1.1                          A bill for an act 
  1.2             relating to lawful gambling; regulating lawful purpose 
  1.3             expenditures by or to certain organizations exempt 
  1.4             from federal income taxes; amending Minnesota Statutes 
  1.5             1994, sections 349.12, subdivision 25, and by adding a 
  1.6             subdivision. 
  1.7   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.8      Section 1.  Minnesota Statutes 1994, section 349.12, is 
  1.9   amended by adding a subdivision to read: 
  1.10     Subd. 15a.  [FESTIVAL ORGANIZATION.] "Festival 
  1.11  organization" is an organization conducting a community festival 
  1.12  that is exempt from the payment of federal income taxes under 
  1.13  section 501(c)(4) of the Internal Revenue Code. 
  1.14     Sec. 2.  Minnesota Statutes 1994, section 349.12, 
  1.15  subdivision 25, is amended to read: 
  1.16     Subd. 25.  [LAWFUL PURPOSE.] (a) "Lawful purpose" means one 
  1.17  or more of the following:  
  1.18     (1) any expenditure by or contribution to a 501(c)(3) or 
  1.19  festival organization, as defined in section 349.12, subdivision 
  1.20  15a, provided that the organization and expenditure or 
  1.21  contribution are in conformity with standards prescribed by the 
  1.22  board under section 349.154, which standards must apply to both 
  1.23  types of organizations in the same manner and to the same 
  1.24  extent; 
  1.25     (2) a contribution to an individual or family suffering 
  1.26  from poverty, homelessness, or physical or mental disability, 
  2.1   which is used to relieve the effects of that poverty, 
  2.2   homelessness, or disability; 
  2.3      (3) a contribution to an individual for treatment for 
  2.4   delayed posttraumatic stress syndrome or a contribution to a 
  2.5   recognized program for the treatment of compulsive gambling on 
  2.6   behalf of an individual who is a compulsive gambler; 
  2.7      (4) a contribution to or expenditure on a public or private 
  2.8   nonprofit educational institution registered with or accredited 
  2.9   by this state or any other state; 
  2.10     (5) a contribution to a scholarship fund for defraying the 
  2.11  cost of education to individuals where the funds are awarded 
  2.12  through an open and fair selection process; 
  2.13     (6) activities by an organization or a government entity 
  2.14  which recognize humanitarian or military service to the United 
  2.15  States, the state of Minnesota, or a community, subject to rules 
  2.16  of the board, provided that the rules must not include mileage 
  2.17  reimbursements in the computation of the per occasion 
  2.18  reimbursement limit and must impose no aggregate annual limit on 
  2.19  the amount of reasonable and necessary expenditures made to 
  2.20  support: 
  2.21     (i) members of a military marching or colorguard unit for 
  2.22  activities conducted within the state; or 
  2.23     (ii) members of an organization solely for services 
  2.24  performed by the members at funeral services; 
  2.25     (7) recreational, community, and athletic facilities and 
  2.26  activities intended primarily for persons under age 21, provided 
  2.27  that such facilities and activities do not discriminate on the 
  2.28  basis of gender and the organization complies with section 
  2.29  349.154; 
  2.30     (8) payment of local taxes authorized under this chapter, 
  2.31  taxes imposed by the United States on receipts from lawful 
  2.32  gambling, the taxes imposed by section 297E.02, subdivisions 1, 
  2.33  4, 5, and 6, and the tax imposed on unrelated business income by 
  2.34  section 290.05, subdivision 3; 
  2.35     (9) payment of real estate taxes and assessments on 
  2.36  permitted gambling premises wholly owned by the licensed 
  3.1   organization paying the taxes, not to exceed: 
  3.2      (i) the amount which an organization may expend under board 
  3.3   rule on rent for premises used for bingo; or 
  3.4      (ii) $15,000 per year for premises used for other forms of 
  3.5   lawful gambling; 
  3.6      (10) a contribution to the United States, this state or any 
  3.7   of its political subdivisions, or any agency or instrumentality 
  3.8   thereof other than a direct contribution to a law enforcement or 
  3.9   prosecutorial agency; 
  3.10     (11) a contribution to or expenditure by a nonprofit 
  3.11  organization which is a church or body of communicants gathered 
  3.12  in common membership for mutual support and edification in 
  3.13  piety, worship, or religious observances; 
  3.14     (12) payment of one-half of the reasonable costs of an 
  3.15  audit required in section 297E.06, subdivision 4; 
  3.16     (13) a contribution to or expenditure on a wildlife 
  3.17  management project that benefits the public at-large, provided 
  3.18  that the state agency with authority over that wildlife 
  3.19  management project approves the project before the contribution 
  3.20  or expenditure is made; or 
  3.21     (14) expenditures, approved by the commissioner of natural 
  3.22  resources, by an organization for grooming and maintaining 
  3.23  snowmobile trails that are (1) grant-in-aid trails established 
  3.24  under section 116J.406, or (2) other trails open to public use, 
  3.25  including purchase or lease of equipment for this purpose. 
  3.26     (b) Notwithstanding paragraph (a), "lawful purpose" does 
  3.27  not include: 
  3.28     (1) any expenditure made or incurred for the purpose of 
  3.29  influencing the nomination or election of a candidate for public 
  3.30  office or for the purpose of promoting or defeating a ballot 
  3.31  question; 
  3.32     (2) any activity intended to influence an election or a 
  3.33  governmental decision-making process; 
  3.34     (3) the erection, acquisition, improvement, expansion, 
  3.35  repair, or maintenance of real property or capital assets owned 
  3.36  or leased by an organization, unless the board has first 
  4.1   specifically authorized the expenditures after finding that (i) 
  4.2   the real property or capital assets will be used exclusively for 
  4.3   one or more of the purposes in paragraph (a); (ii) with respect 
  4.4   to expenditures for repair or maintenance only, that the 
  4.5   property is or will be used extensively as a meeting place or 
  4.6   event location by other nonprofit organizations or community or 
  4.7   service groups and that no rental fee is charged for the use; 
  4.8   (iii) with respect to expenditures, including a mortgage payment 
  4.9   or other debt service payment, for erection or acquisition only, 
  4.10  that the erection or acquisition is necessary to replace with a 
  4.11  comparable building, a building owned by the organization and 
  4.12  destroyed or made uninhabitable by fire or natural disaster, 
  4.13  provided that the expenditure may be only for that part of the 
  4.14  replacement cost not reimbursed by insurance; or (iv) with 
  4.15  respect to expenditures, including a mortgage payment or other 
  4.16  debt service payment, for erection or acquisition only, that the 
  4.17  erection or acquisition is necessary to replace with a 
  4.18  comparable building a building owned by the organization that 
  4.19  was acquired from the organization by eminent domain or sold by 
  4.20  the organization to a purchaser that the organization reasonably 
  4.21  believed would otherwise have acquired the building by eminent 
  4.22  domain, provided that the expenditure may be only for that part 
  4.23  of the replacement cost that exceeds the compensation received 
  4.24  by the organization for the building being replaced; 
  4.25     (4) an expenditure by an organization which is a 
  4.26  contribution to a parent organization, foundation, or affiliate 
  4.27  of the contributing organization, if the parent organization, 
  4.28  foundation, or affiliate has provided to the contributing 
  4.29  organization within one year of the contribution any money, 
  4.30  grants, property, or other thing of value; 
  4.31     (5) a contribution by a licensed organization to another 
  4.32  licensed organization unless the board has specifically 
  4.33  authorized the contribution.  The board must authorize such a 
  4.34  contribution when requested to do so by the contributing 
  4.35  organization unless it makes an affirmative finding that the 
  4.36  contribution will not be used by the recipient organization for 
  5.1   one or more of the purposes in paragraph (a); or 
  5.2      (6) a contribution to a statutory or home rule charter 
  5.3   city, county, or town by a licensed organization with the 
  5.4   knowledge that the governmental unit intends to use the 
  5.5   contribution for a pension or retirement fund.