With new rules enacted in 2013, Pennsylvania has introduced new licensing and reporting requirements for charitable organizations and clubs conducting small games of chance. Involved in charitable organization or club planning limited types of gambling activities such as bingo, raffles or pull-tab games? Here’s what you need to know about the required licensing and reporting that will keep you on the right side of the law.
Licensing Requirements for Charitable Organizations
Licensed charitable organizations and clubs are authorized to conduct a variety of games of chance including pull-tab games, punchboards, raffles daily drawings and fifty-fifty drawings. Licenses for charitable organizations and clubs are authorized by county treasurers.
Charitable organizations and clubs are eligible for two types of license: an annual license for $125 or a monthly license for $25. In addition to regular and monthly licenses, special raffle permits are also available.
Reporting Requirements for Charitable Organizations
The special raffle permit authorizes a holder to conduct a raffle that exceeds the normal prize limits applicable to games of chance. Generally, a licensed eligible organization may obtain up to 10 special raffle permits. Total prizes awarded under all special raffle permits may not exceed $150,000. Volunteer organizations such as fire, ambulance or rescue may obtain up to 12 special raffle permits and award up to $250,000.
All club or charitable organization licensees with proceeds in excess of $20,000 in a calendar year are required to submit annual reports to the Department of Revenue by February 1 for the preceding calendar year. Online reporting is scheduled to begin February 1, 2015.
The annual reports will require the organization to report proceeds received by the organization from each game of chance conducted and the amount of prizes paid itemized by week, as well as other costs related to the conduct of games and the amount of proceeds distributed for public interest. Organizations are expected to use 60% of the proceeds to benefit the public.
In addition to the annual reports required, the organization must report winnings on Form W-2G when the amount paid is $600 or more and at least 300 times the amount of the wager. The form must be given to the winner as well as the IRS and PA Department of Revenue.
Have questions about staying compliant with the new rules affecting small games of chance in Pennsylvania? Check out the PA Department of Revenue’s website or contact your RKL advisor.
Contributed by Ruthann Woll, CPA, a manager in RKL’s Tax Services Group. Ruthann has 17 years experience in tax planning and compliance and specializes in serving individual and not-for-profit clients