code: Provided, That the initial promulgation of rules to administer the provisions of this article shall be by emergency rule. Additionally, the commissioner shall promulgate a rule which sets forth a means of verifying on the face of requires that every charitable raffle board or game that the charitable raffle board or game is distributed by a wholesaler licensed pursuant to the provisions of this article shall each bear a unique minimum five number serial number printed by a manufacturer on each ticket in a game unless, upon application by the taxpayer showing undue hardship, the tax commissioner consents to waive this requirement in favor of some other form of verification.
(b) The commissioner shall deny an application for a license if he or she finds that the issuance thereof would be in violation of the provisions of this article.
(c) The commissioner may suspend, revoke or refuse to renew any license issued hereunder for a material failure to maintain the records or file the reports required by this article or administrative rule if the commissioner finds that said failure will substantially impair the commissioner's ability to administer the provisions of this article with regard to said licensee.
(d) The burden of proof in any administrative or court proceeding is on the applicant to show cause why a charitable raffle boards or games wholesaler's or distributor's license should be issued or renewed and on the licensee to show cause why its license should not be revoked or suspended.
§ 47-23-14. Collection and remittance of taxes imposed; required withholding.

(a) The fee of six cents twenty cents on retail value which is imposed on the wholesaler pursuant to section three of this article shall be paid by each wholesaler by check, bank draft, certified check or money order, payable to the commissioner, for the amount of tax due, if any, for the preceding quarter. The fee shall be remitted to the tax commissioner as prescribed by rules promulgated pursuant to section eleven of this article.

(b) The excise tax imposed on the winnings attributable to any raffle board or game shall be withheld by the retailer conducting the raffle game from which the winnings were paid. The retailer shall keep the amount of tax paid separate from the proceeds of the sale of the raffle ticket, slip or chance. If any retailer fails to collect the tax imposed by section three of this article, he or she shall be personally liable for the amount he or she failed to collect. The retailer shall be required to withhold the tax attributable to any winnings subject to the tax imposed by section three of this article in the manner prescribed by the tax commissioner by rule promulgated pursuant to section eleven of this article. The tax commissioner shall deposit all collections of the excise tax imposed by section three of this article in the general revenue fund of this state.