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

Universal Citation: 110 WV Code of State Rules 110-16-2

Current through Register Vol. XLI, No. 38, September 20, 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.

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