238.536 Amount and use of net receipts retained by charitable organization --
735 words·~3 min read·
/ky/238-536A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
Penalties imposed upon charitable organization failing to retain certain
percentage of adjusted gross receipts -- Submission of financial plan.
(1)The net receipts from charitable gaming retained by a charitable organization for
the previous calendar year, provided the charitable organization was licensed at the
start of the calendar year, shall be equal to or greater than forty percent (40%) of the
adjusted gross receipts of the charitable organization for the same period. A
licensed charitable organization shall expend net receipts exclusively for purposes
consistent with the charitable, religious, educational, literary, civic, fraternal, or
patriotic functions or objectives for which the licensed charitable organization
received and maintains federal tax-exempt status, or consistent with its status as a
local school district, a common school, an institution of higher education, or a state
college or university. No net receipts shall inure to the benefits or financial gain of
an individual. Any charitable organization which permits its license to expire or
otherwise lapse shall still be subject to the retention requirement. The following
fees and taxes shall be excluded from the calculation of the percentage retained,
retroactive to calculations made for calendar year 1999:
(a)All fees paid to the office during the calendar year;
(b)Any sales or use taxes levied under KRS Chapter 139 on charitable gaming
supplies and equipment that are paid by a licensed charitable organization
during the calendar year; and
(c)Any federal excise taxes levied under 26 U.S.C. secs. 4401 and 4411 and paid
by a licensed charitable organization during the calendar year.
(2)The following actions shall be imposed on a licensed charitable organization that
fails to retain the requisite percentage of adjusted gross receipts required in
subsection
(1)of this section. The calculation of percentages shall be rounded to the
nearest tenth of a percent:
(a)If the percentage retained is between thirty-five percent (35%) and thirty-nine
and nine-tenths percent (39.9%), the licensee shall be placed on probation for
a period of six
(6)months and shall be required to submit to the office an
acceptable financial plan detailing corrective actions to be taken by the
licensee to achieve the forty percent (40%) threshold by the end of the
calendar year in which the probation is imposed;
(b)If the percentage retained is between thirty percent (30%) and thirty-four and
nine-tenths percent (34.9%), the licensee shall be placed on probation for a
period of one
(1)year and shall be required to submit to the office a financial
plan as described in paragraph
(a)of this subsection. The office shall conduct
a six
(6)month review of the charitable gaming activities of a licensee placed
on probation pursuant to this subsection to evaluate the licensee's compliance
with its financial plan;
(c)If the percentage retained falls between twenty-nine and nine-tenths percent
(29.9%) and twenty-five percent (25%), the licensee shall be placed on
probation for a period of one
(1)year, shall submit to the office an acceptable
financial plan as described in paragraph
(a)of this subsection, and shall
participate in a mandatory training program designed by the office. The office
shall conduct a quarterly review of the licensee's activities to evaluate the
licensee's compliance with its financial plan and its progress toward
achievement of the forty percent (40%) threshold during the probationary
period;
(d)If the percentage falls below twenty-five percent (25%) or if the licensee fails
to attain the forty percent (40%) threshold for a second consecutive calendar
year, the licensee shall have its license suspended for a period of one
(1)year;
and
(e)For purposes of paragraphs (a), (b), (c), and
(d)of this subsection, periods of
probation and suspension shall commence, unless appealed, from the date the
office notifies the licensee of its failure to satisfy the retention requirement for
the previous calendar year. If a probation or suspension is appealed, the action
shall commence on the date final adjudication of the matter is complete.
(3)Any licensee that has had its license suspended under the provisions of subsection
(2)(d) of this section shall be required to submit to the office an acceptable financial
plan as described in subsection (2)(a) of this section, upon applying for
reinstatement of its license. As a condition of reinstatement, the licensee shall be on
probation for a period of one
(1)year and shall be subject to quarterly review by the
office in accordance with subsection (2)(c) of this section.