5-407. Statement of receipts; expenses; penalty

A. On or before the twentieth day after the end of every reporting period designated for the class of the license each licensee shall file with the licensing authority on forms prescribed by the licensing authority a financial report that is signed and sworn to by the proceeds coordinator showing the amount of the gross receipts derived during the reporting period from games of bingo, the expenses paid, a brief description of the classification of such expenses, the ratio of net proceeds to the adjusted gross receipts received by the licensee during the reporting period, the name and address of each person to whom has been paid $300 or more and the purpose of such expenditure, the net proceeds derived from each such game of bingo and the uses to which such net proceeds have been or are to be applied. Each licensee shall maintain and keep such books and records as may be necessary to substantiate the particulars of each such report.

B. Except for class A licensees, if the net proceeds derived from the games of bingo for any six consecutive months do not amount to at least fifty percent of adjusted gross receipts for those months in total, it shall be presumed that the expenses incurred for goods, wares, merchandise and services rendered are not bona fide and reasonable, and the operation of the game is deemed to be against public policy. If the net proceeds of the games operated by a licensee are less than fifty percent of the adjusted gross receipts in any six consecutive months, the license may be revoked.

C. The failure to file reports within forty-five days after their due date, or filing reports that are not fully, accurately and truthfully completed, may be the basis of the revocation of the license. If the licensee fails to make and file a return on or before the due date, unless the failure is due to reasonable cause, a penalty equal to five percent of the amount found to be due or remaining due under subsection I of this section shall be added to that amount for each month or fraction of a month between the due date of the return and the date on which the return is filed, plus interest at a rate determined pursuant to section 42-1123. The total penalty shall not exceed twenty-five percent of the amount found to be remaining due. The penalty is due and payable on notice and demand from the licensing authority. If an action has been filed by the licensing authority for revocation of a license, the court shall award reasonable attorney fees to the licensing authority as a part of the proceedings if the licensing authority prevails in the proceedings.

D. Except for a class A licensee, all monies collected or received from the sale of admission, extra regular cards, special game cards, sale of supplies and all other receipts from the games of bingo shall be deposited in a special account of the licensee that shall contain only such money.  Except for a class A licensee, all expenses for bingo games, except cash prizes in the amount of less than $1,100, shall be withdrawn from the licensee's special account by consecutively numbered checks duly signed by a specified officer or officers of the licensee or the supervisor and payable to a specific person or organization.  Class A licensees shall pay all bingo game prizes, except cash prizes in an amount less than $1,100, by check duly signed by a specified person or persons or the supervisor. A check shall not be drawn to "cash" or a fictitious payee.  A check drawn on a licensee's special account shall not be payable to the licensee. Checks drawn against the net proceeds in the special account shall be drawn only for lawful uses and purposes. The licensee may establish interest bearing accounts that shall contain only monies transferred from the licensee's special account, but all monies, interest and other proceeds shall be redeposited to the special account before being used for lawful uses and purposes.

E. A licensee shall maintain a permanent record containing the signature of each player who receives a cash prize from such licensee and the amount of the cash prize awarded to such player.

F. The net profits after they have been given over to another organization shall not be used by the donee organization to pay any person for services rendered or materials purchased in connection with the conducting of bingo by the donor organization.

G. Expenses shall not be incurred or paid in connection with holding, operating or conducting any game of bingo pursuant to any license, except bona fide expenses of a reasonable amount. Expenses may be incurred only for the following purposes:

1. The purchase of goods, wares and merchandise furnished.

2. Payment for services rendered.

3. Rent.

4. Accountants' fees.

5. License fees.

6. Utility expenses.

7. Security guards.

8. Compensation not to exceed the current federal minimum wage plus twenty percent.

9. Mortgage payments when a nonprofit charitable organization licensee is using the building or premises for both bingo and for the licensee's bona fide charity.

10. Advertising.

H. For the purposes of subsection G of this section:

1. "Goods, wares and merchandise" means prizes, equipment and articles of a minor nature such as pencils, crayons, tickets, envelopes, paper clips and coupons necessary for the conduct of games of bingo.

2. "Services rendered" means repair to equipment, reasonable compensation to bookkeepers or accountants, not more than two in the aggregate, for services in preparing financial reports and a reasonable amount for janitorial service and security guards. Services rendered do not include and no item of expense may be incurred or paid for service of any nature whatever rendered by a member or new member, including, without limitation except as provided by subsection G, paragraph 8 of this section, equipment repair, bookkeeping, accounting, janitorial service, security guard service or operating, conducting or managing a bingo game or providing any professional or consultation service related to bingo.

I. In lieu of the taxes collected under title 42, chapter 5, article 1 there shall be paid to the licensing authority a tax in the amount prescribed in section 5-414. The taxes collected pursuant to this section shall be deposited in the state general fund. All administrative receipts, including license fees, penalties and interest, collected by the state pursuant to this article shall be deposited in the state general fund.

J. Each licensee, at the time each financial report is submitted to the licensing authority, shall pay to the order of the licensing authority the amount of tax provided in subsection I of this section.

K. For reporting periods beginning from and after December 31, 2019, or when the licensing authority has established an electronic filing program, whichever is later, each licensee shall file electronically any report or return required under this chapter.  The report or return is considered to be filed and received by the licensing authority on the date of the electronic postmark pursuant to section 42-1105.02.