COMMITTEE SUBSTITUTE

FOR

Senate Bill No. 91

(By Senator Snyder)

____________

[Originating in the Committee on the Judiciary;

reported April 2, 2001.]

____________

A BILL to amend and reenact section twenty-two, article twenty- one, chapter forty-seven of the code of west Virginia, one thousand nine hundred thirty-one, as amended; to amend and reenact sections two, three and eight, article twenty- three of said chapter; and to further amend said article by adding thereto a new section, designated section ten-a, all relating to charitable raffle boards and games; requiring certain reports; redefining terms; increasing certain fees; requiring state identification and inspection stamps; providing for the calculation and quarterly payment of fees; penalties for failing to pay state identification and inspection stamps; establishing administrative remedies; providing for civil penalties; and providing that money collected as a civil penalty be deposited in the general revenue fund.

Be it enacted by the Legislature of West Virginia:
That section twenty-two, article twenty-one, chapter forty- seven of the code of West Virginia, one thousand nine hundred thirty-one, as amended, be amended and reenacted; that sections two, three and eight, article twenty-three of said chapter be amended and reenacted; and that said article be further amended by adding thereto a new section, designated section ten-a, all to read as follows:
ARTICLE 21. CHARITABLE RAFFLES.

§47-21-22. Filing of reports.
Each licensee holding an annual, limited or state fair license shall file with the commissioner a quarterly and an annual financial report summarizing its raffle operations within thirty days after the expiration date of the 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. 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.
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 the report when due is liable for a penalty of twenty-five dollars for each month or fraction of a month during which the failure continues, the penalty not to exceed one hundred dollars: Provided, however, That annual financial reports must contain either a compilation or review of such financial report by a certified or licensed public accountant, or may be audited by a certified or licensed public accountant, if a licensee's gross receipts exceed fifty 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 or, in the absence of consideration paid, the actual cost to the wholesaler of the 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 without a license pursuant to section three, article twenty-one of this chapter the provisions of this code governing charitable raffles.
(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: . Once the undue hardship exemption to the requirement for a manufacture serial number has been granted it continues until the circumstances that warranted the exemption no longer exist: 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 no license taxes or other fees provided for in this section may be charged to any newspaper or other printing or duplicating operation not regularly engaged in the business of manufacturing, packaging, preparing or repackaging charitable raffle boards or games where the gross sales of such printing or duplicating operation from such activity does not exceed seven thousand five hundred dollars per calendar year and who is donating such items or services to a nonprofit entity without compensation may not be considered a "wholesaler" or "distributor" under this article.
§47-23-3. Fees; state identification and inspection stamps;
penalties.
(a) 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.
(b) Wholesalers and distributors shall also pay a fee of twenty cents on each dollar of retail value of each charitable raffle board or games game sold to a retailer before the first day of July, two thousand one. Effective the first day of July, two thousand one, wholesalers and distributors shall pay a fee of one hundred percent 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.
(c) 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 effective the first day of July, two thousand one, eighty percent of the fees collected on charitable raffle boards and games sold shall be deposited into the general revenue fund of this state.
 (d) No raffle board or game may be sold, bartered, traded or given by a wholesaler or distributor for use in this state or played in this state unless the retail value fee has been paid. Proof of payment of the retail value fee is evidenced by affixing a state identification and inspection stamp to the board or game or the packaging of boards or games.
(e) The commissioner shall establish, by emergency and legislative rules proposed for promulgation in accordance with the provisions of article three, chapter twenty-nine-a of this code, a method of distributing, affixing and using identification and inspection stamps on raffle boards and games. Identification and inspection stamps shall be affixed to raffle boards and games in a manner to assure reasonable inspection without obstruction. Any raffle board or game which is enclosed or packaged in protective material to seal the package and prevent tampering with the board or game shall have the stamp or stamps affixed in a manor that allows the stamp or stamps to be readily visible for inspection without removing the protective covering. The commissioner may authorize a manufacturer or distributor to print the identification and inspection stamp numbers of all raffle boards or games contained in the package on the outside of the package or inside the protective covering.
(f) The commissioner may charge wholesalers and distributers an amount reasonably expected to cover the cost of administrating the identification and inspection stamp program.
 (g) If any person commits any of the following acts he or she is in violation of this article:
(1) Makes any false entry upon an invoice, package or container of raffle boards or games 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 or his agents from making a full inspection of any place where 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 raffle boards or games in this state without first affixing to each raffle board or game the identification and inspection stamp required to be affixed thereto by this article;
(4) Is a manufacturer, distributer or retailer in this state, and has in his or her possession raffle boards or games not bearing the stamps required by this section affixed thereto or, whoever fails to produce on demand by the commissioner invoices of all raffle boards or games purchased or received by him within the previous two years, unless upon satisfactory proof it is shown that such non-production is due to providential or other causes beyond his control;
(5) A manufacturer that sells raffle boards or games to any person in this state other than to a distributor or retailer or any person in this state other than a manufacturer or distributor that sells raffle boards or games to a retailer.
(6) A distributor who purchases unstamped raffle boards or games from the manufacturer and fails to pay the identification and inspection fee and the affix the required stamps; or
(7) Any person, firm or corporation, who is not a licensed manufacturer, distributor or retailer that has more than five raffle boards or games in his possession within the state not bearing the fee paid stamps of this state, such possession is presumed to be for the purpose of evading the payment of the fees imposed or due thereon.
(h) Whoever violates any of the provisions of this section or any lawful rule promulgated by the commissioner under authority of article ten of this code is guilty of a misdemeanor, and, upon conviction thereof, shall be fined not less than three hundred dollars nor more than five thousand dollars, or confined in a county or regional jail for not more than one year, or both, in the discretion of the court.
(i) Whoever falsely or fraudulently makes, forges, alters or counterfeits any stamps prescribed, or defined, by the provisions of this article, or its related rules, and any person who knowingly and willfully makes, causes to be made, purchases, receives or has in his or her possession, any device for forging or counterfeiting any stamp or meter impression, or has in his or her possession, any stamps not properly issued by the commissioner or his or her agent or deputy or tampers with or alters any stamping device authorized by the commissioner, or uses more than once any stamp provided for and required by this article for the purpose of evading the fee hereby imposed, is 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 and imprisoned in a state correctional facility for a term of not less than one year nor more than five years.
(j) Whenever the commissioner or any of his or her authorized agents, deputies or employees or any law enforcement officer of this state discovers any raffle boards or games subject to the fee as provided by this article and upon which the fee has not been paid, the raffle boards or games are contraband, and shall be seized without a warrant. The seized raffle boards or games shall be forfeited to the state and sold by the commissioner within a reasonable time: Provided, That such seizure and sale shall not relieve any person from fine or imprisonment as provided herein for violation of any provisions of this article. The sale may be made in any county the tax commissioner determines most convenient and economical. Notice of the sale shall be published as a Class I legal advertisement in compliance with the provisions of article three, chapter fifty-nine of this code, and the publication area for such publication shall be the county wherein such seizure was made and the county wherein the sale is to take place. Notice shall be published at least five days prior to the sale. All fees and penalties collected under the provisions of this section shall be paid into the state treasury and treated as fees collected under this article.
(k) Magistrates shall have concurrent jurisdiction with any other courts having jurisdiction for the trial of all misdemeanors arising under this article.
§47-23-8. How fee paid; reports required; due date; records to be kept; inspection of records and stocks; examination of witnesses, summons, etc.

(a) The retail value fee imposed by section three of this article shall be paid by each licensed wholesaler or distributor to the commissioner on or before the twentieth day of April, July, October and January for the preceding three calendar months. The measure of the fee on the retail value of charitable raffle boards or games shall be determined by multiplying the total amount of the retail value of all charitable raffle boards and games sold by a wholesaler or distributor to retailers during the said each three-month period by twenty percent until the thirtieth day of June, two thousand one and by one hundred percent effective the first day of July, two thousand one. Said This fee shall be is in addition to any tax imposed pursuant to the provisions of article fifteen, chapter eleven of this code.
(b) 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 are subject to the provisions of article ten, chapter eleven of this code.
(c) Each wholesaler or distributor shall provide with each quarterly payment of fees a return covering the business transacted in the previous three calendar months and providing such any other information as the commissioner may deem require necessary for the ascertainment or assessment of the fee imposed by this article. Such Each return shall be signed under penalty of perjury on such forms as the tax commissioner may prescribe. and the The wholesaler or distributor shall at the time of filing remit all fees owed or due.
(d) The returns prescribed herein are required, although a fee might not be due or no business transacted for the period covered by the return.
(e) Each person required to file a return under this article shall make and keep such all 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.
(f) 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, and serial number. and The price of the product sold and the fee must be set out separately, on each delivery ticket or invoice. and such Each delivery ticket or invoice must contain any other reasonable information as required by the commissioner may require. These invoicing requirements also apply to cash sales. and a A person making such cash sales must maintain such all records as may be reasonably necessary to substantiate his or her return.
(g) In addition to the commissioner's powers set forth in section five, article ten, chapter eleven of this code, the commissioner shall have has the 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 The commissioner shall have has the 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 return and to ascertain whether the fee imposed by this article has been properly paid.
(h) 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 returns due under this article, the commissioner shall have has the power to examine witnesses under oath;. and if If the witness shall fail or refuse at the request of the commissioner fails or refuses to grant the commissioner 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 The court shall thereupon issue summons to such party to appear before the commissioner, on a date certain, at a place designated within the jurisdiction of such the court, on a day fixed, to be. The appearance may be continued as the occasion may require required for good cause shown. and Each party shall give such evidence and lay open for inspection such its books and papers as may be required for the purpose of ascertaining to ascertain the amount of fee and returns due, if any.
§47-23-10a. Civil remedies when retailer possesses charitable raffle boards and games not purchased from a wholesaler or distributor licensed under this article.

(a) Civil penaltiesremedies.
A retailer who possesses charitable raffle boards and games that were not purchased from a wholesaler or distributor licensed under this article shall be subject to the following civil remedies:
(1) For a first offense, the retailer shall pay to the commissioner, a civil money penalty of not less than one hundred nor more than five hundred dollars for each charitable raffle board or game in the possession of the retailer that was not purchased from a wholesaler or distributor licensed under this article or who possesses charitable raffle boards or games which do not have a state identification and inspection stamp .
(2) For a second and each subsequent offense, the retailer shall pay to the commissioner, a civil money penalty of not less than five hundred nor more than one thousand five hundred dollars for each charitable raffle board or game in the possession of the retailer that was not purchased from a wholesaler or distributor licensed under this article or which did not have a state identification and inspection stamp .
(3) For a second offense, the retailer, in addition to paying the money penalty imposed in subdivision (2) of this subsection, shall have all licenses issued under article sixteen, chapter eleven of this code and article seven, chapter sixty of this code, for the place of business in which charitable raffle boards and games not purchased from a wholesaler or distributor licensed under this article or which did not have a state identification and inspection stamp were found, suspended for a period of thirty consecutive days. The alcohol beverage control commissioner shall also suspend the licenses of a retailer upon receipt of the tax commissioner's certified order issued under this subdivision.
(4) For a third and each subsequent offense, the retailer, in addition to applying the money penalty imposed in subdivision (2) of this subsection shall have the business registration certificate issued under article twelve, chapter eleven of this code and the licenses issued under article sixteen, chapter eleven of this code and article seven, chapter sixty of this code, for the place of business in which charitable raffle boards and games not purchased from a wholesaler or distributor licensed under this article or which did not have a state identification and inspection stamp were found, suspended for a period of thirty consecutive days. The alcohol beverage control commissioner shall also suspend the licenses of a retailer upon receipt of the tax commissioner's certified order issued under this subsection. Additionally, any license issued under articles twenty and twenty-one of this chapter to the retailer to conduct charitable bingo games or raffles shall be suspended for a period of thirty consecutive days.
(b) Administrative procedures.
(1) An order issued under this section by the tax commissioner shall be served by certified mail or in the manner provided in rule 4(d) of the West Virginia rules of civil procedure.
(2) A retailer may appeal an order of the tax commissioner issued under this section by filing a written protest with the tax commissioner, either in person or by certified mail, within twenty days after the licensee is served with a copy of the order.
(3) When a written protest is timely filed, the provisions of article five, chapter twenty-nine-a of this code shall apply. The tax commissioner may, by procedural rule, specify the form and content of a written protest.
(4) The burden of proof in any administrative or court proceeding is on the licensee to show cause why the order of the tax commissioner under this section should be modified, in whole or in part, or set aside.
(c) Deposit of money penalties.
All money penalties imposed under this section and collected by the tax commissioner, shall be deposited into the general revenue fund of this state.





NOTE: The purpose of this bill is to set the fee wholesalers and distributors pay on charitable raffle boards and games sold to retailers at one hundred percent of retail value. The bill also creates civil penalties where retailers possess charitable raffle boards and games which were purchased from a wholesaler or distributor not licensed to sell them.

Strike-throughs indicate language that would be stricken from the present law, and underscoring indicates new language that would be added.

Section ten-a is new; therefore, strike-throughs and underscoring have been omitted.