West Virginia Code of State Rules › Agency 110 - Tax › Title 110 - LEGISLATIVE RULE STATE TAX DEPARTMENT › Series 110-16 - Bingo › Section 110-16-2 - Definitions

Current through Register Vol. XLI, No. 28, July 12, 2024
2.1. When used in
				this rule and unless the context clearly requires a different meaning, the
				following terms have the meaning ascribed in this section, and apply in the
				singular or in the plural.
2.1.1. "Act" or
				"Bingo Act" means the Act contained in Article twenty, Chapter forty-seven of
				the W. Va. Code (W. Va. Code '47-20-1 et
				seq.).
2.1.2. "Bingo" or "bingo
				game" means the game in which participants pay consideration for the use of one
				or more cards bearing several rows of numbers or other designations no two (2)
				of which cards played in any one (1) game contain the same sequence or pattern.
				When the game commences, numbers are selected by chance, one (1) by one (1),
				and announced. The players cover or mark those numbers announced as they appear
				on the card or cards which they are using.
2.1.3. "Bingo Card" means a card bearing
				numbers or other designations, five or more in each line.
2.1.4. "Bingo Occasion" or "Occasion" means a
				single gathering or session at which a series of one or more successive bingo
				games are played pursuant to an annual license, a super-bingo license, a
				limited occasion license or a state fair license. During a series, only one
				game at a time may be played.
2.1.5. "Bona Fide Senior Citizen
				Organization" means any nonprofit organization that is organized and operated
				solely to provide service to persons who are fifty-five (55) or older. These
				organizations must be described, and qualified under I.R.C. Section 501(c)(3)
				and have a determination letter to that effect from the Internal Revenue
				Service.
2.1.6. "Charitable or
				Public Service Activity or Endeavor" means any bona fide activity or endeavor
				which directly benefits a number of people by:
2.1.6.1. assisting them to establish
				themselves in life as contributing members of society through education or
				religion;
2.1.6.2. relieving them
				from disease, distress, suffering, constraint, or the effects of
				poverty;
2.1.6.3. increasing their
				comprehension of and devotion to the principles upon which this nation was
				founded and to the principles of good citizenship;
2.1.6.4. making them aware of or educating
				them about issues of public concern so long as the activity or endeavor is not
				aimed at influencing legislation or supporting or participating in the campaign
				of any candidate for public office;
2.1.6.5. by lessening the burdens borne by
				government or voluntarily supporting, augmenting or supplementing services
				which government would normally render to the people;
2.1.6.6. providing or supporting nonprofit
				community activities for youth, senior citizens or the disabled; or
2.1.6.7. providing or supporting nonprofit
				cultural or artistic activities.
2.1.6.7.a.
				Occasionally questions will arise as to whether a particular activity is a
				"charitable or public service activity or endeavor." The criteria in this
				subdivision should provide some guidance. Further references and explanations
				are contained in Appendix A of this rule.
2.1.7. "Charitable or public service
				organization" means a bona fide, nonprofit, tax exempt organization which is
				either benevolent, educational, philanthropic, humane, patriotic, civic,
				religious, fraternal or eleemosynary. An organization shall obtain an I.R.C. '
				501 tax exempt status determination letter from the Internal Revenue Service
				finding that it is exempt from the federal income taxes under section
				501(c)(3), 501(c)(4), 501(c)(8), 501(c)(10), 501(c)(19), or 501(d) of the
				Internal Revenue Code of 1954, as amended. However, an organization that is a
				subdivision of the federal, state and local governments does not need to obtain
				an I.R.C. ' 501 tax exempt status determination letter from the Internal
				Revenue Service. "Charitable or public service organization" also includes
				volunteer fire departments, rescue units or other similar volunteer community
				service organizations. These organizations do not need to obtain an I.R.C.
				Section 501 tax exempt status determination letter from the Internal Revenue
				Service. The term "charitable or public service organization" does not include
				social or political organizations.
2.1.7.1.
				Test for determining tax exempt status. - In every instance, a charitable
				organization wishing to obtain a bingo license shall file with its application
				a copy of its current determination letter from the Internal Revenue Service
				stating that the organization is exempt from taxes under certain Internal
				Revenue Code provisions. Requirements for each tax exempt status are set in
				this paragraph:
2.1.7.1.a. I.R.C. Section
				501(c)(3) exempts from federal taxation corporations, community chests, funds
				or foundations which are organized and operated only for:
2.1.7.1.a.1. religious purposes;
2.1.7.1.a.2. charitable purposes;
2.1.7.1.a.3. scientific purposes;
2.1.7.1.a.4. testing for public safety
				purposes;
2.1.7.1.a.5. literary or
				educational purposes;
2.1.7.1.a.6.
				the fostering of national or international amateur sports competition (no part
				of these organizations activities can involve the provision of athletic
				equipment or facilities); or
2.1.7.1.a.7. the prevention of cruelty to
				children or animals: Provided, that for an organization to be considered tax
				exempt under this section no portion of its net earnings can be given to or
				benefit any private shareholder or individual, no substantial propagandizing
				can be carried on, no attempts to influence legislation can be carried on, and
				no participation or intervention in political campaigns for candidates can be
				maintained.
2.1.7.1.b.
				I.R.C. Section 501(c)(4) exempts from federal taxation nonprofit civic leagues
				or organizations operated solely for the promotion of social welfare. It also
				exempts a local employee association in which:
2.1.7.1.b.1. membership is limited to
				employees of a designated person in a particular municipality; and
2.1.7.1.b.2. all net earnings are given or
				used solely for charitable, educational or recreational purposes.
2.1.7.1.c. I.R.C. Section
				501(c)(8) exempts from federal taxation fraternal beneficiary societies that
				operate under the lodge system (parent organization which charters local
				branches), or societies operating for the sole benefit of members of a lodge
				system fraternity. These organizations must also provide for the payment of
				benefits (life, sick, accident or other) to the members or their
				dependents.
2.1.7.1.d. I.R.C.
				Section 501(c)(10) exempts from federal taxation domestic fraternal societies
				that operate under the lodge system, do not pay benefits and devote their net
				earnings solely to charitable, religious, scientific, literary, educational and
				fraternal purposes.
2.1.7.1.e.
				I.R.C. Section 501(c)(19) exempts from federal taxation organizations,
				auxiliary units, and trusts of foundations for war veterans. They must be
				organized in the United States, and no part of their net earnings may benefit
				any shareholder or individual. Seventy-five percent (75%) of the members must
				be war veterans and substantially all of the other members must be veterans,
				cadets, or spouses, widowers or widows of war veterans.
2.1.7.1.f. I.R.C. Section 501(d) exempts from
				federal taxation religious or apostolic associations if they have a common
				treasury. These associations may engage in business which commonly benefits all
				members if the members include their share as gross income on their income tax
				returns. These amounts are to be considered dividends received.
2.1.7.2. Further references and
				explanations are contained are contained in Appendix B of this rule.
2.1.8. "Commissioner" or "Tax
				Commissioner" means the West Virginia State Tax Commissioner or his or her duly
				appointed representative except as otherwise required by law.
2.1.9. "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 or individuals operating the concession. In no case is the
				sale or the consumption of alcoholic beverages, beer or nonintoxicating beer
				permitted in any area where bingo is being played.
2.1.9.1. Clarification of the term "Area". -
				For illustrative purposes, several examples are set forth in this paragraph to
				help determine what constitutes "any area where bingo is being played."
2.1.9.1.a. Example 1. - Organization X is
				holding a bingo occasion in their organization headquarters' large meeting
				room. The lounge next to this meeting room contains a bar. This bar is not
				considered to be in an "area where bingo is being played," and alcoholic
				beverages, beer and nonintoxicating beer may be sold and consumed in the
				lounge. But, no alcoholic beverages, beer or nonintoxicating beer may be taken
				into the bingo area from the lounge.
2.1.9.1.b. Example 2. - Organization Y is
				holding a open air street fair at which they plan to play bingo and sell
				alcoholic beverages, beer and nonintoxicating beer. These beverages may not be
				sold at the tables where bingo games are being conducted, and may not be
				consumed by persons at the tables or by the operators of bingo games.
2.1.9.1.c. Example 3. - Organization Z is
				sponsoring a picnic where bingo is to be played. The organization sets up a
				tent to cover and contain the gaming space. This covered space thus constitutes
				the "area where bingo is being played," and alcoholic beverages, beer and
				nonintoxicating beer may not be sold or consumed within this space.
2.1.10. "Conduct" means
				to direct the actual playing of a bingo game by activities including, but not
				limited to, handing out bingo cards, collecting fees, drawing the numbers,
				announcing the numbers, posting the numbers, verifying winners and awarding
				prizes.
2.1.11. "Consideration"
				means more than five cents (54). The licensing may not charge any other fee in
				conjunction with the fee for the use of the cards if the organization intends
				to play bingo without a license.
2.1.11.1.
				Example 1. - X society plays bingo and charges two cents (24) per card. There
				is no door fee. Therefore, X society does not need to obtain a bingo
				license.
2.1.11.2. Example 2. - Y
				organization plays bingo and charges one cent (14) per card. The door fee is
				one dollar ($1.00). Y organization must obtain a bingo license.
2.1.12. "De minimis violations"
				includes a violation the Commissioner finds to not be a material violation if,
				having regard to the nature of the conduct charged to constitute a violation,
				and the nature of the attendant circumstances, the Commissioner finds that the
				violator's conduct:
2.1.12.1. Was within a
				customary license or tolerance, neither expressly negated by the Commissioner
				nor inconsistent with the purpose of the law defining the violation;
2.1.12.2. Did not actually cause or threaten
				the harm or evil sought to be prevented by the law defining the violation or
				did so only to an extent too trivial to warrant the condemnation of the
				law;
2.1.12.3. Considered with
				regard to the totality of the facts and circumstances, cannot reasonably be
				regarded as envisaged by the Legislature in forbidding the violation;
				or
2.1.12.4. Resulted from mistake
				or inadvertent omissions, and was not deliberately committed for the purpose of
				evading the statutory requirements and restrictions applicable to
				licensees.
2.1.13.
				"Employee" means an individual who is an "employee" for purposes of federal
				income tax withholding, as defined in 26 U.S.C. '3401;
2.1.14. "Expend net proceeds for charitable
				or public service purposes" means to devote the net proceeds of a bingo
				occasion or occasions to a qualified recipient organization.
2.1.15. "Immediate family member" means a
				person's spouse, mother, father, son, daughter, brother, sister, grandchild,
				grandparent, mother-in-law, father-in-law or step-child. A legally adopted
				child of a person is treated for these purposes as a child of the individual by
				birth.
2.1.16. "Licensee" means any
				organization or association granted an annual, limited occasion, super-bingo or
				State Fair bingo license.
2.1.17.
				"Material violation" includes any of the following listed acts or omissions,
				set forth in W. Va. Code '47-20-1, et
				seq., (except violations found to be de minimis violations by the Commissioner
				in accordance with this section), committed by a licensee, or an officer,
				director, employee, designee, agent or representative of a licensee:
2.1.17.1. Conducting charitable bingo
				occasions at times or at a location inconsistent with the license
				application;
2.1.17.2. Failing to
				timely amend or modify the charitable bingo license in accordance with section
				9 of this rule;
2.1.17.3. Not
				having the bingo license posted at the occasion;
2.1.17.4. Allowing charitable bingo workers
				to play bingo;
2.1.17.5. Utilizing
				charitable bingo workers who fail to qualify under W. Va. Code '47-20-1 et seq
				and this rule;
2.1.17.6. Allowing
				individuals under the age of eighteen years (with the exception of junior
				firefighters, in accordance with the provisions of section 6 of this rule) to
				participate in the conduct of charitable bingo activities;
2.1.17.7. Allowing individuals under the age
				of eighteen to participate in the playing of bingo;
2.1.17.8. Expending or using charitable bingo
				proceeds for unauthorized expenses;
2.1.17.9. Distributing charitable bingo net
				proceeds for purposes other than qualified charitable or public service
				purposes or for unauthorized purposes;
2.1.17.10. Continuing failure to maintain
				accurate records;
2.1.17.11.
				Continuing violations of any nature, subsequent to the licensee having been
				notified in writing of a violation;
2.1.17.12. Conducting fraudulent charitable
				bingo occasions; or
2.1.17.13.
				Obtaining a charitable bingo license under false pretenses or deceptive or
				fraudulent circumstances.
2.1.18. "Meaningfully associated with the
				licensee" means persons who are members of the licensee organization, family
				members of members of the licensee organization, clients of licensee
				organizations, supporters of the licensee organization, volunteers and
				employees of the licensee organization.
2.1.19. "Member" means a person who, under
				the rules or practices of the licensee, may participate in the selection of
				persons authorized to manage the affairs of the licensee or in the development
				of policy of the licensee.
2.1.20.
				"Net proceeds" means the gross receipts (i.e. all moneys connected with
				participation in bingo games, the sale of supplies and other miscellaneous
				receipts) from all bingo occasions held during a license period minus the
				reasonable, necessary and actual expenses. Expenses of holding the game may not
				exceed twenty-five percent (25%) of the gross receipts collected during the
				entire license period, and expenses for prizes for any bingo occasion may not
				exceed seventy-five hundred dollars ($7,500) in value.
2.1.21. "Non-membership organization" or
				"organization that is not a bona fide membership organization" means an
				organization which is exempt or qualified to be exempt from federal income
				taxation under subsection 501(c)(3) or 501(c)(4) of the Internal Revenue Code
				of 1986, as amended, but does not have bona fide members, or which has bona
				fide members, the majority of whom cannot operate charitable bingo games over a
				sustained period of time by reason of physical disability or legal disability
				or any other bona fide disability.
2.1.21.1.
				Example 1: An organization which is exempt or qualified to be exempt from
				federal income taxation under subsection 501(c)(3) or 501(c)(4) of the Internal
				Revenue Code of 1986, as amended, has only a board of directors. The
				organization carries out its operations through volunteer workers. The
				organization is a non-membership organization for purposes of this
				definition.
2.1.21.2. Example 2: A
				young persons club (appropriately supported and sponsored by adults, parents
				and others) is a section 501(c)(3) organization which has members, all of whom
				are young persons under the age of 16. The members are prevented by law from
				participating in charitable bingo operations because of their ages (W. Va. Code
				''47-20-4
				and 5). This young persons club is an organization which is exempt or qualified
				to be exempt from federal income taxation under subsection 501(c)(3) or
				501(c)(4) of the Internal Revenue Code of 1986, as amended, and the
				organization's bona fide members cannot operate charitable bingo games by
				reason of a legal disability. This organization qualifies as a "non-membership"
				organization or an organization that is "not a bona fide membership
				organization" for the limited purposes of this definition.
2.1.22. "Person" means any individual,
				association, society, incorporated or unincorporated organization, firm,
				partnership or other nongovernmental entity or institution.
2.1.23. "Qualified recipient organization"
				means charitable or public service organizations which are organized and
				function solely to benefit people by charitable or public service activities or
				endeavors.
2.1.24. "Residents of
				this State meaningfully associated with a licensee" means individuals that are
				residents of West Virginia, are associated with a licensee that is a
				non-membership organization, are age eighteen years or older (or junior
				firefighters qualified to participate in bingo operations under W. Va. Code
				'47-20-4), including the immediate family members of any resident of this State
				meaningfully associated with a licensee, provided that the family members are
				residents of West Virginia, and fulfill one or more of the following criteria:
2.1.24.1. Who are clients of the licensee for
				one or more years prior to the date of the applicant's application for a bingo
				license, or for renewal of a bingo license, whichever is the latter, and have
				regularly or routinely utilized the services of the licensee
				organization,
2.1.24.2. Who are
				regular financial supporters of the licensee organization,
2.1.24.3. Who are employees of the licensee
				organization, or
2.1.24.4. Who are
				volunteers that regularly assist the licensee in delivering its
				services.
2.1.25.
				"Super-bingo" means bingo where larger prizes are authorized in accordance with
				W. Va. Code '47-20-6a.
				(Section 6a of this Rule provides additional information.)
2.1.26. "Supporters" of the licensee
				organization includes persons who promote the charitable interests of a
				licensee through monetary or volunteer assistance, and who uphold and advocate
				the charitable interests and charitable causes of the licensee.
2.1.27. "Volunteers" of a licensee
				organization means persons who give their services of their own free will to
				accomplish the charitable purposes of the organization, to furnish the services
				provided by the licensee organization or to support the charitable bingo
				operations of the licensee without any express or implied promise of direct or
				indirect payment, remuneration or gratuity, and having no direct or indirect
				monetary or legal interest or concern in the licensee organization's charitable
				purposes, services or charitable raffle operations. For purposes of this
				definition, a person does not qualify as a volunteer if that person's services
				are rendered pursuant to any mandate decision or action of a court, appeals
				board, parole board or other judicial or administrative body as part of an
				alternative sentencing program, parole program, sentence, judgement,
				settlement, plea bargain, or other administrative or judicial action or
				judgement; and a person does not qualify as a volunteer if that person's
				services are rendered pursuant to any state, local, county or administrative
				requirement for graduation from any high school or other school or institution
				of learning.
2.1.28. All other
				terms defined in the Act have the same meaning when used in this
				rule.