HF 1281

as introduced - 79th Legislature (1995 - 1996) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to gambling; changing the pull-tab and 
  1.3             tipboard tax; modifying the definition of lawful 
  1.4             purpose in respect of compulsive gambling and real 
  1.5             estate tax expenditures; increasing the number of 
  1.6             bingo occasions an organization may hold in a week and 
  1.7             clarifying the determination of bingo prizes; changing 
  1.8             the term lawful gambling to nonprofit gambling; 
  1.9             amending Minnesota Statutes 1994, sections 297E.02, 
  1.10            subdivision 4; 297E.031, subdivisions 1 and 2; 349.12, 
  1.11            subdivision 25; 349.166, subdivision 2; 349.17, 
  1.12            subdivision 1; 349.191, subdivision 1a; and 349.211, 
  1.13            subdivision 1; repealing Minnesota Statutes 1994, 
  1.14            section 297E.17.  
  1.15  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.16     Section 1.  Minnesota Statutes 1994, section 297E.02, 
  1.17  subdivision 4, is amended to read: 
  1.18     Subd. 4.  [PULL-TAB AND TIPBOARD TAX.] (a) A tax at the 
  1.19  rate of two percent is imposed on the sale of each deal of 
  1.20  pull-tabs and tipboards sold by a distributor an organization's 
  1.21  gross receipts from sales of pull-tab and tipboard deals.  The 
  1.22  rate of the tax is two percent of the ideal gross of the 
  1.23  pull-tab or tipboard deal.  The sales tax imposed by chapter 
  1.24  297A on the sale of the pull-tabs and tipboards by the 
  1.25  distributor is imposed on the retail sales price less the tax 
  1.26  imposed by this subdivision.  The retail sale of pull-tabs or 
  1.27  tipboards by the organization is exempt from taxes imposed by 
  1.28  chapter 297A and is exempt from all local taxes and license fees 
  1.29  except a fee authorized under section 349.16, subdivision 8.  
  1.30     (b) The liability for the tax imposed by this section is 
  2.1   incurred when the pull-tabs and tipboards are delivered by the 
  2.2   distributor to the customer or to a common or contract carrier 
  2.3   for delivery to the customer, or when received by the customer's 
  2.4   authorized representative at the distributor's place of 
  2.5   business, regardless of the distributor's method of accounting 
  2.6   or the terms of the sale.  
  2.7      The tax imposed by this subdivision is imposed on all sales 
  2.8   of pull-tabs and tipboards, except the following:  
  2.9      (1) sales to the governing body of an Indian tribal 
  2.10  organization for use on an Indian reservation; 
  2.11     (2) sales to distributors licensed under the laws of 
  2.12  another state or of a province of Canada, as long as all 
  2.13  statutory and regulatory requirements are met in the other state 
  2.14  or province; 
  2.15     (3) sales of promotional tickets as defined in section 
  2.16  349.12; and 
  2.17     (4) pull-tabs and tipboards sold to by an organization that 
  2.18  sells pull-tabs and tipboards under the exemption from licensing 
  2.19  in section 349.166, subdivision 2.  A distributor shall require 
  2.20  an organization conducting exempt gambling to show proof of its 
  2.21  exempt status before making a tax-exempt sale of pull-tabs or 
  2.22  tipboards to the organization.  A distributor An organization 
  2.23  shall identify, on all reports submitted to the commissioner, 
  2.24  all sales of pull-tabs and tipboards that are exempt from tax 
  2.25  under this subdivision.  
  2.26     (c) A distributor having a liability of $120,000 or more 
  2.27  during a fiscal year ending June 30 must remit all liabilities 
  2.28  in the subsequent calendar year by a funds transfer as defined 
  2.29  in section 336.4A-104, paragraph (a).  The funds transfer 
  2.30  payment date, as defined in section 336.4A-401, must be on or 
  2.31  before the date the tax is due.  If the date the tax is due is 
  2.32  not a funds transfer business day, as defined in section 
  2.33  336.4A-105, paragraph (a), clause (4), the payment date must be 
  2.34  on or before the funds transfer business day next following the 
  2.35  date the tax is due. 
  2.36     Sec. 2.  Minnesota Statutes 1994, section 297E.031, 
  3.1   subdivision 1, is amended to read: 
  3.2      Subdivision 1.  [APPLICATION AND ISSUANCE.] A distributor 
  3.3   who An organization that sells gambling products pull-tabs and 
  3.4   tipboards under this chapter must file with the commissioner an 
  3.5   application, on a form prescribed by the commissioner, for a 
  3.6   gambling tax permit and identification number.  The 
  3.7   commissioner, when satisfied that the applicant has a valid 
  3.8   license from the board, shall issue the applicant a permit and 
  3.9   number.  A permit is not assignable and is valid only for 
  3.10  the distributor organization in whose name it is issued. 
  3.11     Sec. 3.  Minnesota Statutes 1994, section 297E.031, 
  3.12  subdivision 2, is amended to read: 
  3.13     Subd. 2.  [SUSPENSION; REVOCATION.] (a) If a distributor an 
  3.14  organization fails to comply with this chapter or a rule of the 
  3.15  commissioner, or if a license issued under chapter 349 is 
  3.16  revoked or suspended, the commissioner, after giving notice, may 
  3.17  for reasonable cause revoke or suspend a permit held by a 
  3.18  distributor an organization.  A notice must be sent to 
  3.19  the distributor organization at least 15 days before the 
  3.20  proposed suspension or revocation is to take effect.  The notice 
  3.21  must give the reason for the proposed suspension or revocation 
  3.22  and must require the distributor organization to show cause why 
  3.23  the proposed action should not be taken.  The notice may be 
  3.24  served personally or by mail.  
  3.25     (b) The notice must inform the distributor organization of 
  3.26  the right to a contested case hearing.  If a request in writing 
  3.27  is made to the commissioner within 14 days of the date of the 
  3.28  notice, the commissioner shall defer action on the suspension or 
  3.29  revocation and shall refer the case to the office of 
  3.30  administrative hearings for the scheduling of a contested case 
  3.31  hearing.  The distributor organization must be served with 20 
  3.32  days' notice in writing specifying the time and place of the 
  3.33  hearing and the allegations against the distributor organization.
  3.34     (c) The commissioner shall issue a final order following 
  3.35  receipt of the recommendation of the administrative law judge.  
  3.36     (d) Under section 271.06, subdivision 1, an appeal to the 
  4.1   tax court may be taken from the commissioner's order of 
  4.2   revocation or suspension.  The commissioner may not issue a new 
  4.3   permit after revocation except upon application accompanied by 
  4.4   reasonable evidence of the intention of the applicant to comply 
  4.5   with all applicable laws and rules.  
  4.6      Sec. 4.  Minnesota Statutes 1994, section 349.12, 
  4.7   subdivision 25, is amended to read: 
  4.8      Subd. 25.  [LAWFUL PURPOSE.] (a) "Lawful purpose" means one 
  4.9   or more of the following:  
  4.10     (1) any expenditure by or contribution to a 501(c)(3) 
  4.11  organization, provided that the organization and expenditure or 
  4.12  contribution are in conformity with standards prescribed by the 
  4.13  board under section 349.154; 
  4.14     (2) a contribution to an individual or family suffering 
  4.15  from poverty, homelessness, or physical or mental disability, 
  4.16  which is used to relieve the effects of that poverty, 
  4.17  homelessness, or disability; 
  4.18     (3) a contribution to an individual for treatment for 
  4.19  delayed posttraumatic stress syndrome or a contribution to a 
  4.20  recognized program recognized by the Minnesota department of 
  4.21  human services for the education, prevention, or treatment of 
  4.22  compulsive gambling on behalf of an individual who is a 
  4.23  compulsive gambler; 
  4.24     (4) a contribution to or expenditure on a public or private 
  4.25  nonprofit educational institution registered with or accredited 
  4.26  by this state or any other state; 
  4.27     (5) a contribution to a scholarship fund for defraying the 
  4.28  cost of education to individuals where the funds are awarded 
  4.29  through an open and fair selection process; 
  4.30     (6) activities by an organization or a government entity 
  4.31  which recognize humanitarian or military service to the United 
  4.32  States, the state of Minnesota, or a community, subject to rules 
  4.33  of the board, provided that the rules must not include mileage 
  4.34  reimbursements in the computation of the per occasion 
  4.35  reimbursement limit and must impose no aggregate annual limit on 
  4.36  the amount of reasonable and necessary expenditures made to 
  5.1   support: 
  5.2      (i) members of a military marching or colorguard unit for 
  5.3   activities conducted within the state; or 
  5.4      (ii) members of an organization solely for services 
  5.5   performed by the members at funeral services; 
  5.6      (7) recreational, community, and athletic facilities and 
  5.7   activities intended primarily for persons under age 21, provided 
  5.8   that such facilities and activities do not discriminate on the 
  5.9   basis of gender and the organization complies with section 
  5.10  349.154; 
  5.11     (8) payment of local taxes authorized under this chapter, 
  5.12  taxes imposed by the United States on receipts from lawful 
  5.13  gambling, the taxes imposed by section 297E.02, subdivisions 1, 
  5.14  4, 5, and 6, and the tax imposed on unrelated business income by 
  5.15  section 290.05, subdivision 3; 
  5.16     (9) payment of real estate taxes and assessments on 
  5.17  permitted gambling premises wholly owned by the licensed 
  5.18  organization paying the taxes, not to exceed: 
  5.19     (i) the amount which an organization may expend under board 
  5.20  rule on rent for premises used for bingo, the amount which an 
  5.21  organization may expend under board rules on rent for bingo; or 
  5.22  and 
  5.23     (ii) $15,000 per year for premises used for other forms of 
  5.24  lawful gambling: 
  5.25     (A) 100 percent of the real estate taxes and assessments 
  5.26  for premises constructed, acquired, or expanded, if the 
  5.27  construction, acquisition, or expansion was started before 
  5.28  August 1, 1990; and 
  5.29     (B) for other premises, $15,000 per year; 
  5.30     (10) a contribution to the United States, this state or any 
  5.31  of its political subdivisions, or any agency or instrumentality 
  5.32  thereof other than a direct contribution to a law enforcement or 
  5.33  prosecutorial agency; 
  5.34     (11) a contribution to or expenditure by a nonprofit 
  5.35  organization which is a church or body of communicants gathered 
  5.36  in common membership for mutual support and edification in 
  6.1   piety, worship, or religious observances; 
  6.2      (12) payment of one-half of the reasonable costs of an 
  6.3   audit required in section 297E.06, subdivision 4; 
  6.4      (13) a contribution to or expenditure on a wildlife 
  6.5   management project that benefits the public at-large, provided 
  6.6   that the state agency with authority over that wildlife 
  6.7   management project approves the project before the contribution 
  6.8   or expenditure is made; or 
  6.9      (14) expenditures, approved by the commissioner of natural 
  6.10  resources, by an organization for grooming and maintaining 
  6.11  snowmobile trails that are (1) grant-in-aid trails established 
  6.12  under section 116J.406, or (2) other trails open to public use, 
  6.13  including purchase or lease of equipment for this purpose. 
  6.14     (b) Notwithstanding paragraph (a), "lawful purpose" does 
  6.15  not include: 
  6.16     (1) any expenditure made or incurred for the purpose of 
  6.17  influencing the nomination or election of a candidate for public 
  6.18  office or for the purpose of promoting or defeating a ballot 
  6.19  question; 
  6.20     (2) any activity intended to influence an election or a 
  6.21  governmental decision-making process; 
  6.22     (3) the erection, acquisition, improvement, expansion, 
  6.23  repair, or maintenance of real property or capital assets owned 
  6.24  or leased by an organization, unless the board has first 
  6.25  specifically authorized the expenditures after finding that (i) 
  6.26  the real property or capital assets will be used exclusively for 
  6.27  one or more of the purposes in paragraph (a); (ii) with respect 
  6.28  to expenditures for repair or maintenance only, that the 
  6.29  property is or will be used extensively as a meeting place or 
  6.30  event location by other nonprofit organizations or community or 
  6.31  service groups and that no rental fee is charged for the use; 
  6.32  (iii) with respect to expenditures, including a mortgage payment 
  6.33  or other debt service payment, for erection or acquisition only, 
  6.34  that the erection or acquisition is necessary to replace with a 
  6.35  comparable building, a building owned by the organization and 
  6.36  destroyed or made uninhabitable by fire or natural disaster, 
  7.1   provided that the expenditure may be only for that part of the 
  7.2   replacement cost not reimbursed by insurance; or (iv) with 
  7.3   respect to expenditures, including a mortgage payment or other 
  7.4   debt service payment, for erection or acquisition only, that the 
  7.5   erection or acquisition is necessary to replace with a 
  7.6   comparable building a building owned by the organization that 
  7.7   was acquired from the organization by eminent domain or sold by 
  7.8   the organization to a purchaser that the organization reasonably 
  7.9   believed would otherwise have acquired the building by eminent 
  7.10  domain, provided that the expenditure may be only for that part 
  7.11  of the replacement cost that exceeds the compensation received 
  7.12  by the organization for the building being replaced; 
  7.13     (4) an expenditure by an organization which is a 
  7.14  contribution to a parent organization, foundation, or affiliate 
  7.15  of the contributing organization, if the parent organization, 
  7.16  foundation, or affiliate has provided to the contributing 
  7.17  organization within one year of the contribution any money, 
  7.18  grants, property, or other thing of value; 
  7.19     (5) a contribution by a licensed organization to another 
  7.20  licensed organization unless the board has specifically 
  7.21  authorized the contribution.  The board must authorize such a 
  7.22  contribution when requested to do so by the contributing 
  7.23  organization unless it makes an affirmative finding that the 
  7.24  contribution will not be used by the recipient organization for 
  7.25  one or more of the purposes in paragraph (a); or 
  7.26     (6) a contribution to a statutory or home rule charter 
  7.27  city, county, or town by a licensed organization with the 
  7.28  knowledge that the governmental unit intends to use the 
  7.29  contribution for a pension or retirement fund. 
  7.30     Sec. 5.  Minnesota Statutes 1994, section 349.166, 
  7.31  subdivision 2, is amended to read: 
  7.32     Subd. 2.  [EXEMPTIONS.] (a) Lawful gambling may be 
  7.33  conducted by an organization without a license and without 
  7.34  complying with sections 349.168, subdivisions 1 and 2; 349.17, 
  7.35  subdivisions 4 and 5; 349.18, subdivision 1; and 349.19 if: 
  7.36     (1) the organization conducts lawful gambling on five or 
  8.1   fewer days in a calendar year; 
  8.2      (2) the organization does not award more than $50,000 in 
  8.3   prizes for lawful gambling in a calendar year; 
  8.4      (3) the organization pays a fee of $25 to the board, 
  8.5   notifies the board in writing not less than 30 days before each 
  8.6   lawful gambling occasion of the date and location of the 
  8.7   occasion, or 60 days for an occasion held in the case of a city 
  8.8   of the first class, the types of lawful gambling to be 
  8.9   conducted, the prizes to be awarded, and receives an exemption 
  8.10  identification number; 
  8.11     (4) the organization notifies the local government unit 30 
  8.12  days before the lawful gambling occasion, or 60 days for an 
  8.13  occasion held in a city of the first class; 
  8.14     (5) the organization purchases all gambling equipment and 
  8.15  supplies from a licensed distributor; and 
  8.16     (6) the organization reports to the board, on a single-page 
  8.17  form prescribed by the board, within 30 days of each gambling 
  8.18  occasion, the gross receipts, prizes, expenses, expenditures of 
  8.19  net profits from the occasion, and the identification of the 
  8.20  licensed distributor from whom all gambling equipment was 
  8.21  purchased.  
  8.22     (b) If the organization fails to file a timely report as 
  8.23  required by paragraph (a), clause (3) or (6), a $250 penalty is 
  8.24  imposed on the organization.  Failure to file a timely report 
  8.25  does not disqualify the organization as exempt under this 
  8.26  subdivision if a report is later filed and the penalty paid. 
  8.27     (c) Merchandise prizes must be valued at their fair market 
  8.28  value. 
  8.29     (d) Unused pull-tab and tipboard deals must be returned to 
  8.30  the distributor within seven working days after the end of the 
  8.31  lawful gambling occasion.  The distributor must accept and pay a 
  8.32  refund for all returns of unopened and undamaged deals returned 
  8.33  under this paragraph. 
  8.34     (e) An organization that is exempt from taxation on 
  8.35  purchases sales of pull-tabs and tipboards under section 
  8.36  297E.02, subdivision 4, paragraph (b), clause (4), must return 
  9.1   to the distributor any tipboard or pull-tab deal no part of 
  9.2   which is was used at the lawful gambling occasion for which it 
  9.3   was purchased by the organization. 
  9.4      (f) The organization must maintain all required records of 
  9.5   exempt gambling activity for 3-1/2 years. 
  9.6      Sec. 6.  Minnesota Statutes 1994, section 349.17, 
  9.7   subdivision 1, is amended to read: 
  9.8      Subdivision 1.  [BINGO OCCASIONS.] Not more than seven ten 
  9.9   bingo occasions each week may be conducted by an organization.  
  9.10  At least 15 bingo games must be held at each occasion and a 
  9.11  bingo occasion must continue for at least 1-1/2 hours but not 
  9.12  more than four consecutive hours. 
  9.13     Sec. 7.  Minnesota Statutes 1994, section 349.191, 
  9.14  subdivision 1a, is amended to read: 
  9.15     Subd. 1a.  [CREDIT AND SALES TO DELINQUENT ORGANIZATIONS.] 
  9.16  (a) If a distributor does not receive payment in full from an 
  9.17  organization within 30 35 days of the delivery of gambling 
  9.18  equipment, the distributor must notify the board in writing of 
  9.19  the delinquency. 
  9.20     (b) If a distributor who has notified the board under 
  9.21  paragraph (a) has not received payment in full from the 
  9.22  organization within 60 days of the notification under paragraph 
  9.23  (a), the distributor must notify the board of the continuing 
  9.24  delinquency. 
  9.25     (c) On receipt of a notice under paragraph (a), the board 
  9.26  shall order all distributors that until further notice from the 
  9.27  board, they may sell gambling equipment to the delinquent 
  9.28  organizations only on a cash basis with no credit extended.  On 
  9.29  receipt of a notice under paragraph (b), the board shall order 
  9.30  all distributors not to sell any gambling equipment to the 
  9.31  delinquent organization. 
  9.32     (d) No distributor may extend credit or sell gambling 
  9.33  equipment to an organization in violation of an order under 
  9.34  paragraph (c) until the board has authorized such credit or sale.
  9.35     Sec. 8.  Minnesota Statutes 1994, section 349.211, 
  9.36  subdivision 1, is amended to read: 
 10.1      Subdivision 1.  [BINGO.] Except as provided in subdivision 
 10.2   2, prizes for a single bingo game may not exceed $100 except 
 10.3   prizes for a cover-all game, which may exceed $100 if the 
 10.4   aggregate value of all cover-all prizes in a bingo occasion does 
 10.5   not exceed $1,000.  Total prizes awarded at a bingo occasion may 
 10.6   not exceed $2,500, unless a cover-all game is played in which 
 10.7   case the limit is $3,500.  A prize may be determined based on 
 10.8   the type of bingo game conducted or the value of the bingo 
 10.9   packet sold to the player.  For purposes of this subdivision, a 
 10.10  cover-all game is one in which a player must cover all spaces 
 10.11  except a single free space to win. 
 10.12     Sec. 9.  [INSTRUCTION TO REVISOR.] 
 10.13     The revisor of statutes shall change the words "lawful 
 10.14  gambling" wherever they appear in Minnesota Statutes and 
 10.15  Minnesota Rules to "nonprofit gambling". 
 10.16     Sec. 10.  [REPEALER.] 
 10.17     Minnesota Statutes 1994, section 297E.17, is repealed. 
 10.18     Sec. 11.  [EFFECTIVE DATE.] 
 10.19     Sections 1, 2, 3, 5, and 10 are effective for taxes 
 10.20  incurred on or after July 1, 1995.  Sections 4, 6, 7, 8, and 9 
 10.21  are effective the day following final enactment.