Allied Charities of Minnesota

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  • 01 May 2019 09:16 | Allen Lund (Administrator)

    Members,

    Rich Jaranson, President of Allied Charities. I am writing to you today to convey the urgency and importance of you contacting Governor Walz and your legislators regarding tax relief for licensed gaming charities.

    Tax relief for us, by proposing to lower the combined receipt rates to 8/16/24/32%, was passed out of the Senate Tax committee last Thursday, April 26. The Commissioner of the Minnesota Department of Revenue, Cynthia Bauerly, testified at the committee hearing that the administration was not in favor of tax relief for us.

    The Senate Omnibus Tax bill was sent to the full Senate for a vote, where it passed on April 30. As the House and Senate bills are different, there will now be a conference committee with the goal of coming to consensus on one bill that if passed by both bodies would go to the Governor for his signature.

    The House and Senate bills are roughly $2 billion dollars apart on a two year budget of just under $50 billion dollars. That will mean compromise by both bodies if there is to be an agreement. If there is an agreement many of the provisions in both bills as initially passed by their respective bodies will not be there at the end.

    Our portion of the Senate bill represents .0004% of the overall two year budget. We are on pace to pay in $95 million this fiscal year. That is $27 million more than is needed to pay our general fund tab ($36.9 million) and the stadium tab ($31 million).

    If our sales grow by 11% next year (they have grown by more than that the last several years) there will be no negative impact on either the general fund or the stadium fund by providing the proposed relief to us.

    This tax relief would benefit every charity that conducts licensed gaming. All of us need to be involved in making this happen.

    We need to tell our legislators and the Governor that what we do is important and if we are no longer in the picture that it will be up to the state to fill the gaps that will be upwards of $500 million per year.

    This legislative session is due to end at midnight on May 20, a mere 20 days away. Time is of the essence in this matter.

    If we do not attain tax relief this year it will be even more difficult to get it next year as the second year of a biennium is not normally a tax bill year.

    We will share in the blame if we do not get tax relief. If every member of every organization contacted the Governor and their two legislators in regards to tax relief for us, we would get our tax relief.

    Regards,

    Rich Jaranson – President Allied Charities of Minnesota

    Find out who represents you @ https://www.gis.leg.mn/iMaps/districts/

    Contact Governor Walz @ https://mn.gov/governor/contact/


  • 24 Apr 2019 14:36 | Allen Lund (Administrator)

    Members,

    The Senate Omnibus Tax bill (SF5) was released today. We are in it for two provisions.

    I want to thank the following Senators for standing up for charities and authoring or co-authoring legislation to help us this session. Senators Newton, B. Anderson, Chamberlain, Koran, Ruud, Goggin, Lang, Relph, Draheim, Howe, Senjem, Kiffmeyer, Utke, Tomassoni, Hoffman, Ingebrigtsen, Eichorn, Eken and Nelson deserve our thanks and appreciation. Please thank them, especially if they represent you.

    A special thanks to Senate Tax Chair Chamberlain. He deserves our thanks and appreciation.

    Provision one would change the combined receipt rates (effective July 1, 2019) to 8/16/24/32% from the current 9/18/27/36%. This would be an 11.2% overall reduction in the rates. It is concrete recognition of the issue we are facing regarding taxation of the funds that we raise for our communities and missions.

    Provision two would change the star rating system. As we read it, a five star rating would require a minimum 70% of net receipts go to LPE in a fiscal year. A four star rating would require a minimum of 55% LPE. A three star rating would require a minimum of 40% LPE. In FY2018 42 charities (5% of us) were on probation for not having at least a three star rating. If the proposed provision was applied to our FY2018 numbers an additional 285 charities for a total of 327 charities (28% of us) would have been on probation.

    There is a concern at the legislature that tax relief gets to the bottom line for community and mission. I think that we can all agree with that. I think that we would also agree that increasing the number of charities on probation almost eight fold is probably not the best way to go about it. I have spoken with Director Barrett of the GCB and he assures me that the proposal did not come from the GCB. We will work to better understand the thinking behind the provision.

    While the tax proposal is very welcomed, I would caution that we have a long way to go before a tax bill that includes us sits on the Governor’s desk for him to sign. Please keep helping your legislators know what tax relief would mean for your organization, your community and your mission.

    Regards,

    Al


  • 09 Apr 2019 07:24 | Allen Lund (Administrator)

    Members,

    The House Omnibus Tax bill was released Monday, April 8. We are in it. If passed we would no longer pay sales tax on prizes for bingo, raffles, etc. to the tune of $400,000 in relief per year.

    I would like to thank House Tax Chair Marquart for including us in his bill. There were many that did not make it into the bill. While I am thankful that we are in the bill it does show that we have a difference of opinion as to the severity of our issue.  

    I want to thank the following Representatives for standing up for charities and authoring or co-authoring legislation to help us this session. Representatives Davids, Fabian, Dettmer, Theis, Lueck, Zerwas, McDonald, Gruenhagen, Mekeland, Lucero, Munson, Drazkowski, Lien, Nornes, Boe, Haley, Persell, Lillie, Erickson, Backer, Poston, Gunther, Pierson and Ecklund deserve our thanks and appreciation. Please thank them, especially if they represent you.

    If charitable gaming ever ceases to exist the state will inherit close to a half billion dollar annual problem; $150 million in economic stimulus (games, rent, revenue share, wages, audits), $100 million in gambling taxes, $75 million in community aid/donations, $15 million in income taxes and many millions more in unemployment benefits.

    Our state legislators are on break from April 13 – 22. Most of them will be in their districts at some point during their break. It is an opportunity to see and talk to them about the impact of the current tax structure for charities is having on your overall ability to serve your communities.

    We believe that the Senate Omnibus Tax bill will be released when the Senate returns from break.

    Here are some points to make to your legislators along with how the current tax structure is directly impacting your organization.

    We now have charities that can only make donations when they are not paying the 36% combined receipt rate (a 72% effective rate after paying expenses).

    We now have charities that are making no donations in a fiscal year. You ask how that can be and still hold a license. The average charity is paying 28% of every dollar that they get to the bank to the state in taxes. That equates to 2.8 stars as taxes count towards the star rating. A charity averaging 30% to the state in taxes annually (of which 126 of us did just that in FY2018) has met the three star criteria for keeping their license, no donations are required.  

    We now have charities that are bouncing their tax checks to the state. Many more are in a position where one bad month will place them in the same situation. The margin of error for many charities is declining rapidly.

    Our bottom line will never improve under the current tax structure. If our business continues to grow our overall tax burden as a percentage of what we get to the bank will grow at a faster rate than our business increase due to the current combined receipt rates. If our business does not increase or decreases our bottom line will never improve as our expenses will continue to grow each year. Rising tax rates and rising expenses can only come from one place, mission dollars.

    I want to thank all of you that took the time to contact your legislators in regards to how the current tax structure is impacting your organization.

    This is not over until it is over. We still have six weeks left to go until the end of session. Keep talking to your legislators and our Governor.

    Regards,

    Al


  • 27 Mar 2019 09:49 | Allen Lund (Administrator)

    Members,

    On Tuesday, March 26 HF293 (combined receipt rate reduction) and HF294 (sales tax exemption) were heard in the House Tax committee. Our thanks to chief authors Rep. Lien (HF293) and Rep. Dettmer (HF294) for their help and support. Thanks to Glen Jenkins of St. Paul Fire Relief and Tony Chesak of the Minnesota Licensed Beverage Association for testifying in support of tax relief. Thanks to Tom Deegan, President of the NE Mpls. Lions club for his letter in support of tax relief that was included in the record. Both bills were held over for possible inclusion into an Omnibus Tax bill. We are now where we need to be in both the House and Senate. Bills for possible inclusion cover combined receipt rate reduction, donation exemption from the gambling tax and sales tax exemption of our paper games and electronic revenue share. Link to the video of the hearing https://www.house.leg.state.mn.us/hjvid/91/892159

    If you have not contacted your state senator or state representative, you still have time to do that. Find out who represents you at https://www.gis.leg.mn/iMaps/districts/ We need to keep reminding our legislators of the importance of relief prior to the Omnibus Tax bills being released late April/early May.

    We now need to let Governor Walz know that this is important to us as well. You can write the Governor at https://mn.gov/governor/contact/ All you need to say is who you are, what organization you belong to, what your organization paid in taxes the past fiscal year, what you had left for donations and ask the Governor to support tax relief for charities. If we cannot get 1,000 of us to write the Governor on this subject, shame on us. I will be writing on behalf of my Legion and my Lions club, not Allied Charities. ACM does not hold a gambling license, it needs to come from where the rubber hits the road, in every organization and community throughout our state.

    The folks that are against relief for us are working full time to keep the status quo. Their theme has not changed; expenses are our problem not taxes. Besides, only the “MEGA” charities, of which there are only a handful, pay the big taxes. You and I know that this is not true, but it sells when we don’t tell the real story. When you do, it makes a difference. If every one of the 340 organizations that are upside down let the Governor know how their organization is being impacted, it will be a big deal. Do not be silent. Tell your story.

    Here is what my letter to the Governor said: Dear Governor Walz. My name is Allen Lund. I live in Maple Grove, MN. I belong to the Osseo Lions and the Osseo/Maple Grove American Legion. Both of these charities are licensed to conduct charitable gaming to raise funds for our community needs and organization missions. Both have only one gaming site, we are not the “MEGA” charities you may have been hearing about. In FY2018, the Osseo Lions paid $150,000 in gambling taxes while we had $132,000 for community and missions and the Osseo/Maple Grove American Legion paid $244,000 in gambling taxes while we had $267,000 for community and missions. We believe that more of the money rose locally needs to stay local. We ask for your support in this matter. Regards, Allen Lund

    Regards,

    Al


  • 22 Mar 2019 07:02 | Allen Lund (Administrator)

    Members,

    Below you will find three clear examples of what is wrong with the current tax structure for charities that are licensed to conduct charitable gaming. Those seeking to keep the status quo will tell you that the current system is working perfectly, FOR THE STATE. Those seeking to keep the status quo say that it is only a handful of charities that are paying the big taxes. Below are the stories of three of those so called “MEGA CHARITIES”.

    This week I received an e-mail from Craig Kittelson, Gambling Manager of the St. Paul Park American Legion Post 98. Post 98 has been in existence for 98 years. Craig has been the GM at his Post for the past 2 ½ years. Craig tells me that in February his post had $300 to donate while paying the state $9100 in taxes. He predicts that if there is no change in the current tax structure that they will be out of business in 2 to 3 years. I looked back at charitable gaming at their post (they only have the one site) the past three fiscal years (2016 – 2018). Their sales volume grew from $1.5 million to $2.4 million, their taxes grew from $43,000 to $91,000 and their funds to donate grew from $60,000 to $63,000. In other words the increase in sales volume of $900,000 in the past three fiscal years has netted them $3,000 or one third of one penny per dollar wagered, while netting the state a nickel on every dollar wagered.  In the past three fiscal years the state has profited from the work of Post 98 SIXTEEN TIMES more than Post 98 has.  In the past three fiscal years Post 98’s overall profit per dollar wagered has gone from 4 cents to 2.6 cents.  

    See the attached article from the February 21, 2019 Waterville Lake Region Life paper. It details the plight of the Waterville Lions Club. In FY2018 the Lions had just under $40,000 for community and missions while paying the state $98,000. Thanks to the Waterville Lake Region Life paper for calling attention to this issue.

    Matt Balmer, President of the Northern Lakes Lightning Youth Hockey Association in a letter (attached) sent to hockey groups across the state, speaks to the importance of communicating with legislators about relief for charities. In FY2018 his organization had $114,000 for missions while paying the state $236,000. In FY2019 they are on pace to have $113,000 for missions and pay the state $265,000. This is a net loss of $1,000 to the charity and a net gain to the state of $29,000.

    See the link to an editorial from the February 22, 2019 Brainerd Dispatch https://www.brainerddispatch.com/opinion/editorials/4574654-our-opinion-reduce-taxes-charitable-gambling The Brainerd Dispatch is a long time advocate for tax relief for charities and we thank them for their support.

    The issue of relief for charities is boiling up. Your work with your state legislators is making a difference. The current confiscatory tax structure for charities that conduct charitable gaming cannot continue much longer. Having equal or less amounts each fiscal year for our communities and missions while growing the state coffers SIXTEEN TIMES more than we grow ours has got to stop.

    We have been notified that HF294 the sales tax exemption bill is up for a hearing in the House Tax Committee on Tuesday, March 26 at 8 am in Committee room 5 in the State Office Building. We are working to understand if any of the other tax relief bills will be heard as well. HF69 and HF293 are in the House Tax Committee, but as yet unheard.

    ACM held their annual legislative reception this past Monday. Attendance by legislators was light, due to the House being in session that evening, so two thirds of our possible attendees were debating bills. We reserve the space and the date a year in advance. There is no way to know that far ahead of time what the day will look like. We had thirteen charities in attendance, the most that we have ever had. Thanks go to Claremont Chamber of Commerce, Carlos Lions, Ballentine VFW Post, Osseo Lions, Morristown American Legion, North Country Snowmobile Club, Luverne Eagles, Rochester Youth Baseball, Baxter Lions, Northern Pine Riders, Forest Lake Lions, Bloomington Lions and Saint Paul Midway Lions. Legislators in attendance were Senators Ruud, Koran, Tomassoni, Relph, Weber and Hoffman. We thank them for their support.

    Regards,

    Al

    waterville02212019.pdf

    Hello District 15 Presidents.pdf

  • 13 Mar 2019 11:17 | Allen Lund (Administrator)

    Members,

    Folks, this session may be our last chance to get legislators to see that the path that charities are currently on is not one that can be sustained long term. In the past six years the number of charities that pay more to the state than they have for their communities and missions has tripled (110 to 340). On a dollar wagered basis our ability to serve has been cut by a third (from 5.0 cents to 3.5 cents).

    In January my Osseo Lions lost $2,300 conducting charitable gaming while paying the state $19,000 in taxes. Every one of the nine months that the Osseo Lions are paying the 36% (we have only one site that we share with another charity) we are hoping to have enough to pay the bills, pay the taxes and have a few dollars to help those that are really in need. Our reason for being, helping those in need is all but gone.

    In the Senate, our tax bills are where they need to be, all being up for possible inclusion in an omnibus tax bill. In the House our tax bills are in the House Tax committee. I believe that those bills (HF69, HF293 and HF294) will be heard, but your representative needs to hear from you, your organization members and the groups that benefit from your work how important relief is.

    Those of you that are not yet paying the 36% can help those that are. Remember, six years ago only a hundred of us were upside down. If the trend continues (which it is guaranteed to do if nothing is done), by 2025 all of us but one hundred will be upside down and our penny profit will be below 2 cents per dollar wagered.

    Attached is a roster of the Minnesota House of Representatives with their office number (all have offices in the State Office Building) and phone number. Most of them can be e-mailed using their full name such as (rep.jane.doe@house.mn). Find out who represents you at https://www.gis.leg.mn/iMaps/districts/

    A reminder that next Monday, March 18 is ACM’s legislative reception at the Best Western Plus Capitol Ridge (161 Saint Anthony Ave. St. Paul, MN 55103) in St. Paul from 5:00 pm to 7:00 pm. All state senators and representative have been invited. Come to show your support of our efforts to get tax relief. See attached flyer.

    Regards,

    Al Lund

    Executive Director


  • 06 Mar 2019 09:03 | Allen Lund (Administrator)

    Update on the bills that deal with charitable gaming:

    HF69/SF219 Exempts donations from the gambling tax. Rep. Dettmer is chief author in the House, co-authors are Rep. Davids, Gunther, Nornes, Erickson, Nash, Pierson, Ecklund, Lueck, Lien, Lillie and Backer. Senator Nelson is chief author in the Senate, co-authors are B. Anderson, Chamberlain and Kiffmeyer. SF219 was heard in the Senate Tax Committee on 2/7 and held over for possible inclusion in an Omnibus Tax bill. HF69 has been referred to the House Commerce Committee. HF69 was heard in the House Commerce Committee on Friday, March 1 and referred to the House Tax Committee. No hearing date in House Taxes as of yet.

    HF81/SF549 Lowers the combined receipt rates from the current 9/18/27/36% to 4.5/9/13.5%. Rep. Lueck is chief author in the House, co-authors are Rep. Dettmer, Poston, Lillie and Backer. Senator Ruud is chief author, co-authors are Senjem, Kiffmeyer, Utke and Dahms. SF549 was heard in the Senate Tax Committee on 2/7 and held over for possible inclusion in an Omnibus Tax bill. HF81 has been referred to the House Commerce Committee, no hearing date as of yet.

    HF293/SF371 Lowers the combined receipt rates from the current 9/18/27/36% to 6/12/18/24%. Rep. Lien is chief author in the House, co-authors are Rep. Ecklund, Dettmer, Persell, Lillie and Lueck. Senator Koran is chief author in the Senate, co-authors are Newton and Eken. SF371 was heard in the Senate Tax Committee on 2/7 and held over for possible inclusion in an Omnibus Tax bill. HF293 has been referred to the House Commerce Committee. HF293 was heard in the House Commerce Committee on Friday, March 1 and referred to the House Tax Committee. No hearing date in House Taxes as of yet.

    HF294/SF437 Exempts paper games and electronic revenue share from sales tax. Rep. Dettmer is chief author in the House, co-author is Rep. Nornes. Senator B. Anderson is chief author in the Senate, co-authors are Sen. Relph and Ingebrigtsen. SF437 was heard in the Senate Tax Committee on 2/7 and held over for possible inclusion in an Omnibus Tax bill. HF294 has been referred to the House Commerce Committee. HF294 was heard in the House Commerce Committee on Friday, March 1 and was referred to the House Tax Committee. No hearing date in House Taxes as of yet.

    HF310 Removes the external audit from the Charitable Gambling Chapter (349) and changes the Attorney General’s external annual audit requirement for non-profits from $750,000 in sales to $750,000 in sales minus prizes for licensed gaming charities. Rep. Dettmer is chief author in the House, co-author is Rep. Nornes. Senator B. Anderson is chief author in the Senate, co-authors are Sen. Ingebrigtsen and Relph. HF310 has been referred to the House Commerce Committee, no hearing date as of yet. SF435 has been referred to the Senate State Government Finance Committee, no hearing date as of yet.

    HF356/SF512 Authorizes an electronic table to compliment the electronic tri-wheel authorized in 2012. Rep. Lien is chief author in the House. Senator Koran is chief author in the Senate. HF356 has been referred to the House Commerce Committee, no hearing date as of yet. SF512 has been referred to the Senate State Government Finance Committee. HF356 was heard in the House Commerce Committee on Friday, March 1 and was held over for possible inclusion in an Omnibus Policy Bill.

    HF722/SF876 Lowers the combined receipt rates from the current 9/18/27/36% to 6/12/18/24% and exempts donations from the gambling tax. Rep. McDonald is chief author in the House, co-authors are Gruenhagen, Lucero, Mekeland and Dettmer. Senator B. Anderson is chief author in the Senate, co-authors are Goggin and Lang. HF722 has been referred to the House Commerce Committee, no hearing date as of yet. SF876 has been referred to the Senate Tax Committee, no hearing date as of yet.

    HF1027/SF414 Exempts donations from the gambling tax. Rep. Davids is chief author in the House. Senator Eichorn is chief author in the Senate, co-authors are Kiffmeyer, Howe and Relph. Similar to SF219, but also removes section 2.1 to 2.18. HF1027 has been referred to the House Commerce Committee, no hearing date as of yet.  SF414 was heard in the Senate Tax Committee on 2/7 and held over for possible inclusion in an Omnibus Tax bill.

    SF577 (No House Companion as of yet) Lowers the current minimum star rating from 3 stars to 2 stars to not be on probation. Senator Draheim is chief author, Senators Howe, B. Anderson and Lang are co-authors. SF577 has been referred to the Senate State Government Finance Committee, no hearing date as of yet.

    SF578 (No House Companion as of yet) Changes the current combined receipt brackets from 9/18/27/36% to 6/12/18/27%. Senator Draheim is chief author, Senators Howe and Lang are co-authors. SF578 was heard in Senate Tax Committee on 2/7 and held over for possible inclusion in an Omnibus Tax bill.

    SF845 (No House Companion as of yet) Exempts paper games and electronic revenue share from sales tax. Senator Relph is chief author in the Senate. SF845 was heard in the Senate Tax Committee on 2/7 and held over for possible inclusion in an Omnibus Tax bill.

    All of the bills are on the ACM website www.alliedcharitiesmn.org under the News/Legislation tab.

    Regards,



  • 01 Mar 2019 13:17 | Allen Lund (Administrator)

    Members,

    Today HF69, HF293, HF294 and HF356 were heard in the House Commerce committee. HF69 exempts our donations and is authored by Rep. Dettmer. HF293 would reduce the combined receipt rates to 6/12/18/24% and is authored by Rep. Lien. HF294 would exempt paper games and electronic revenue share from the sales tax and is authored by Rep. Dettmer. HF356 would authorize an electronic table to accompany the electronic tri-wheel approved in 2012 and is authored by Rep. Lien. Many thanks to these two representatives (from opposite sides of the aisle) that want to help ensure that we are around for a long time to come.

    HF69, HF293 and HF294 were referred to the House Tax committee. That is exactly what we needed to happen. There are no deadlines on tax bills. We will work to have them heard in taxes soon.

    HF356 was held over for possible inclusion in an omnibus policy bill. Stand alone gambling bills are rarely voted on in committee and forwarded for a floor vote as they are targets for amendments that have no bearing on the original bill.

    Testifying on behalf of the bills today were Amanda Jackson-Spring Lake Park Lions, Glen Jenkins-St. Paul Fire, Susie Normandin-Hopkins Raspberry Festival, Rachel Jenner-Destination Education, Tom Deegan-NE Lions, Mark Kurth-Lexington Fire, Gerald Smith-Mendota VFW and Jim Probst-South Robert Street Business Association. It meant a lot to have them speaking directly to what these bills would mean for their organizations. Thank you all!

    There are still those that want legislators to believe that only a few of us pay the majority of the taxes. The statistic that stands out to me is that in FY2013 9% (110 of 1200) of us were upside down, contributing more to the state than we had for our communities and missions. In FY2018 that number was 30% (340 of 1144). My Lions group is a member of the upside down club. We are one of those “MEGA” charities that those that seek to keep the status quo on confiscatory tax policy speak of. We have one site and we share that site with another licensed charity! To those 340 organizations that are upside down, our Independence Day comes after July 4 as we work for more than half the year for the state. The number of organizations in the club will surely grow in FY2019. There is no charity that pays more to the state than they have for their community and mission that thinks that the current system is fair and equitable.

    ON TO HOUSE TAXES!

    Regards,

    Al

  • 15 Feb 2019 08:01 | Allen Lund (Administrator)

    Members,

    Update on the bills that deal with charitable gaming:

    HF69/SF219 Exempts donations from the gambling tax. Rep. Dettmer is chief author in the House, co-authors are Rep. Davids, Gunther, Nornes, Erickson, Nash, Pierson, Ecklund, Lueck, Lien, Lillie and Backer. Senator Nelson is chief author in the Senate, co-authors are B. Anderson, Chamberlain and Kiffmeyer. SF219 was heard in the Senate Tax Committee on 2/7 and held over for possible inclusion in an Omnibus Tax bill. HF69 has been referred to the House Commerce Committee, no hearing date as of yet.

    HF81/SF549 Lowers the combined receipt rates from the current 9/18/27/36% to 4.5/9/13.5%. Rep. Lueck is chief author in the House, co-authors are Rep. Dettmer, Poston, Lillie and Backer. Senator Ruud is chief author, co-authors are Senjem, Kiffmeyer, Utke and Dahms. SF549 was heard in the Senate Tax Committee on 2/7 and held over for possible inclusion in an Omnibus Tax bill. HF81 has been referred to the House Commerce Committee, no hearing date as of yet.

    HF293/SF371 Lowers the combined receipt rates from the current 9/18/27/36% to 6/12/18/24%. Rep. Lien is chief author in the House, co-authors are Rep. Ecklund, Dettmer, Persell, Lillie and Lueck. Senator Koran is chief author in the Senate, co-authors are Newton and Eken. SF371 was heard in the Senate Tax Committee on 2/7 and held over for possible inclusion in an Omnibus Tax bill. HF293 has been referred to the House Commerce Committee, no hearing date as of yet.

    HF294/SF437 Exempts paper games and electronic revenue share from sales tax. Rep. Dettmer is chief author in the House, co-author is Rep. Nornes. Senator B. Anderson is chief author in the Senate, co-authors are Sen. Relph and Ingebrigtsen. SF437 was heard in the Senate Tax Committee on 2/7 and held over for possible inclusion in an Omnibus Tax bill. HF294 has been referred to the House Commerce Committee, no hearing date as of yet.

    HF310/SF435 Removes the external audit from the Charitable Gambling Chapter (349) and changes the Attorney General’s external annual audit requirement for non-profits from $750,000 in sales to $750,000 in sales minus prizes for licensed gaming charities. Rep. Dettmer is chief author in the House, co-author is Rep. Nornes. Senator B. Anderson is chief author in the Senate, co-authors are Sen. Ingebrigtsen and Relph. HF310 has been referred to the House Commerce Committee, no hearing date as of yet. SF435 has been referred to the Senate State Government Finance Committee, no hearing date as of yet.

    HF356/SF512 Authorizes an electronic table to compliment the electronic tri-wheel authorized in 2012. Rep. Lien is chief author in the House. Senator Koran is chief author in the Senate. HF356 has been referred to the House Commerce Committee, no hearing date as of yet. SF512 has been referred to the Senate State Government Finance Committee, no hearing date as of yet.

    HF722/SF876 Lowers the combined receipt rates from the current 9/18/27/36% to 6/12/18/24% and exempts donations from the gambling tax. Rep. McDonald is chief author in the House, co-authors are Gruenhagen, Lucero, Mekeland and Dettmer. Senator B. Anderson is chief author in the Senate, co-authors are Goggin and Lang. HF722 has been referred to the House Commerce Committee, no hearing date as of yet. SF876 has been referred to the Senate Tax Committee, no hearing date as of yet.

    HF1027/SF414 Exempts donations from the gambling tax. Rep. Davids is chief author in the House. Senator Eichorn is chief author in the Senate, co-authors are Kiffmeyer, Howe and Relph. Similar to SF219, but also removes section 2.1 to 2.18. HF1027 has been referred to the House Commerce Committee, no hearing date as of yet.  SF414 was heard in the Senate Tax Committee on 2/7 and held over for possible inclusion in an Omnibus Tax bill.

    SF577 (No House Companion as of yet) Lowers the current minimum star rating from 3 stars to 2 stars to not be on probation. Senator Draheim is chief author, Senators Howe, B. Anderson and Lang are co-authors. SF577 has been referred to the Senate State Government Finance Committee, no hearing date as of yet.

    SF578 (No House Companion as of yet) Changes the current combined receipt brackets from 9/18/27/36% to 6/12/18/27%. Senator Draheim is chief author, Senators Howe and Lang are co-authors. SF578 was heard in Senate Tax Committee on 2/7 and held over for possible inclusion in an Omnibus Tax bill.

    SF845 (No House Companion as of yet) Exempts paper games and electronic revenue share from sales tax. Senator Relph is chief author in the Senate. SF845 was heard in the Senate Tax Committee on 2/7 and held over for possible inclusion in an Omnibus Tax bill.

    All of the bills are on the ACM website www.alliedcharitiesmn.org under the News/Legislation tab.

    Regards,


  • 07 Feb 2019 16:03 | Allen Lund (Administrator)

    Members,

    Today our tax bills SF437 (Sen. B. Anderson), SF845 (Sen. Relph), SF414 (Sen. Eichorn), SF219 (Sen. Nelson), SF549 (Sen. Ruud), SF371 (Sen. Koran), SF578 (Sen. Draheim) were heard in the Senate Tax Committee. All bills were held over for possible inclusion in an Omnibus Tax bill. That is the best that we could have hoped for. At the end of this message were my prepared comments.

    These seven chief authors (along with their respective co-authors) stood up for YOU today. They stood up for the charities in their district and the rest of us throughout the entire state. It is not universally agreed upon that your organization needs relief. These Senators stuck their necks out for YOU. YOU need to thank them. If one of these Senators represent YOU, YOU really need to thank them.

    A large thanks to Tax Chair Senator Chamberlain as well. He is calling attention to our problem. He is showing us what a leader does, taking on issues that need fixing when not everyone agrees it is a problem or needs fixing.

    There were four charities that came to testify. More would have come, but the weather was not conducive to travel. An American Legion, a VFW, a youth group and a group that works with individuals with disabilities all told their stories.

    The Senators on the tax committee listened when I talked, but they really listened when those folks talked. Those are the stories that hit home. Senator Ruud had similar examples from charities in her district that outlined their particular situations and those were quite impactful as well.

    Letting your legislators know how the taxes that you are paying is impacting your ability to serve your community is as easy as: Dear Senator Limmer/Representative Bahner, Al Lund, member of the Osseo Lions and a constituent of yours. Due to charitable gaming, in FY2107 we were able to donate $106,000 to our missions/community and paid $131,000 in taxes and fees to the state. In FY2018 we were able to donate $132,000 to our missions/community and paid $150,000 in taxes and fees to the state. I think that this is wrong, we should not be paying more in taxes and fees than we have for our communities and missions. We need your help to get it fixed. Please let me know if you are willing to be part of the solution or you have any questions of me. Regards, Al

    This is the kind of information that the legislators need to know in order to be prepared to stand up and be counted as supporting us.

    Defenders of the current tax policy are still playing the same old saws: It’s your expenses, especially your wages (this was supposed to be all volunteer labor after all) and only 10% of you pay the high taxes. Ignore the FACT that 340 of us (30% of us) are upside down, paying more to the state than we have for our communities/missions. Ignore the FACT that 60% of us pay at least three times what a for profit business in Minnesota pays. Ignore the FACT that since 2013 our ability to serve on a per dollar wagered basis has declined by 30%. Ignore the FACT that we pay up to SEVEN times what a for profit business in Minnesota pays. If nothing is done this year to deliver relief, next fiscal year we will be sending the state in excess of $100,000,000. Say that our loud, ONE HUNDRED MILLION DOLLARS.

    No news on a House Tax Committee hearing, but requests have been made.

    Regards,

    Al

    Allied Charities of Minnesota (501c6 trade association representing licensed gaming charities) comments:

    SF219 & SF414 would exempt donations from the combined receipts gambling tax.

    SF371 would reduce the combined receipt tax rates for licensed gaming charities from the current 9/18/27/36% to 6/12/18/24%. 

    SF437 & SF845 would eliminate the sales tax on paper games and the electronic revenue share. Chapter 297E (our tax chapter) .02 Subd 1 says: The taxes imposed by this subdivision is in lieu of the tax imposed by section 297A.62 (sales tax imposed). Sales tax takes 3+ million from our mission dollars that is an expense, not part of gambling taxes/fees.

    SF549 would reduce the combined receipt tax rates from the current 9/18/27/36% to 4.5/9/13.5%. Paper bingo, raffles and paddlewheels would be reduced from the current 8.5% to 4.25%.

    SF578 would reduce the combined receipt tax rates from the current 9/18/27/36% to 6/12/18/27%.

     

    It has been reported that charitable gaming will remit over $95 million in gambling taxes/fees to the state in FY2019. That is more than double the $40 million of just six years ago. Without change and even a modest growth rate of 6% we will break the 9 digit barrier and remit more than $100,000,000 to the state in gambling taxes and fees in FY2020.

     

    Since FY2017, as a group, licensed gaming charities pay more to the state in taxes/fees than they have for their communities and missions. The proposed changes would help to ensure that charities do not pay more to the state than they have for their communities and missions.

     

    In the 2012 stadium legislation, we believe that the intent was for gaming charities to continue to pay $36.9 million into the general fund and pay the annual stadium bond payments of $31 million.

     

    If the FY2019 projection of charities remitting $95 million comes to fruition (our business in on track for a 15% increase in FY2019, a seventh year of double digit increases) we will be sending the state $27 million more than is needed for the general fund and stadium bonds.

     

    Since FY2013 our ability to serve our communities and missions has dropped from 5 cents per dollar wagered to 3.5 cents per dollar wagered in FY2018, a 30% decline. If that decline is not reversed, at some point charities will not continue carrying a gambling license.

    Local needs are growing at an alarming rate. Local charities can respond to local needs faster and more economically.

     

    Licensed gaming charities are allowed no deductions of any kind prior to determining our tax liability.

    We pay taxes on our expenses. We have been told that if we were allowed to deduct our expenses we would just grow our expenses.

    We pay taxes on our donations. We have been told that if we were allowed to deduct our donations we would just grow our donations!

    Our effective tax rate can be as high as 72%, over seven times higher than the current state tax on businesses of 9.8%. 

    Per the FY2018 Gambling Control Board Organization Annual Report, 340 charities (30% of us) pay more to the state than we have for our communities and missions.

    495 charities (43% of us) pay at least 40% to the state of what remains after paying expenses.

    687 charities (60% of us) pay at least 30% to the state of what remains after paying expenses.

    Groups such as Jackpot, FanDuel and Draft Kings ply their trade in Minnesota. They add no socially redeeming value to Minnesota. If they pay any state tax at all, they pay the 9.8% business rate.

    While we are not the only group that does good deeds in Minnesota, we are the only one that I am aware of that pays for the privilege of doing so.

    ACM supports all of the efforts to increase the amount of funds remaining in our local communities. Thank you for your time. We ask for your support of these bills.


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