Bill Summary – FastDemocracy

WEST VIRGINIA LEGISLATURE
REGULAR SESSION
                 Introduced House Bill 5397
  By Delegates Steele, Kelly, Hott, Cannon, Smith,
 Hanshaw (Mr. Speaker), Maynor, Akers, Kirby, Riley,
                     and Dean [Introduced January 31, 2024; Referred to the Committee on the Judiciary then Finance]
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  A BILL to amend the Code of West Virginia, 1931, as amended, by adding thereto a new article,
          designated §47-21A-101, §47-21A-102, §47-21A-103, §47-21A-104, §47-21A-105, §47-
          21A-106, §47-21A-107, §47-21A-108, §47-21A-109, §47-21A-110, §47-21A-111, §47-
          21A-112, §47-21A-113, §47-21A-114, §47-21A-115, §47-21A-116, §47-21A-117, §47-21A-
          118, §47-21A-119, §47-21A-120, §47-21A-121, §47-21A-122, §47-21A-123, §47-21A-
          124, §47-21A-125, §47-21A-126, §47-21A-127, §47-21A-128, §47-21A-129, and §47-
          21A-130, all relating to creating online charitable raffles.
     Be it enacted by the Legislature of West Virginia:
     ARTICLE 21A. ONLINE CHARITABLE RAFFLES.
     §47-21A-101.                                     Legislative intent.
          The Legislature, in recognition of the need charitable and public service organizations
  have for a practicable way of raising funds by means of the internet, declares its intent to grant the
  privilege of holding online raffles to those organizations which qualify as provided in this article.
     §47-21A-102. Definitions.
          For purposes of this article, unless specified otherwise:
          (a) "Charitable or public service activity or endeavor" means any bona fide activity or
  endeavor which directly benefits a number of people by:
          (1) Contributing to educational or religious purposes;
          (2) Relieving them from disease, distress, suffering, constraint, or the effects of poverty;
          (3) Increasing their comprehension of, and devotion to, the principles upon which this
  nation was founded and to the principles of good citizenship;
          (4) Making them aware of, or educating them about, issues of public concern so long as the
  activity or endeavor is not aimed at supporting or participating in the campaign of any candidate for
 public office;
         (5) Lessening the burdens borne by government or voluntarily supporting, augmenting, or
 supplementing services which government would normally render to the people;
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        (6) Providing or supporting nonprofit community activities for youth, senior citizens, or the
 disabled;
        (7) Providing or supporting nonprofit cultural or artistic activities; or
        (8) Providing or supporting any political party executive committee.
        (b) "Charitable or public service organization" means a bona fide, not-for-profit, tax-
 exempt, benevolent, educational, philanthropic, humane, patriotic, civic, religious, fraternal, or
 eleemosynary, incorporated or unincorporated association, or organization; or a volunteer fire
 department, rescue unit, or other similar volunteer community service organization or association;
 but does not include any nonprofit association or organization, whether incorporated or not, which
 is organized primarily for the purposes of influencing legislation or supporting or promoting the
 campaign of any single candidate for public office.
        (c) "Commissioner" means the State Tax Commissioner.
        (d) "Conduct" means to direct the actual holding of a online raffle by activities including, but
 not limited to, selling tickets, collecting money, drawing or arranging for the drawing of the winning
 numbers or names, announcing the winning numbers or names, posting the winning numbers or
 names, verifying winners, and awarding prizes.
        (e) "Expend net proceeds for charitable or public service purposes" means to devote the
 net proceeds of an online raffle occasion or occasions to a qualified recipient organization or as
 otherwise provided by this article and approved by the commissioner pursuant to §47-21A-113 of
 this code.
        (f) "Gross proceeds" means all moneys collected or received from the conduct of an online
 raffle held by a licensee during a license period.
        (g) "Licensee" means any organization or association granted an annual or limited
 occasion license pursuant to the provisions of this article.
        (h) "Net proceeds" means all moneys collected or received from the conduct of an online
 raffle or online raffles at occasions held by a licensee during a license period after payment of the
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 raffle expenses authorized by §47-21A-111, §47-21A-112, and §47-21A-113 of this code.
         (i) "Person" means any individual, association, society, incorporated or unincorporated
 organization, firm, partnership, or other nongovernmental entity or institution.
         (k) "Patron" means any individual who participates in an online raffle by purchasing an
 online raffle ticket other than an individual who is participating in the conduct of the occasion.
         (l) "Platform provider" means any third-party entity that contracts by written agreement with
 a licensee to host, conduct, or otherwise administer an online raffle by utilizing a software system,
 web application, method, or other process for the purpose of conducting online raffles over the
 Internet.
         (m) "Qualified recipient organization" means any bona fide, not-for-profit, tax-exempt, as
 defined in subdivision (p) of this subsection, incorporated or unincorporated association or
 organization which is organized and functions exclusively to directly benefit a number of people as
 provided in paragraphs (1) through (7), inclusive, subdivision (a) of this subsection. "Qualified
 recipient organization" includes, without limitation, any licensee which is organized and functions
 exclusively as provided in this subdivision.
         (n) "Online Raffle" shall have the same meaning as "raffle" as defined in §47-21-2 of this
 code but conducted utilizing a software system, web application, method, or other process for the
 purpose of conducting online raffles over the Internet.
         (o) "Online raffle occasion" or "occasion" means a single online session at which a series of
 one or more successive online raffles is conducted by a single licensee.
         (p) "Tax-exempt association or organization" means an association or organization which
 is, and has received from the Internal Revenue Service a determination letter that is currently in
 effect stating that the organization is, exempt from federal income taxation under subsection
 501(a) and described in subsection 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; or is exempt from income taxes under
 subsection 527(a) of that code.
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     §47-21A-103. Authorizing the conduct of certain online raffles without a license.
          Notwithstanding any other provisions of this article to the contrary, any charitable or public
  service organization which has been in existence in this state for at least one year is hereby
  authorized to conduct online raffles without compliance with the licensing provisions of this article:
  Provided, That any prize awarded in any single online raffle in an online raffle occasion may not
  exceed in value the sum of $4,000: Provided, however, That the cumulative gross proceeds
  derived from the conduct of online raffle occasions by any such charitable or public service
  organization may not exceed $15,000 during any calendar year: Provided further, That any such
  organization may not be subject to the record keeping provisions of §47-21A-114 of the code but
  shall maintain a separate accounting for the operation of online raffles. All records required by this
 section shall be maintained for at least three calendar years and shall be available for reasonable
 inspection by the commissioner.
     §47-21A-104. Who may hold online raffles; application for license; licenses not transferable.
          (a) Except as provided in section in §47-21A-103 of this code, only persons, as defined in
  this article, who are residents of this state and who are active members of any charitable or public
  service organization which has been in existence in this state for at least two years prior to filing an
  application for an online raffle license issued pursuant to §47-21A-105 and §47-21A-106 of the
  code may hold online raffle occasions in accordance with the provisions of this article during the
  time it holds a valid license.
          (b) Application for an online raffle license shall be made to the Tax Commissioner and shall
  be on a form supplied by him or her. The application shall contain the information required by §47-
  21A-108 of the code and any other information which the commissioner considers necessary. No
 online raffle may be held and no tickets may be sold pursuant to this article until the online raffle
 application has been approved by the Tax Commissioner and the license has been received by the
 applicant: Provided, That no online raffle occasion may be held and no online raffle tickets may be
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 sold until a 60 day filing period, which is that time period between the receipt of that application by
 the Tax Commissioner and the first online raffle occasion, has expired: Provided, however, That
 the Tax Commissioner shall send the applicant its license within five days after the application is
 approved. If the 60-day filing period has expired and the application has not been denied and the
 online raffle license has not been received by the applicant, the applicant may consider the
 application approved and begin to sell tickets for the online raffle or hold the online raffle occasion.
 The Tax Commissioner shall send the applicant its license within five days after the expiration of
 the filing period if the application has not been otherwise denied.
        (c) No online raffle license issued pursuant to this article may be transferred.
     §47-21A-105. Annual license; conditions on holding of online raffles.
         A charitable or public service organization or any of its auxiliaries or other organizations
  otherwise affiliated with it, may apply for an annual license. Only one license per year in the
  aggregate may be granted to a charitable or public service organization and all of its auxiliaries or
  other associations or organizations otherwise affiliated with it: Provided, That for purposes of this
  section, the various branches, chapters or lodges of any national association or organization or
  local churches of a nationally organized church are not considered affiliates or auxiliaries of each
  other. The commissioner shall by regulation provide for the manner for determining to which
  organization, whether the parent organization, an affiliate or an auxiliary, the one license allowed
  under this section is granted. An annual license is valid for one year from the date of issuance. No
 organizations may hold a joint online raffle occasion under any annual licenses.
        The Tax Commissioner shall provide a hyperlink on its website that will display a list of
 every active and approved licensee to conduct an online raffle or raffle occasion. A licensee shall
 conspicuously provide this hyperlink on any online raffle ticket that is purchased by a patron. A
 licensee shall conspicuously display at its physical location, that was provided on its application,
 the approved license to conduct an online raffle.
     §47-21A-106. Limited occasion license; conditions on holding of online raffles.
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         Two or more organizations may hold a joint online raffle occasion provided each
  participating organization has been granted a limited occasion online raffle license for such jointly
  held occasion: Provided, That no licensee which holds an annual license may obtain more than
  one limited occasion license.
         A limited occasion license is valid only for the time period specified in the application and
  entitles only the licensee to hold two online raffle occasions during the time period so specified
  which may not exceed six months from the date of issuance of such limited occasion license.
         Subject to the limitations set forth in this section for charitable or public service
  organization having an annual license, a charitable or public service organization and all of its
 auxiliaries or other associations or organizations otherwise affiliated with it, may be granted only
 three limited occasion licenses per year in the aggregate. For purposes of this section the various
 branches, chapters or lodges of any national association or organization or local churches of a
 nationally organized church are not considered affiliates or auxiliaries of each other. The
 commissioner shall by rule-making provide the manner for determining to which organization,
 whether the parent organization, an affiliate or an auxiliary, the three licenses allowed under this
 section are granted.
        The Tax Commissioner shall provide a hyperlink on its website that will display a list of
 every active and approved licensee to conduct an online raffle or raffle occasion. A licensee shall
 conspicuously provide this hyperlink on any online raffle ticket that is purchased by a patron. A
 licensee shall conspicuously display at its physical location, that was provided on its application,
 the approved license to conduct an online raffle.
     §47-21A-107. License fee and exemption from taxes.
         (a) A license fee shall be paid to the Tax Commissioner for annual licenses in the amount of
  $500. A license fee shall be paid to the Tax Commissioner for a limited occasion license in the
  amount of $50. All revenue from said license fee shall be deposited in the special revenue account
  established under the authority of §11-9-2a of this code and used to support the investigatory Intr HB                                      2024R3364
  activities provided for in that section. The license fee imposed by this section is in lieu of all other
  license or franchise taxes or fees of this state and no county or municipality or other political
  subdivision of this state may impose a license or franchise tax or fee on any online raffle or online
  raffle occasion.
          (b) The gross proceeds derived from the conduct of an online raffle occasion are exempt
 from state and local business and occupation taxes, income taxes, excise taxes and all special
 taxes. Any charitable or public service organization conducting an online raffle occasion pursuant
 to the provisions of this article is exempt from payment of consumers sales and service taxes, use
 taxes and all other taxes on all purchases for use or consumption in the conduct of an online raffle
 occasion and is exempt from collecting consumers sales taxes on any admission fees and sales of
 online raffle tickets.
     §47-21A-108. Information required in application.
          An application for an online raffle license shall include the following information:
          (a) Name of the applicant and name and headquarter's address of any state or national
  organization of which the applicant is a local branch or lodge;
          (b) The address and telephone number of the applicant organization, if any, and if the
  applicant organization has no telephone, then the address and telephone number of the person
  applying on behalf of such organization shall be supplied;
          (c) For a limited occasion license, the names and addresses of two or more bona fide
  active members of the applicant organization who are charged with overall responsibility for the
  applicant's online raffle operations, at least one of whom shall be virtually present and available
 when the winning numbers or names are drawn, announced, posted and verified and present
 when the prizes are awarded; and the names and addresses of the highest elected officer of the
 licensee and his or her officially appointed designee, one of whom shall be virtually present and
 available when the winning numbers or names are drawn, announced, posted and verified and
 present when the prizes are awarded; for an annual license, the names, addresses and telephone
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 numbers of three or more bona fide active members of the applicant organization who are charged
 with overall responsibility for the applicant's online raffle operations, at least one of whom shall be
 virtually present and available when the winning numbers or names are drawn, announced,
 posted and verified and present when the prizes are awarded; and the names and addresses and
 telephone numbers of the highest elected officer of the licensee and his or her officially appointed
 designee, one of whom shall be virtually present and available when the winning numbers and
 names are drawn, announced posted and verified and present when the prizes are awarded;
         (d) The address and the location of any platform provider that manages a website software
 system, web application, method, or process for the purpose of collecting monies related to the
 sale of online raffles, securing and safekeeping all monies collected related to the sale of online
 raffle tickets, disbursing monies collected from the sale of online raffle tickets to the licensee
 before or after the onl