16 TAC §402.598
The Texas Lottery Commission proposes new section 16 TAC §402.598
relating to the charitable use of proceeds. Specifically, the new section
identifies records relating to an organization's charitable purpose which
must be maintained by each organization, the information related to an organization's
charitable purpose which must be submitted when an organization applies for
a license to conduct bingo, and the guidelines used by the Commission to determine
if a distribution is charitable, as described by Occupations Code, §2001.454.
Fiscal Impact
Lee Deviney, Financial Administration Director, has determined for the
first five year period the new rule is in effect, there will be no significant
fiscal impact for state or local government as a result of enforcing this
rule. Any costs to the State could be absorbed by current resources. For each
year of the first five years the section will be in effect, the fiscal impact
is the following: FY 04, $0; FY 05, $0; FY 06, $0; FY 07, $0 and FY 08, $0.
Additionally, there will be no effect on small businesses, micro businesses
or local or state employment.
William L. Atkins, Director, Charitable Bingo Operations Division, has
determined that for each of the first five years the section as proposed is
in effect, licensees will benefit from the adoption of the section. The anticipated
benefit as a result of the proposed new section is to provide licensees with
additional information regarding the types of records an organization conducting
Charitable Bingo must maintain. Additionally, the proposed new section will
assist organizations conducting Charitable Bingo in making appropriate charitable
distributions.
Written comments on the proposed new rule may be submitted to Kevin Oldham,
Assistant General Counsel, Texas Lottery Commission, P.O. Box 16630, Austin,
Texas 78761-6630.
The proposed new rule is proposed under Occupations Code, §2001.054
which authorizes the Commission to adopt rules to enforce and administer the
Bingo Enabling Act, under Government Code, §467.102 which authorizes
the Commission to adopt rules for the enforcement and administration of the
laws under the Commission's jurisdiction, under Occupations Code, §2001.051(b)
which grants the Commission broad authority to exercise strict control and
close supervision over all bingo conducted in Texas so that bingo is fairly
conducted and the proceeds derived from bingo are used for an authorized purpose,
and under Occupations Code, §2001.454 which provides the standard by
which an organization's use of net proceeds from the conduct of bingo may
be considered dedicated to the charitable purpose of the organization.
The new rule implements Occupations Code, Chapter 2001.
§402.598.Charitable Use of Proceeds.
(a)
An organization must maintain and make available to a representative
of the commission or designee:
(1)
a complete copy of the application for exemption, either
I.R.S. Form 1023 for 501(c)(3) organizations or I.R.S. Form 1024 for other
non-profits, which provides a full description of the purposes and the activities
of the organization in relation to the exempt status filed with the Internal
Revenue Service;
(2)
a letter of good standing from the parent organization,
if applicable, copy of the organization's Articles of Incorporation, Articles
of Association, Trust Indenture, Constitution; or
(3)
other enabling document and any amendments and any adopted
bylaws which provide in writing the specific cause, deed or activity that
is consistent with the organization's purposes and objectives for which bingo
net proceeds will be used.
(b)
Organizations Licensed After May 1, 2004 must furnish with
their application to conduct bingo:
(1)
a copy of the application for exemption, I.R.S. Form 1023
for 501(c)(3) or I.R.S. Form 1024 for non-profits;
(2)
a conformed copy of the organization's Articles of Incorporation,
Articles of Association, Trust Indenture, Constitution; or
(3)
other enabling documents and any amendments and any adopted
bylaws and provide in writing the specific cause, deed or activity that is
consistent with the organization's purposes and objectives for which bingo
net proceeds will be used.
(c)
Nothing in this rule precludes the commission from requesting
supplemental information in order to substantiate compliance with Occupations
Code, Chapter 2001.
(d)
Record Keeping:
(1)
All distributions for charitable purposes must be made
from the bingo checking account. A distribution made from the bingo checking
account into another account maintained by the organization must be substantiated
with documentation and used for a cause, deed, or activity dedicated to the
charitable purposes of the organization consistent with the 26 U.S.C. Section
501 tax exemption of the organization or the purposes or objective for which
the organization qualifies as an authorized organization
(2)
A licensed authorized organization must submit quarterly,
on a form prescribed by the commission, a list of the charitable distributions
made by the organization during the quarter.
(3)
All records to substantiate the use of net proceeds must
be maintained for a period of four years.
(4)
Records required by the commission as supporting documentation
of use of net proceeds made by the licensed authorized organization may include
one or more of the following: annual reports; treasurers reports; historian
records; balance sheets; accountants work papers; time cards; meeting minutes;
committee minutes; canceled checks; letters of acknowledgment; newspaper articles;
publications; invoices; receipts; correspondence file; reports to governing
parent organizations; flyers, pamphlets, brochures; advertisement; log, schedule
or calendar; licensed authorized organizations monthly bulletins; criteria
for soliciting applicants awarding scholarships; IRS Form 990; IRS Form 940
and 941; and IRS examination reports.
(e)
A use of net proceeds, which would not be considered as
a cause, deed, or activity dedicated to the charitable purposes of the organization
and not consistent with the 26 U.S.C. Section 501 tax exemption of the organization
or the purposes or objective for which the organization qualifies as an authorized
organization, are any use of proceeds which:
(1)
inures to the benefit of any private shareholder, individual,
officers, governing body or member other than as reasonable compensation for
services rendered;
(2)
has no documentation to substantiate the use of net proceeds;
or
(3)
does not further the organization's cause, deed or activity
consistent with the federal tax exempt application or written purpose provided
with their application.
(f)
Reimbursement or direct payment for member or employee
travel expenses. Reimbursement or direct payment for member or employee travel
expenses will only be considered a cause, deed, or activity dedicated to the
charitable purposes and consistent with the 26 U.S.C. Section 501 tax exemption
of the organization or the purposes or objective for which the organization
qualifies as an authorized organization if the following records are provided
to the commission upon request:
(1)
the itinerary of the seminar, convention, or retreat showing
that the purpose of the seminar, convention, or retreat was primarily to discuss
the charitable functions and purposes consistent with the 26 U.S.C. Section
501 tax exemption of the organization or the purposes or objective for which
the organization qualifies as an authorized organization; and
(2)
the original receipts and cancelled checks, or true and
correct copies of the same, showing the date and amount of the contribution
for actual out-of-pocket reasonable and necessary expenses such as hotel,
airline tickets, meals, etc. and the corresponding request for payment or
reimbursement maintained by the organization.
This agency hereby certifies that the proposal has been
reviewed by legal counsel and found to be within the agency's legal authority
to adopt.
Filed with the Office of
the Secretary of State on March 5, 2004.
TRD-200401748
Kimberly L. Kiplin
General Counsel
Texas Lottery Commission
Earliest possible date of adoption: April 18, 2004
For further information, please call: (512) 344-5113
16 TAC §402.601
The Texas Lottery Commission proposes new section 16 TAC §402.601
relating to Unit Managers. Specifically, the new section identifies the process
by which a person may become a unit manager, including the steps necessary
to properly notify the commission, the applicable bond amount or security
which must be posted, and the annual license fee.
Fiscal Impact
Lee Deviney, Financial Administration Director, has determined for the
first five year period the new rule is in effect, there will be no significant
fiscal impact for state or local government as a result of enforcing this
rule. Any costs to the State could be absorbed by current resources. For each
year of the first five years the section will be in effect, the fiscal impact
is the following: FY 04, $0; FY 05, $0; FY 06, $0; FY 07, $0 and FY 08, $0.
Additionally, there will be no effect on small businesses, micro businesses
or local or state employment.
William L. Atkins, Director, Charitable Bingo Operations Division, has
determined that for each of the first five years the section as proposed is
in effect, licensees will benefit from the adoption of the section. The anticipated
benefit as a result of the proposed new section is to provide interested parties
with a uniform standard for obtaining a license as a unit manager.
Written comments on the proposed new rule may be submitted to Kevin Oldham,
Assistant General Counsel, Texas Lottery Commission, P.O. Box 16630, Austin,
Texas 78761-6630.
The proposed new rule is proposed under Occupations Code, §2001.054
which authorizes the Commission to adopt rules to enforce and administer the
Bingo Enabling Act, under Government Code, §467.102 which authorizes
the Commission to adopt rules for the enforcement and administration of the
laws under the Commission's jurisdiction, under Occupations Code, §2001.051(b)
which grants the Commission broad authority to exercise strict control and
close supervision over all bingo conducted in Texas so that bingo is fairly
conducted and the proceeds derived from bingo are used for an authorized purpose,
and under Occupations Code, §2001.437 which authorizes the Commission
to issue and regulate the licenses of unit managers.
The new rule implements Occupations Code, Chapter 2001.
§402.601.Unit Manager.
(a)
Notification.
(1)
An individual shall not provide services as a unit manager
to licensed authorized organizations that have formed a unit until the following
occurs:
(A)
the commission receives the unit accounting agreement executed
by all members of the unit with the name of the unit manager designated therein;
(B)
the individual holds a unit manager license issued by the
commission;
(C)
the individual posts a bond or security, for each unit,
in the form prescribed by §402.583(b) of this chapter; and
(D)
the individual provides information to the commission relating
to the location where the unit manager services will be performed and where
the records will be maintained.
(2)
Bond. The required initial bond amount for a unit manager
shall not exceed $30,000.00 for each unit. The unit manager's required initial
bond amount will be determined by identifying the license class of each member
of the unit and adding the corresponding dollar amounts for each member as
follows:
(A)
Classes A-D $1000
(B)
Classes E-H $3000
(C)
Classes I-J $6000
(3)
A unit manager shall provide written notification to the
commission of any change in the information in the unit manager's most recent
application for a unit manager license or renewal. The unit manager shall
notify the commission of the change in the information not later than the
15th day after the date of the change.
(b)
Annual License Fee for a Unit Manager. The non refundable
annual license fee for a unit manager may not exceed $250.00.
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of
the Secretary of State on March 5, 2004.
TRD-200401749
Kimberly L. Kiplin
General Counsel
Texas Lottery Commission
Earliest possible date of adoption: April 18, 2004
For further information, please call: (512) 344-5113