H. B. 3249



(By Delegates Douglas, Kuhn, Angotti, Perdue, Yeager and Ellem)



(Originating in the Committee on Government Organization)

[April 5, 2001]



A BILL to amend and reenact section one, article one, chapter eleven of the code of West Virginia, one thousand nine hundred thirty-one, as amended; to amend and reenact sections fifteen, sixteen and twenty-nine, article twenty, chapter forty-seven of said code; to amend and reenact sections fifteen, sixteen and twenty-two, article twenty-one of said chapter; and to further amend said article by adding thereto a new section, designated section thirty-one, all relating to the enforcement of charitable bingo and charitable raffle and permitted uses of the proceeds from these charitable games; creating office of charitable bingo and charitable raffle regulation within the Tax Division; permitted uses of bingo and raffle proceeds; prohibiting the comingling of bingo and raffle receipts; requiring quarterly raffle reports; and effective date.

Be it enacted by the Legislature of West Virginia:
That section one, article one, chapter eleven of the code of West Virginia, one thousand nine hundred thirty-one, as amended, be amended and reenacted; that sections fifteen, sixteen and twenty-nine, article twenty, chapter forty-seven be amended and reenacted; that sections fifteen and sixteen, article twenty-one of said chapter be amended and reenacted; and that said article be further amended by adding thereto a new section, designated section thirty-one, all to read as follows:
CHAPTER 11 TAXATION

ARTICLE 1. SUPERVISION.
 .
§11-1-1. Office of tax commissioner continued and designated the state tax division; appointment, term, oath, bond and compensation of commissioner; powers and duties generally; sections of division; assistant tax commissioner; assistant attorneys general to assist commissioner.

(a) The office of the tax commissioner shall be continued in all respects as heretofore constituted in the state government, but is hereby designated as the state tax division of the department of tax and revenue.
(b) The tax commissioner shall be the chief executive officer of the state tax division and shall be appointed by the governor, by and with the advice and consent of the Senate, to serve at the will and pleasure of the governor for the term for which the governor was elected and until a successor has been appointed and has qualified.
(c) The tax commissioner, before entering upon the duties of office, shall take the oath or affirmation prescribed by section 5, article IV of the constitution. The tax commissioner shall give bond with good security, to be approved by the governor, in the penalty of fifteen thousand dollars. The salary of the tax commissioner shall be sixty-five thousand dollars a year or the amount specified in section two-a, article seven, chapter six of this code, whichever amount is greater. The tax commissioner shall be repaid his or her actual disbursements for traveling expenses. The tax commissioner shall be provided with an office in the capitol and with furniture, office equipment and clerical assistance as shall be necessary.
(d)(1) The tax commissioner shall have control and supervision of the state tax division and shall be responsible for the work of each of its sections or other subunits. Each section or bureau shall be headed by a director appointed by the tax commissioner and who shall be responsible to the tax commissioner for the work of his or her section or bureau. The tax commissioner may create such sections or bureaus and employ staff or employees as may be necessary to administer the state tax laws for which the tax commissioner or tax division is responsible, within the amount of expenditures appropriated for operation of the tax division by the Legislature. The tax commissioner shall have authority to appoint an assistant tax commissioner who shall be his or her principal assistant. The powers and duties vested in the tax commissioner by this chapter and any other provisions of law may be delegated by the tax commissioner to the assistant or other employees, but the tax commissioner shall be responsible for all official acts of such delegates.
(2) The office of charitable bingo and raffle regulation is hereby created within the tax division to administer and enforce the provisions of articles twenty, twenty-one and twenty-three, chapter forty-seven of this code. The tax commissioner shall appoint a director, qualified by education, experience and training, to oversee and regulate charitable bingo and charitable raffle operations including the development and offering of comprehensive educational programs and training classes for the charitable and public service organizations licensed to conduct bingo and raffles.
(e) The tax commissioner, if he or she deems such action necessary, may request the attorney general to appoint assistant attorneys general who shall perform duties as may be required by the tax commissioner. The attorney general, in pursuance of such request, may select and appoint assistant attorneys general, with the consent of the tax commissioner, to serve during the will and pleasure of the attorney general, and the assistants shall be paid out of any funds made available for that purpose by the Legislature to the state tax division.
CHAPTER 47 REGULATION OF TRADE

ARTICLE 20. CHARITABLE BINGO
§47-20-15. Permitted uses of proceeds; disapproval of certain
contracts or leases.

(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 to the rental agreement 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 the 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 on the proceeds 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 or acquisition 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.
 (a) During the period of a charitable bingo license, the gross proceeds from charitable bingo may only be used by a licensee for: (1) the payment for prizes and for the reasonable, necessary and actual expenses incurred in connection with the conduct of charitable bingo occasions, including, but not limited to: custodial services, rent, advertising, equipment and supplies to conduct charitable bingo occasions, security personnel, promotional supplies, workers or operators required to operate the charitable bingo occasion, and child care services; (2) expenses directly related to the existence and operation of the licensee charitable or public service organization where these expenses are directly related to the charitable or public service purpose directly underlying the tax exempt status of the licensee organization, including, but not limited to: (A) the annual cost of housing the licensee organization, including, but not limited to, rent, mortgage payments, maintenance and repairs; (B) property, casualty or liability insurance for the licensee organization; (C) on-going utility expenses; (D) printing, postage and mail expense; (E) workers; and (F) any other expense incurred by the licensee organization directly in furtherance of its charitable or public service purpose: Provided, That no more than sixty percent of the proceeds from charitable bingo remaining after the expenses set forth in subdivision-one of this subsection may be expended for the purposes set forth in subdivision-two of this subsection: Provided further, That in all events at least two per cent of gross proceeds from charitable bingo shall be used for charitable or public service purposes.
(e)(b) The tax commissioner has the authority to may disapprove any contract for sale of goods or services to any charitable bingo licensee for use in or with relation to any charitable bingo operation or occasion, or any lease of real or tangible personal property to any charitable bingo licensee for use in or with relation to any charitable bingo operation or occasion, if the contract or lease is unreasonable or not representative of fair market value. Contracts or leases which are disapproved shall be considered to be are in contravention of this article, and are void. Any attempt by any charitable bingo licensee to engage in transactions under the terms of any lease or contract that has been disapproved is grounds for revocation or suspension of the charitable bingo license and for refusal by the tax commissioner to renew the charitable bingo license.
(f)(c) If a property owner or lessee, including his or her agent, has entered into a rental contract to hold super bingo occasions on his or her premises, the premises shall be rented, for super bingo occasions, to not more than four super bingo licensees during any period of four consecutive calendar weeks: Provided, That each of the charitable or public service organizations desiring to hold a super bingo occasion must possess its own super bingo license. Subject to this limitation, the premises may be used for super bingo occasions during two consecutive days during a conventional weekend. For purposes of this subsection, the term "conventional weekend" means Saturday and Sunday.: When used two consecutive days during a conventional weekend Provided, however, That the super bingo occasions may occur at the same facility no more often than alternating weekends during a calendar month.
(g)(d) 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 the 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 the periodic reports with the commissioner as the commissioner directs until the proceeds are expended.
 §47-20-16. Checking accounts; records; commissioner audit.
Any licensee which holds a bingo occasion as provided by this article shall maintain a separate checking account and a separate bookkeeping procedure for its bingo operations. A licensee may not commingle moneys from its charitable bingo operations with moneys from its charitable raffle operations for which it may also be licensed, but it may, by check, transfer funds between the separate checking accounts to offset any losses from its conduct of one with gains from its conduct of the other. Money for expenses may be withdrawn only by checks having preprinted consecutive numbers and made payable to a specific person, firm or corporation and at no time shall a check be made payable to cash. A licensee shall maintain all records required by this article for a least three years and the records shall be open to the commissioner for reasonable inspection. Whenever the tax commissioner has reasonable cause to believe a licensee has violated any of the provisions of this article, he or she may perform or cause to be performed an audit of the licensee's books and records: Provided, That the tax commissioner shall perform or cause to be performed an audit of the books and records of any licensee that has awarded total prizes in excess of one hundred seventy-five thousand dollars. The tax commissioner shall file a copy of the completed audit with the county commission of the county wherein the licensee holds bingo occasions.
§47-20-29. Effective date.
The effective date of this article is the fifteenth day of August, one thousand nine hundred eighty-one. The effective date of the amendments made to this article is the first day of July, two thousand one.
ARTICLE 21. CHARITABLE RAFFLES.
§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 twenty-five 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 to the rental agreement 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 the 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 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 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 on the net raffle proceeds 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, or improvement, 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.
 (a) During the period of a charitable raffle license, the gross proceeds from charitable raffles awarded to winners of charitable raffle games may only be used by a licensee for: (1) the payment for prizes and for the reasonable, necessary and actual expenses incurred in connection with the conduct of the charitable raffle, including, but not limited to: custodial services, rent, advertising, equipment and supplies to conduct the charitable raffle, security personnel, promotional supplies, workers or operators required to operate the charitable raffle, and child care services; (2) expenses directly related to the existence and operation of the licensee charitable or public service organization where these expenses are directly related to the charitable or public service purpose directly underlying the tax exempt status of the licensee organization, including, but not limited to: (A) the annual cost of housing the licensee organization, including, but not limited to, rent, mortgage payments, maintenance and repairs; (B) property, casualty or liability insurance for the licensee organization; (C) on-going utility expenses; (D) printing, postage and mail expense; (E) workers; and (F) any other expense incurred by the licensee organization directly in furtherance of its charitable or public service purpose: Provided, That no more than sixty percent of the proceeds from charitable raffle remaining after the expenses set forth in subdivision-one of this subsection may be expended for the purposes set forth in subdivision-two of this subsection: Provided further, That in all events at least two per cent of gross proceeds from charitable raffle shall be used for charitable or public service purposes.
(e)(b) The tax commissioner has the authority to may disapprove any contract for sale of goods or services to any charitable raffle licensee for use in or with relation to any charitable raffle operation or occasion, or any lease of real or tangible personal property to any charitable raffle licensee for use in or with relation to any charitable raffle operation or occasion, if the contract or lease is unreasonable or not representative of fair market value. Disapproved contracts or leases shall be considered to be are in contravention of this article, and are void. Any attempt by any charitable raffle licensee to engage in transactions under the terms of any disapproved lease or contract is grounds for revocation or suspension of the charitable raffle license and for refusal by the tax commissioner to renew the charitable raffle license.
(f)(c) Any licensee which, in good faith, finds itself unable to comply with the requirements of the subsections (a) through (e) subsection (a) 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 must 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 the periodic reports with the commissioner as the commissioner directs until the proceeds are expended.
 §47-21-16. Checking accounts; records; commissioner audit.
Any licensee which holds a raffle occasion as provided by this article shall maintain a separate checking account and separate bookkeeping procedure for its raffle operations. A licensee may not commingle moneys from its charitable raffle operations with moneys from its charitable bingo operations for which it may also be licensed, but it may, by check, transfer funds between the separate checking accounts to offset any losses from its conduct of one with gains from its conduct of the other. All records required by this article shall be maintained for at least three years and shall be open to the commissioner for reasonable inspection. Whenever the commissioner has reasonable cause to believe a licensee has violated any of the provisions of this article, he or she may perform or cause to be performed an audit of the licensee's books and records.
§47-21-22. Filing of reports.
(a) 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, 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.
(b) Each licensee holding a limited or state fair license shall file with the commissioner a financial report summarizing its raffle operations within thirty days after the date of expiration of the license under which the operations covered by the report were held.
(c) 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.
 §47-21-31. Effective date.
The effective date of the amendments made to this article is the first day of July, two thousand one.

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