5-407

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 upon forms prescribed by the licensing authority a financial report which 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 three hundred dollars 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 per cent 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 per cent 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 if
reports 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 per
cent of the amount found to be due or remaining due under subsection H 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 filed, plus interest at a rate determined pursuant to
section 42-1123. The total penalty shall not exceed twenty-five per cent 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
which 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 one hundred fifty dollars,
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 one hundred fifty dollars, 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 which 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 per
cent.

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. In this subsection:

(a) "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.

(b) "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 paragraph 8 of this subsection, 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.

H. In lieu of the taxes collected under title 42, chapter 5, article 1 there shall
be paid to the state 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.

I. 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 H of this section.