SC Administrative Law Court Decisions

This matter comes before me pursuant to the Petitioner's request for a contested case hearing to review a decision of the Department of Revenue (DOR). DOR refused the Petitioner's request to reissue to Langley Bath Clearwater bingo cards purchased by the Petitioner on behalf of Metropolitan Sertoma. After notice to the parties, a hearing was conducted on June 30, 1998 in Aiken, South Carolina. Metropolitan Sertoma was not represented at the hearing.

After review of the evidence presented, the Petitioner's request to have the bingo paper reissued must be denied. Any issues raised or presented in the proceedings or hearing of this case not specifically addressed in this Order are deemed denied. ALJD Rule 29(C).

I make the following Findings of Fact, taking into account the burden on the parties to establish their respective cases by a preponderance of the evidence and taking into consideration the credibility of the witnesses:

Jimmy L. Martin, a registered bingo promoter, owns Mr. Bingo, Inc. (now known as Charitable Bingo Associates, Inc.).

An application for the renewal of a Class B bingo license for Metropolitan Sertoma Club was filed with the Department of Revenue (DOR) on September 12, 1997. DOR denied Metropolitan Sertoma's request for a new bingo license. On September 29, 1997, Metropolitan Sertoma filed a protest to DOR concerning the denial of its license renewal. Metropolitan Sertoma's license expired on September 30, 1997.

Metropolitan Sertoma was scheduled to conduct bingo games on October 3-5, 1997 at 1215 A St. Andrews Road, Columbia, South Carolina.

The registered bingo promoter for Metropolitan Sertoma was James Dasho.

Mr. Bingo is the registered promoter for Langley Bath Clearwater.

On September 29, 1997, Langley Bath Clearwater applied for a Class B bingo license, to conduct games at 1215 A St. Andrews Road, Columbia, South Carolina.

DOR issued the Class B license to Langley Bath Clearwater on October 1, 1997.

On October 1, 1997, Mr. Bingo obtained from DOR purchase vouchers in the name of Metropolitan Sertoma to purchase bingo cards from the distributor for the games scheduled October 3-5, 1997.

On October 3, 1997, Mr. Bingo received the bingo paper from the distributor for Metropolitan Sertoma. This paper was used for the bingo games operated by Langley Bath Clearwater on October 3-5, 1997.

On October 2, 1997, Steve McDougall, a representative of Mr. Bingo, went to DOR. At the Department, McDougall explained that paper had been issued to Metropolitan Sertoma but Langley Bath Clearwater had the license to operate and wanted to use the paper to operate bingo games. He inquired about what needed to be done to allow this. The assistant at DOR informed him that John Taylor would have to answer his question.

John Taylor, the DOR official in charge of bingo, was unavailable to review the matter until after the bingo games of October 3-5, 1997. Taylor, through the assistant, asked that McDougall put the request in writing and he would handle it when he returned. McDougall placed his request in writing and gave it to the assistant.

Although McDougall testified that he informed the assistant that the bingo games would occur within the next few days, the DOR assistant does not recall being so informed and John Taylor was not aware that the request was for bingo games that would be played before his return.

McDougall, however, was under the impression that Taylor would take steps within DOR to reflect that the paper in the name of Metropolitan Sertoma could be used for the Langley Bath Clearwater games and that DOR would reflect in its records that the paper belonged to Langley Bath Clearwater.

On November 13, 1997, Mr. Bingo paid Palmetto Paper and Specialties, Inc. for the bingo paper that was issued in the name of Metropolitan Sertoma.

Mr. Bingo returned the unused bingo cards to DOR. At that time Mr. Bingo learned that the request for Langley Bath Clearwater to use the paper for the games held October 3-5, 1997 had not been processed.

Mr. Bingo requested that the agency reissue the Metropolitan Sertoma bingo cards to Langley Bath Clearwater. This request was denied by DOR. Mr. Bingo filed a protest with DOR over its decision not to reissue the Metropolitan Sertoma paper in the name of Langley Bath Clearwater.

On October 1, 1997, amendments to the Bingo Act of 1996 became effective. Among the amendments was a provision that required the licensed nonprofit organization or its promoter (in the name of the nonprofit organization) to obtain bingo card purchase vouchers from DOR prior to ordering the paper from the distributor. This provision was enacted to prevent bingo paper from being transferred from one organization to another without paying the 16.5 percent tax imposed. See S.C. Code Ann. § 12-21-4270 (Supp. 1997). The scheme for purchasing bingo cards would operate as follows: Upon receipt, the voucher would be given to the distributor at the time of order or purchase of bingo paper. The distributor would then record the serial numbers of the paper issued to the nonprofit organization and transfer the voucher to DOR. DOR then would have a record to trace the serial numbers to the appropriate organization. Once DOR would issue the voucher, the 16.5 percent tax would be due within 15 days. See S.C. Code Ann. § 12-21-4270 (Supp. 1997). If, for some reason, the nonprofit organization would not want to purchase bingo paper after the issuance of the voucher, it could contact DOR to cancel the voucher prior to placing the order with the distributor or obtaining the paper.

The purchase of bingo cards in the name of Metropolitan Sertoma prevented their transfer or reissuance to another nonprofit organization. Although Mr. Bingo may have provided the funds for the initial purchase of bingo cards, those bingo cards were issued in the name of Metropolitan Sertoma. For an unknown reason, Mr. Bingo purchased the bingo cards in the name of an organization for which it was not authorized to act as promoter, even though promoters are required to obtain a promoter's license for each organization.

Had Mr. Bingo wished to exercise control over the bingo cards, it could have purchased them in the name of a nonprofit organization for which it was the registered promoter. Further, Mr. Bingo could have canceled the issuance of the bingo cards in the name of Metropolitan Sertoma after Langley Bath Clearwater was approved as a Class B charity on October 1, 1997. At that time, no tax would have been due from Metropolitan Sertoma and no payment to the distributor would have been required. As S.C. Code Ann. § 12-21-4210 (Supp. 1997) prevents DOR from transferring bingo cards between licensed organizations, the Petitioner's request to have the bingo paper reissued must be denied.

Because of the confusion concerning the recent amendments to the Bingo Act and the request Mr. Bingo made prior to the games on October 3-5, 1997, DOR did not seek administrative penalties for transferring the bingo cards to Langley Bath Clearwater. Since "[a]ll unused bingo cards may be returned to the department for refund and destruction," the licensed nonprofit organization, i.e. Metropolitan Sertoma, or its licensed promoter may obtain from DOR a refund of the price of the unused bingo cards. S.C. Code Ann. § 12-21-4210. Mr. Bingo is not the promoter for the nonprofit in whose name the bingo cards were issued, it may not obtain from DOR a refund for the unused cards. The refund properly belongs to Metropolitan Sertoma, the nonprofit organization in whose name the cards were issued and the entity liable for the taxes. To the extent Mr. Bingo may have a right to be reimbursed by Metropolitan Sertoma, Mr. Bingo's recourse is in another forum.

Based upon the Findings of Fact, I conclude as a matter of law the following:

The ALJD has contested case jurisdiction pursuant to S.C. Code Ann. §§ 1-23-310 et seq. (Rev. 1986 & Supp. 1997) and S.C. Code Ann. § 12-4-30 (Supp. 1997).

The Bingo Tax Act of 1996, S.C. Code Ann. §§ 12-21-3910 et seq. (Supp. 1997), serves as the statutory source of bingo game regulation in South Carolina.

"'Promoter' means an individual, corporation, partnership, or organization who is hired by a nonprofit organization to manage, operate, or conduct the licensee's bingo game. The person hired under written contract is considered the promoter." S.C. Code Ann. § 12-21-3920.

A Promoter's License is required for the privilege of engaging in business as a bingo promoter. S.C. Code Ann. § 12-21-3950 (Supp. 1997). "A promoter shall obtain a promoter's license for each organization for which he operates bingo games." Id.; S.C. Code Ann. § 12-21-3970 (Supp. 1997).

A license to conduct bingo is required before a nonprofit organization may conduct a game of bingo. S.C. Code Ann. § 12-21-3940 (Supp. 1997).

An organization operating a bingo game offering prizes, which do not exceed eight thousand dollars a session, shall obtain a Class B bingo license at a cost of one thousand dollars. The holder of a Class B license may not conduct more than three bingo sessions a week. . . .

An organization operating a bingo game and offering prizes of twenty dollars or less a game during a single session shall obtain a Class C bingo license at no cost. However, the organization may offer a prize in cash or merchandise of no more than one hundred fifty dollars for six jackpot games a session.

S.C. Code Ann. § 12-21-4020. "No nonprofit organization may hold more than one bingo license." S.C. Code Ann. § 12-21-4040 (Supp. 1997).

"Organizations may conduct bingo in this state only by license. The license confers no property right. It is a permit issued pursuant to the State's police power." Army Navy Bingo, Garrison No. 2196 v. Plowden, 281 S.C. 226, 229, 314 S.E.2d 339, 340 (1984).

"The use of the cards is evidence of the payment of the license tax . . . ." S.C. Code Ann. § 12-21-4220 (Supp. 1997).

S.C. Code Ann. § 12-21-4270 (Supp. 1997) provides that

[e]ach licensed nonprofit organization or promoter, in the name of a licensed organization, may obtain bingo cards approved by the department by making application and remitting sixteen and one-half percent of the total face value of the cards to be purchased.

S.C. Code Ann. § 1-23-370 provides as follows:

When a licensee has made timely and sufficient application for the renewal of a license or a new license with reference to any activity of a continuing nature, the existing license does not expire until the application has been finally determined by the agency, and, in case the application is denied or the terms of the new license limited, until the last day for seeking review of the agency order or a later date fixed by order of the reviewing court.

Therefore, although Metropolitan Sertoma's license had expired by September 30, 1997, it was still capable of obtaining bingo cards and conducting bingo games.

S.C. Code Ann. § 12-21-4210 (Supp. 1997) provides as follows:

Bingo cards may not be sold or transferred between licensed organizations, between distributors, or between manufacturers. All unused bingo cards may be returned to the department for refund and destruction. The department is required to refund only the amount retained by the department previously based on the face value of each card and does not include the manufacturer's price or transportation charges to the consignee at destination and such additional charges.

Once issued in the name of a licensed nonprofit organization, bingo cards may not be transferred to a different organization. Accordingly, Metropolitan Sertoma's interest in the bingo cards ordered on its behalf was incapable of being transferred to Langley Bath Clearwater.

As S.C. Code Ann. § 12-21-4210 (Supp. 1997) prevents DOR from transferring bingo cards between licensed organizations, the Petitioner's request to have the bingo paper reissued must be denied.

As S.C. Code Ann. § 12-21-4210 (Supp. 1997) provides that "[a]ll unused bingo cards may be returned to the department for refund and destruction," the licensed nonprofit organization or its licensed promoter may obtain from DOR a refund of the price of the unused bingo cards.

Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby

ORDERED, that the Petitioner's request to have the bingo paper reissued is denied.

AND IT IS SO ORDERED.

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ALISON RENEE LEE

Administrative Law Judge

July 17, 1998

Columbia, South Carolina