Bill Text: MN HF2418 | 2011-2012 | 87th Legislature | Introduced
Bill Title: Lawful gambling net profits contribution to 501(c)(19) organizations allowed by licensed organizations.
Spectrum: Partisan Bill (Republican 3-0)
Status: (Introduced - Dead) 2012-04-24 - Authors stricken Howes and Zellers [HF2418 Detail]
Download: Minnesota-2011-HF2418-Introduced.html
1.2relating to lawful gambling; allowing licensed organizations to contribute net
1.3profits from lawful gambling to 501(c)(19) organizations;amending Minnesota
1.4Statutes 2010, section 349.12, subdivision 25, by adding a subdivision.
1.5BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.6 Section 1. Minnesota Statutes 2010, section 349.12, is amended by adding a
1.7subdivision to read:
1.8 Subd. 15b. 501(c)(19) organization. "501(c)(19) organization" is an organization
1.9exempt from the payment of federal income taxes under section 501(c)(19) of the Internal
1.10Revenue Code.
1.11 Sec. 2. Minnesota Statutes 2010, section 349.12, subdivision 25, is amended to read:
1.12 Subd. 25. Lawful purpose. (a) "Lawful purpose" means one or more of the
1.13following:
1.14 (1) any expenditure by or contribution to a 501(c)(3) or festival organization, as
1.15defined in subdivision 15a, provided that the organization and expenditure or contribution
1.16are in conformity with standards prescribed by the board under section349.154 , which
1.17standards must apply to both types of organizations in the same manner and to the same
1.18extent;
1.19 (2) a contribution to or expenditure for goods and services for an individual or
1.20family suffering from poverty, homelessness, or disability, which is used to relieve the
1.21effects of that suffering;
1.22 (3) a contribution to a program recognized by the Minnesota Department of Human
1.23Services for the education, prevention, or treatment of problem gambling;
2.1 (4) a contribution to or expenditure on a public or private nonprofit educational
2.2institution registered with or accredited by this state or any other state;
2.3 (5) a contribution to an individual, public or private nonprofit educational institution
2.4registered with or accredited by this state or any other state, or to a scholarship fund of a
2.5nonprofit organization whose primary mission is to award scholarships, for defraying the
2.6cost of education to individuals where the funds are awarded through an open and fair
2.7selection process;
2.8 (6) activities by an organization or a government entity which recognize military
2.9service to the United States, the state of Minnesota, or a community, subject to rules
2.10of the board, provided that the rules must not include mileage reimbursements in the
2.11computation of the per diem reimbursement limit and must impose no aggregate annual
2.12limit on the amount of reasonable and necessary expenditures made to support:
2.13 (i) members of a military marching or color guard unit for activities conducted
2.14within the state;
2.15 (ii) members of an organization solely for services performed by the members at
2.16funeral services;
2.17 (iii) members of military marching, color guard, or honor guard units may be
2.18reimbursed for participating in color guard, honor guard, or marching unit events within
2.19the state or states contiguous to Minnesota at a per participant rate of up to $35 per diem; or
2.20 (iv) active military personnel and their immediate family members in need of
2.21support services;
2.22 (7) recreational, community, and athletic facilities and activities intended primarily
2.23for persons under age 21, provided that such facilities and activities do not discriminate on
2.24the basis of gender and the organization complies with section349.154, subdivision 3a ;
2.25 (8) payment of local taxes authorized under this chapter, taxes imposed by the
2.26United States on receipts from lawful gambling, the taxes imposed by section297E.02 ,
2.27subdivisions 1, 4, 5, and 6, and the tax imposed on unrelated business income by section
2.28290.05, subdivision 3
;
2.29 (9) payment of real estate taxes and assessments on permitted gambling premises
2.30owned by the licensed organization paying the taxes, or wholly leased by a licensed
2.31veterans organization under a national charter recognized under section 501(c)(19) of the
2.32Internal Revenue Code;
2.33 (10) a contribution to the United States, this state or any of its political subdivisions,
2.34or any agency or instrumentality thereof other than a direct contribution to a law
2.35enforcement or prosecutorial agency;
3.1 (11) a contribution to or expenditure by a nonprofit organization which is a church
3.2or body of communicants gathered in common membership for mutual support and
3.3edification in piety, worship, or religious observances;
3.4 (12) an expenditure for citizen monitoring of surface water quality by individuals
3.5or nongovernmental organizations that is consistent with section115.06, subdivision 4 ,
3.6and Minnesota Pollution Control Agency guidance on monitoring procedures, quality
3.7assurance protocols, and data management, provided that the resulting data is submitted
3.8to the Minnesota Pollution Control Agency for review and inclusion in the state water
3.9quality database;
3.10 (13) a contribution to or expenditure on projects or activities approved by the
3.11commissioner of natural resources for:
3.12 (i) wildlife management projects that benefit the public at large;
3.13 (ii) grant-in-aid trail maintenance and grooming established under sections84.83
3.14and
84.927 , and other trails open to public use, including purchase or lease of equipment
3.15for this purpose; and
3.16 (iii) supplies and materials for safety training and educational programs coordinated
3.17by the Department of Natural Resources, including the Enforcement Division;
3.18 (14) conducting nutritional programs, food shelves, and congregate dining programs
3.19primarily for persons who are age 62 or older or disabled;
3.20 (15) a contribution to a community arts organization, or an expenditure to sponsor
3.21arts programs in the community, including but not limited to visual, literary, performing,
3.22or musical arts;
3.23 (16) an expenditure by a licensed fraternal organization or a licensed veterans
3.24organization for payment of water, fuel for heating, electricity, and sewer costs for:
3.25(i) up to 100 percent for a building wholly owned or wholly leased by and used as
3.26the primary headquarters of the licensed veteran or fraternal organization; or
3.27(ii) a proportional amount subject to approval by the director and based on the
3.28portion of a building used as the primary headquarters of the licensed veteran or fraternal
3.29organization;
3.30 (17) expenditure by a licensed veterans organization of up to $5,000 in a calendar
3.31year in net costs to the organization for meals and other membership events, limited to
3.32members and spouses, held in recognition of military service. No more than $5,000 can be
3.33expended in total per calendar year under this clause by all licensed veterans organizations
3.34sharing the same veterans post home;
3.35 (18) payment of fees authorized under this chapter imposed by the state of Minnesota
3.36to conduct lawful gambling in Minnesota;
4.1 (19) a contribution or expenditure to honor an individual's humanitarian service
4.2as demonstrated through philanthropy or volunteerism to the United States, this state,
4.3or local community;
4.4(20) a contribution by a licensed organization to another licensed organization with
4.5prior board approval, with the contribution designated to be used for one or more of the
4.6following lawful purposes under this section: clauses (1) to (7), (11) to (15), (19), and (25);
4.7(21) an expenditure that is a contribution to a parent organization, if the parent
4.8organization: (i) has not provided to the contributing organization within one year of the
4.9contribution any money, grants, property, or other thing of value, and (ii) has received
4.10prior board approval for the contribution that will be used for a program that meets one or
4.11more of the lawful purposes under subdivision 7a;
4.12(22) an expenditure for the repair, maintenance, or improvement of real property
4.13and capital assets owned by an organization, or for the replacement of a capital asset that
4.14can no longer be repaired, with a fiscal year limit of five percent of gross profits from
4.15the previous fiscal year, with no carryforward of unused allowances. The fiscal year is
4.16July 1 through June 30. Total expenditures for the fiscal year may not exceed the limit
4.17unless the board has specifically approved the expenditures that exceed the limit due to
4.18extenuating circumstances beyond the organization's control. An expansion of a building
4.19or bar-related expenditures are not allowed under this provision.
4.20(i) The expenditure must be related to the portion of the real property or capital asset
4.21that must be made available for use free of any charge to other nonprofit organizations,
4.22community groups, or service groups,or and is used for the organization's primary
4.23mission or headquarters.
4.24(ii) An expenditure may be made to bring an existing building that the organization
4.25owns into compliance with the Americans with Disabilities Act.
4.26(iii) An organization may apply the amount that is allowed under item (ii) to the
4.27erection or acquisition of a replacement building that is in compliance with the Americans
4.28with Disabilities Act if the board has specifically approved the amount. The cost of
4.29the erection or acquisition of a replacement building may not be made from gambling
4.30proceeds, except for the portion allowed under this item;
4.31(23) an expenditure for the acquisition or improvement of a capital asset with a cost
4.32greater than $2,000, excluding real property, that will be used exclusively for lawful
4.33purposes under this section if the board has specifically approved the amount;
4.34(24) an expenditure for the acquisition, erection, improvement, or expansion of real
4.35property, if the board has first specifically authorized the expenditure after finding that the
4.36real property will be used exclusively for lawful purpose under this section;or
5.1(25) an expenditure, including a mortgage payment or other debt service payment,
5.2for the erection or acquisition of a comparable building to replace an organization-owned
5.3building that was destroyed or made uninhabitable by fire or catastrophe or to replace an
5.4organization-owned building that was taken or sold under an eminent domain proceeding.
5.5The expenditure may be only for that part of the replacement cost not reimbursed by
5.6insurance for the fire or catastrophe or compensation not received from a governmental
5.7unit under the eminent domain proceeding, if the board has first specifically authorized
5.8the expenditure; or
5.9(26) a contribution to a 501(c)(19) organization that does not have an organization
5.10license under section 349.16 and is not affiliated with the contributing organization, and
5.11whose owned or leased property is not a permitted premises under section 349.165. The
5.12501(c)(19) organization may only use the contribution for lawful purposes under this
5.13subdivision or for the organization's primary mission. The 501(c)(19) organization may
5.14not use the contribution for expansion of a building or for bar-related expenditures.
5.15(b) Expenditures authorized by the board under clauses (24) and (25) must be
5.1651 percent completed within two years of the date of board approval; otherwise the
5.17organization must reapply to the board for approval of the project. "Fifty-one percent
5.18completed" means that the work completed must represent at least 51 percent of the value
5.19of the project as documented by the contractor or vendor.
5.20 (c) Notwithstanding paragraph (a), "lawful purpose" does not include:
5.21 (1) any expenditure made or incurred for the purpose of influencing the nomination
5.22or election of a candidate for public office or for the purpose of promoting or defeating a
5.23ballot question;
5.24 (2) any activity intended to influence an election or a governmental decision-making
5.25process;
5.26 (3) a contribution to a statutory or home rule charter city, county, or town by a
5.27licensed organization with the knowledge that the governmental unit intends to use the
5.28contribution for a pension or retirement fund; or
5.29(4) a contribution to a 501(c)(3) organization or other entity with the intent or effect
5.30of not complying with lawful purpose restrictions or requirements.
1.3profits from lawful gambling to 501(c)(19) organizations;amending Minnesota
1.4Statutes 2010, section 349.12, subdivision 25, by adding a subdivision.
1.5BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.6 Section 1. Minnesota Statutes 2010, section 349.12, is amended by adding a
1.7subdivision to read:
1.8 Subd. 15b. 501(c)(19) organization. "501(c)(19) organization" is an organization
1.9exempt from the payment of federal income taxes under section 501(c)(19) of the Internal
1.10Revenue Code.
1.11 Sec. 2. Minnesota Statutes 2010, section 349.12, subdivision 25, is amended to read:
1.12 Subd. 25. Lawful purpose. (a) "Lawful purpose" means one or more of the
1.13following:
1.14 (1) any expenditure by or contribution to a 501(c)(3) or festival organization, as
1.15defined in subdivision 15a, provided that the organization and expenditure or contribution
1.16are in conformity with standards prescribed by the board under section
1.17standards must apply to both types of organizations in the same manner and to the same
1.18extent;
1.19 (2) a contribution to or expenditure for goods and services for an individual or
1.20family suffering from poverty, homelessness, or disability, which is used to relieve the
1.21effects of that suffering;
1.22 (3) a contribution to a program recognized by the Minnesota Department of Human
1.23Services for the education, prevention, or treatment of problem gambling;
2.1 (4) a contribution to or expenditure on a public or private nonprofit educational
2.2institution registered with or accredited by this state or any other state;
2.3 (5) a contribution to an individual, public or private nonprofit educational institution
2.4registered with or accredited by this state or any other state, or to a scholarship fund of a
2.5nonprofit organization whose primary mission is to award scholarships, for defraying the
2.6cost of education to individuals where the funds are awarded through an open and fair
2.7selection process;
2.8 (6) activities by an organization or a government entity which recognize military
2.9service to the United States, the state of Minnesota, or a community, subject to rules
2.10of the board, provided that the rules must not include mileage reimbursements in the
2.11computation of the per diem reimbursement limit and must impose no aggregate annual
2.12limit on the amount of reasonable and necessary expenditures made to support:
2.13 (i) members of a military marching or color guard unit for activities conducted
2.14within the state;
2.15 (ii) members of an organization solely for services performed by the members at
2.16funeral services;
2.17 (iii) members of military marching, color guard, or honor guard units may be
2.18reimbursed for participating in color guard, honor guard, or marching unit events within
2.19the state or states contiguous to Minnesota at a per participant rate of up to $35 per diem; or
2.20 (iv) active military personnel and their immediate family members in need of
2.21support services;
2.22 (7) recreational, community, and athletic facilities and activities intended primarily
2.23for persons under age 21, provided that such facilities and activities do not discriminate on
2.24the basis of gender and the organization complies with section
2.25 (8) payment of local taxes authorized under this chapter, taxes imposed by the
2.26United States on receipts from lawful gambling, the taxes imposed by section
2.27subdivisions 1, 4, 5, and 6, and the tax imposed on unrelated business income by section
2.29 (9) payment of real estate taxes and assessments on permitted gambling premises
2.30owned by the licensed organization paying the taxes, or wholly leased by a licensed
2.31veterans organization under a national charter recognized under section 501(c)(19) of the
2.32Internal Revenue Code;
2.33 (10) a contribution to the United States, this state or any of its political subdivisions,
2.34or any agency or instrumentality thereof other than a direct contribution to a law
2.35enforcement or prosecutorial agency;
3.1 (11) a contribution to or expenditure by a nonprofit organization which is a church
3.2or body of communicants gathered in common membership for mutual support and
3.3edification in piety, worship, or religious observances;
3.4 (12) an expenditure for citizen monitoring of surface water quality by individuals
3.5or nongovernmental organizations that is consistent with section
3.6and Minnesota Pollution Control Agency guidance on monitoring procedures, quality
3.7assurance protocols, and data management, provided that the resulting data is submitted
3.8to the Minnesota Pollution Control Agency for review and inclusion in the state water
3.9quality database;
3.10 (13) a contribution to or expenditure on projects or activities approved by the
3.11commissioner of natural resources for:
3.12 (i) wildlife management projects that benefit the public at large;
3.13 (ii) grant-in-aid trail maintenance and grooming established under sections
3.15for this purpose; and
3.16 (iii) supplies and materials for safety training and educational programs coordinated
3.17by the Department of Natural Resources, including the Enforcement Division;
3.18 (14) conducting nutritional programs, food shelves, and congregate dining programs
3.19primarily for persons who are age 62 or older or disabled;
3.20 (15) a contribution to a community arts organization, or an expenditure to sponsor
3.21arts programs in the community, including but not limited to visual, literary, performing,
3.22or musical arts;
3.23 (16) an expenditure by a licensed fraternal organization or a licensed veterans
3.24organization for payment of water, fuel for heating, electricity, and sewer costs for:
3.25(i) up to 100 percent for a building wholly owned or wholly leased by and used as
3.26the primary headquarters of the licensed veteran or fraternal organization; or
3.27(ii) a proportional amount subject to approval by the director and based on the
3.28portion of a building used as the primary headquarters of the licensed veteran or fraternal
3.29organization;
3.30 (17) expenditure by a licensed veterans organization of up to $5,000 in a calendar
3.31year in net costs to the organization for meals and other membership events, limited to
3.32members and spouses, held in recognition of military service. No more than $5,000 can be
3.33expended in total per calendar year under this clause by all licensed veterans organizations
3.34sharing the same veterans post home;
3.35 (18) payment of fees authorized under this chapter imposed by the state of Minnesota
3.36to conduct lawful gambling in Minnesota;
4.1 (19) a contribution or expenditure to honor an individual's humanitarian service
4.2as demonstrated through philanthropy or volunteerism to the United States, this state,
4.3or local community;
4.4(20) a contribution by a licensed organization to another licensed organization with
4.5prior board approval, with the contribution designated to be used for one or more of the
4.6following lawful purposes under this section: clauses (1) to (7), (11) to (15), (19), and (25);
4.7(21) an expenditure that is a contribution to a parent organization, if the parent
4.8organization: (i) has not provided to the contributing organization within one year of the
4.9contribution any money, grants, property, or other thing of value, and (ii) has received
4.10prior board approval for the contribution that will be used for a program that meets one or
4.11more of the lawful purposes under subdivision 7a;
4.12(22) an expenditure for the repair, maintenance, or improvement of real property
4.13and capital assets owned by an organization, or for the replacement of a capital asset that
4.14can no longer be repaired, with a fiscal year limit of five percent of gross profits from
4.15the previous fiscal year, with no carryforward of unused allowances. The fiscal year is
4.16July 1 through June 30. Total expenditures for the fiscal year may not exceed the limit
4.17unless the board has specifically approved the expenditures that exceed the limit due to
4.18extenuating circumstances beyond the organization's control. An expansion of a building
4.19or bar-related expenditures are not allowed under this provision.
4.20(i) The expenditure must be related to the portion of the real property or capital asset
4.21that must be made available for use free of any charge to other nonprofit organizations,
4.22community groups, or service groups,
4.23mission or headquarters.
4.24(ii) An expenditure may be made to bring an existing building that the organization
4.25owns into compliance with the Americans with Disabilities Act.
4.26(iii) An organization may apply the amount that is allowed under item (ii) to the
4.27erection or acquisition of a replacement building that is in compliance with the Americans
4.28with Disabilities Act if the board has specifically approved the amount. The cost of
4.29the erection or acquisition of a replacement building may not be made from gambling
4.30proceeds, except for the portion allowed under this item;
4.31(23) an expenditure for the acquisition or improvement of a capital asset with a cost
4.32greater than $2,000, excluding real property, that will be used exclusively for lawful
4.33purposes under this section if the board has specifically approved the amount;
4.34(24) an expenditure for the acquisition, erection, improvement, or expansion of real
4.35property, if the board has first specifically authorized the expenditure after finding that the
4.36real property will be used exclusively for lawful purpose under this section;
5.1(25) an expenditure, including a mortgage payment or other debt service payment,
5.2for the erection or acquisition of a comparable building to replace an organization-owned
5.3building that was destroyed or made uninhabitable by fire or catastrophe or to replace an
5.4organization-owned building that was taken or sold under an eminent domain proceeding.
5.5The expenditure may be only for that part of the replacement cost not reimbursed by
5.6insurance for the fire or catastrophe or compensation not received from a governmental
5.7unit under the eminent domain proceeding, if the board has first specifically authorized
5.8the expenditure; or
5.9(26) a contribution to a 501(c)(19) organization that does not have an organization
5.10license under section 349.16 and is not affiliated with the contributing organization, and
5.11whose owned or leased property is not a permitted premises under section 349.165. The
5.12501(c)(19) organization may only use the contribution for lawful purposes under this
5.13subdivision or for the organization's primary mission. The 501(c)(19) organization may
5.14not use the contribution for expansion of a building or for bar-related expenditures.
5.15(b) Expenditures authorized by the board under clauses (24) and (25) must be
5.1651 percent completed within two years of the date of board approval; otherwise the
5.17organization must reapply to the board for approval of the project. "Fifty-one percent
5.18completed" means that the work completed must represent at least 51 percent of the value
5.19of the project as documented by the contractor or vendor.
5.20 (c) Notwithstanding paragraph (a), "lawful purpose" does not include:
5.21 (1) any expenditure made or incurred for the purpose of influencing the nomination
5.22or election of a candidate for public office or for the purpose of promoting or defeating a
5.23ballot question;
5.24 (2) any activity intended to influence an election or a governmental decision-making
5.25process;
5.26 (3) a contribution to a statutory or home rule charter city, county, or town by a
5.27licensed organization with the knowledge that the governmental unit intends to use the
5.28contribution for a pension or retirement fund; or
5.29(4) a contribution to a 501(c)(3) organization or other entity with the intent or effect
5.30of not complying with lawful purpose restrictions or requirements.
