West Virginia Code of State Rules › Agency 110 - Tax › Title 110 - LEGISLATIVE RULE STATE TAX DEPARTMENT › Series 110-37 - Charitable Raffles › Section 110-37-2 - 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.
2.1.1. "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) years of
				age or older. An organization shall be described, and qualified under Internal
				Revenue Code Section 501(c)(3) and have a determination letter to that effect
				from the Internal Revenue Service.
2.1.2. "Charitable or Public Service Activity
				or Endeavor" means any bona fide activ­ity or endeavor which directly
				benefits a number of people by:
2.1.2.1.
				assisting them to establish themselves in life as contributing members of
				society through education or religion;
2.1.2.2. relieving them from disease,
				distress, suffering, constraint, or the effects of poverty;
2.1.2.3. increasing their
				comprehen­sion of and devotion to the principles upon which this nation
				was founded and to the principles of good citizenship;
2.1.2.4. 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;
2.1.2.5. lessening the burdens borne by
				government or voluntarily supporting, augmenting, or supplementing services
				which government would normally render to the people;
2.1.2.6. providing or supporting nonprofit
				community activities for youth, senior citizens or the disabled;
2.1.2.7. providing or supporting nonprofit
				cultural or artistic activities; or
2.1.2.8. providing or supporting any
				political party executive committee.
2.1.3. "Charitable or public service
				organization" or "major organization" means a bona fide, nonprofit, tax exempt
				organization which is either benevolent, educational, philan­thropic,
				humane, patriotic, civic, religious, frater­nal or eleemosynary. These
				organizations shall obtain an Internal Revenue Code Section 501 tax exempt
				status determination letter from the Inter­nal Revenue Service finding
				that they are 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 1986, as amended. However, organiza­tions which are subdivisions
				of the federal, state and local governments do not need to obtain an Internal
				Revenue Code Section 501 tax exempt status determination letter from the
				Internal Revenue Service. "Charitable or public service organizations" also
				includes volunteer fire depart­ments, rescue units or other similar
				volunteer community service organizations. These organi­zations do not
				need to obtain an Internal Revenue Code 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.
2.1.3.1. Test for determining
				tax exempt status. - In every instance, charitable organizations wishing to
				obtain a raffle license shall file with their application a copy of their
				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.
2.1.3.1.a. Internal Revenue Code Section
				501(c)(3) exempts from federal taxation corporations, community chests, funds
				or founda­tions which are organized and operated only for:
2.1.3.1.a.1. religious
				pur­poses;
2.1.3.1.a.2.
				charitable pur­poses;
2.1.3.1.a.3. scientific
				pur­poses;
2.1.3.1.a.4.
				testing for public safety purposes;
2.1.3.1.a.5. literary or educa­tional
				purposes;
2.1.3.1.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
2.1.3.1.a.7. the prevention of cruelty to
				children or animals; and,
2.1.3.1.a.8. no portion of its net earnings
				be given to or benefit any shareholder or individual; no substantial
				propagandizing may be carried on; no attempts to influence legislation may be
				carried on; and no participation or inter­vention in political campaigns
				for candidates may be maintained.
2.1.3.1.b. Internal Revenue Code Section
				501(c)(4) exempts from federal taxation nonprofit civic leagues or
				organizations operated solely for the promotion of social welfare. It also
				exempts local employee associations in which:
2.1.3.1.b.1. membership is limited to
				employees of a designated person in a particular municipality; and
2.1.3.1.b.2. all net earnings are given or
				used solely for charitable, educational or recreational purposes.
2.1.3.1.c. Internal Revenue Code
				Section 501(c)(8) exempts from federal taxation fraternal beneficiary societies
				that operate under the lodge system, such as a parent organization which
				charters local branches, or societies operat­ing for the sole benefit of
				members of a lodge system fraternity. These organizations shall also provide
				for the payment of benefits such as life, sick, or accident insurance benefits,
				to the mem­bers or their dependents.
2.1.3.1.d. Internal Revenue Code 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.
2.1.3.1.e. Internal Revenue Code Section
				501(c)(19) exempts from federal taxation organizations, auxiliary units, trusts
				of founda­tions for war veterans. These entities shall 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 shall be
				war veterans and substantially all of the other members shall be veterans,
				cadets or spouses, widowers or widows of war veterans.
2.1.3.1.f. Internal Revenue Code 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.
2.1.3.2. Further references and explanations
				are contained in Appendix B of this rule.
2.1.4. "Charitable raffle" means a raffle
				held by a charitable or public service organization of a bona fide senior
				citizen organization to raise money for a charitable or public service
				endeavor.
2.1.5. "Charitable raffle
				board" or "chari­table raffle game" means:
2.1.5.1. 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;
2.1.5.2. 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,
2.1.5.3. any
				other similar game which may be defined by the State Tax Commissioner by
				legislative rule.
2.1.6.
				"Commissioner" or "Tax Commis­sioner" means the West Virginia State Tax
				Com­missioner or his or her duly appointed representa­tive,
				except as otherwise required by law.
2.1.7. "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.
2.1.8.
				"Conduct" means to direct the actual holding of a raffle and the playing of
				raffle games by activities including, but not limited to, selling raffle
				tickets, selling tip boards or pull tabs, collecting money, drawing winning
				raffle ticket stubs, verifying winners and awarding prizes.
2.1.9. "De minimis violation" 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:
2.1.9.1. Was within a
				customary license or tolerance, neither expressly negated by the Commissioner
				nor inconsistent with the purpose of the law defining the violation;
2.1.9.2. 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;
2.1.9.3. 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
2.1.9.4. Resulted from mistake
				or inadvertent omissions, and was not deliberately committed for the purpose of
				evading the statutory requirements and restrictions applicable to
				licensees.
2.1.10.
				"Employee" means an individual who is an "employee" for purposes of federal
				income tax withholding, as defined in 26 U.S.C. '3401.
2.1.11. "Expend net proceeds for
				charita­ble or public service purposes" means to devote the net proceeds
				of a raffle occasion to a qualified recipient organization.
2.1.12. "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.
2.1.13. "Joint raffle
				occasion" means a single gathering or session at which a series of one or more
				successive raffles is conducted by two or more licensees. It is also an
				occasion at which raffle tickets, together with "pull tabs" or "tip boards" are
				sold and purchased and the winning numbers are revealed. For raffle tickets it
				also means the occasion of the drawing for the anticipated prize or prizes. For
				a joint raffle occasion authorized under W. Va. Code '47-21-1 et
				seq., it means and includes the selling of raffle tickets, but not pull tabs or
				tip boards, on one day when the drawing for prizes will not be held until a
				later date; however, joint raffle occa­sion does not mean the selling of
				pull tabs and tip boards on one day when the drawing for prizes will not be
				held until a later date.
2.1.14.
				"Licensee" means any organiza­tion or association granted an annual or
				limited occasion raffle license.
2.1.15. "Material violation" includes any of
				the following listed acts or omissions, set forth in W. Va. Code '47-21-1, 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:
2.1.15.1. Conducting charitable raffle
				occasions at times or at a location inconsistent with the license
				application;
2.1.15.2. Failing to
				timely amend or modify the charitable raffle license in accordance with section
				9 of this rule;
2.1.15.3. Not
				having the raffle license posted at the occasion;
2.1.15.4. Allowing charitable raffle workers
				to play raffle;
2.1.15.5. Utilizing
				charitable raffle workers who fail to qualify under W. Va. Code '47-21-1 et seq
				and this rule;
2.1.15.6. Expending
				or using charitable raffle proceeds for unauthorized expenses;
2.1.15.7. Distributing charitable raffle net
				proceeds for purposes other than qualified charitable or public service
				purposes or for unauthorized purposes;
2.1.15.8. Continuing failure to maintain
				accurate records;
2.1.15.9.
				Continuing violations of any nature, subsequent to the licensee having been
				notified in writing of a violation;
2.1.15.10. Conducting fraudulent charitable
				raffle occasions; or
2.1.15.11.
				Obtaining a charitable raffle license under false pretenses or deceptive or
				fraudulent circumstances.
2.1.16. "Meaningfully associated with the
				licensee" means persons who are members of the licensee organization, family
				members of members of the licensee organization, clients of the licensee
				organization, supporters of the licensee organization, volunteers and employees
				of the licensee organization.
2.1.17. "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.
2.1.18.
				"Net proceeds" means the gross receipts (i.e. all moneys connected with
				participa­tion in raffle games, the sale of supplies and other
				miscellaneous receipts) from all raffle occasions held during a license period
				minus the reasonable, necessary and actual expenses of holding the raffle
				occasions. The expenses of holding the game may not exceed twenty-five percent
				(25%) of the gross proceeds collected during the entire license
				period.
2.1.19. "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 raffle games
				over a sustained period of time by reason of physical disability or legal
				disability or any other bona fide disability.
2.1.19.1. 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.
2.1.19.2. 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 raffle operations because of their ages (W. Va. Code '47-21-1 et
				seq.). 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 raffle 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.
2.1.20. "Person" means any individual,
				association, society, incorporated or unincorpo­rated organization,
				firm, partnership or other nongovernmental entity or institution.
2.1.21. "Qualified recipient organization"
				means a charitable or public service organizations as defined in Subdivision
				2.1.4 of this rule, which is organized and functions solely to benefit people
				by charitable or public service activities or en­deavors.
2.1.22. "Raffle" means a game authorized by
				W. Va. Code '47-21-1 et
				seq., involving the selling of tickets to participate in the game which
				entitles the holder or holders to a chance on a prize or prizes. It includes a
				game authorized by W. Va. Code '47-23-1 et seq.,
				involving the selling of so called "tip boards" or "pull tabs" which when
				opened or separated reveal a winning prize or combination of numbers or symbols
				which when read together designate a winning ticket; Provided, That, the
				selling of "tip boards" and "pull tabs" may only occur in conjunction with a
				charitable raffle occasion authorized under W. Va. Code '47-21-1 et
				seq.
2.1.23. "Raffle Occasion"
				means a single gathering or session at which a series of one or more successive
				raffles is conducted by a single licensee. It includes an occasion at which
				raffle tickets, and in conjunction therewith "tip boards" or "pull tabs" are
				sold and purchased and the winning numbers are revealed. For raffle tickets it
				also means the occasion for the drawing for the anticipated prize or prizes.
				For a raffle occasion authorized under W. Va. Code '47-21-1 et
				seq., raffle occasion means and includes the selling of raffle tickets, but not
				pull tabs or tip boards, on one day when the drawing for prizes will not be
				held until a later date; however, raffle occasion does not mean the selling of
				pull tabs or tip boards on one day when the drawing for prizes will not be held
				until a later date.
2.1.24.
				"Residents of this State meaningfully associated with a licensee" means persons
				that are residents of West Virginia, who are associated with a licensee that is
				a non-membership organization, who are age eighteen years or older and who are:
2.1.24.1. Clients of the licensee that, for
				one or more years prior to the date of the applicant's application for a raffle
				license, or for renewal of a raffle license, whichever is the latter, have
				regularly or routinely utilized the services of the licensee organization,
				or
2.1.24.2. regular financial
				supporters of the licensee organization, or
2.1.24.3. employees of the licensee
				organization, or
2.1.24.4.
				volunteers that regularly assist the licensee in delivering its services, and
				includes
2.1.24.5. the immediate
				family members of any resident of this State meaningfully associated with a
				licensee, as defined in this section, provided that the family members are
				residents of West Virginia.
2.1.25. "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.
2.1.26. "Tax-exempt association or
				organization" means a charitable or public service organization which has
				received an Internal Revenue Service letter designating them as a tax-exempt
				organization or association under Internal Revenue Code Section 501.
2.1.27. "Tip board" or "pull tab" means a
				charitable raffle board or charitable raffle game as defined in this
				section.
2.1.28. "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
				raffle 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 individual'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 as 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.
2.1.29. All other terms defined in the W. Va.
				Code '47-21-1 et
				seq., have the same mean­ing when used in this rule.