Could reinstated or related nonprofit organizations immediately qualify for separate South Carolina bingo licenses under RR 97-9?

Plain-English summary

South Carolina Revenue Ruling 97-9 addressed two recurring bingo-license questions under the law taking effect October 1, 1997.

First, corporate reinstatement could relate back and preserve an organization's South Carolina domicile through a temporary dissolution. That did not satisfy the separate bingo-law requirement that the organization be active and operate for charitable, religious, or fraternal purposes for the three years immediately before its application. The three dissolved or reinstated applicants in the ruling therefore did not qualify immediately.

Second, a church branch, veterans auxiliary, or other related applicant could not obtain another license merely because it used a related organization's federal exemption. Because one nonprofit organization could hold only one bingo license, the Department had to decide from all facts whether the applicant was a genuinely separate organization or simply another location of an existing licensee.

Separate-organization factors

The ruling identified factors including:

• whether the applicant had its own charter;
• whether the IRS treated it as a separate exempt entity or listed it under a group exemption;
• whether it had separate day-to-day management and officers;
• whether it maintained a separate bank account;
• what meeting minutes and membership records showed; and
• what deeds, leases, contracts, and other public or private records showed.

No single negative answer necessarily controlled. The Department said all facts and circumstances had to be considered.

Common questions

Q: Did reinstatement erase the period of corporate dissolution? For domicile purposes, the ruling treated qualifying reinstatement as relating back. But inactivity during dissolution still prevented the organization from satisfying the separate three-year active-operation requirement.

Q: When could the reinstated organizations apply successfully? After they had actively operated for qualifying charitable, religious, or fraternal purposes for the three consecutive years immediately before applying, assuming they met the other statutory requirements.

Q: Did RR 97-9 decide whether the subordinate churches or women's auxiliary qualified? No. It said that decision required the individual facts and circumstances described above.

Q: Is this the current bingo-license rule? This page establishes only what RR 97-9 said under the 1997 law. Current statutes and Department procedures should be checked.

Citations and references

• S.C. Code Ann. § 12-21-4070 (three-year domicile and activity requirement quoted)
• S.C. Code Ann. §§ 12-21-3920 and 12-21-3940 (nonprofit definition and application materials)
• S.C. Code Ann. § 12-21-4040 (one-license rule quoted)
• S.C. Code Ann. §§ 33-14-103 through 33-14-220 (voluntary and administrative dissolution and reinstatement)
• Army-Navy Bingo, Garrison #2196 v. Plowden, 281 S.C. 226, 314 S.E.2d 339 (1984) (domicile provision cited)
• SC Revenue Ruling #93-3 (expressly superseded by RR 97-9)

Subject

Domicile and Organizational Requirements

Source

• Landing page: https://dor.sc.gov/advisory-opinion-search
• Original PDF: https://dor.sc.gov/sites/dor/files/policies/RR97-9.pdf

Original ruling text

State of South Carolina

Department of Revenue
301 Gervais Street, P. O. Box 125, Columbia, South Carolina 29214

SC REVENUE RULING #97-9

SUBJECT:

Domicile and Organizational Requirements
(Bingo)

EFFECTIVE DATE: October 1, 1997
SUPERSEDES:

SC Revenue Ruling #93-3

REFERENCE:

S.C. Code Ann. Section 12-21-4070 (Supp. 1996)
S.C. Code Ann. Section 12-21-3920 (Supp. 1996)
S.C. Code Ann. Section 12-21-3940 (Supp. 1996)
S.C. Code Ann. Section 33-14-103 (Supp. 1996)
S.C. Code Ann. Section 33-14-104 (Supp. 1996)
S.C. Code Ann. Section 33-14-105 (Supp. 1996)
S.C. Code Ann. Section 33-14-200 (Supp. 1996)
S.C. Code Ann. Section 33-14-210 (Supp. 1996)
S.C. Code Ann. Section 33-14-220 (Supp. 1996)

AUTHORITY:

S.C. Code Ann. Section 12-4-320 (Supp. 1996)

SCOPE:

A Revenue Ruling is the Department of Revenue's official advisory
opinion of how laws administered by the Department are to be
applied to a specific issue or a specific set of facts, and is provided
as guidance for all persons or a particular group. It is valid and
remains in effect until superseded or modified by a change in the
statute or regulations or a subsequent court decision, Revenue
Ruling or Revenue Procedure.

Question:
Would the bingo license applicants, as described in the examples in the Facts, qualify for
a bingo license under the bingo laws of this State?
Facts:
Several questions have arisen recently concerning the statutory requirement that an
individual or organization be domiciled in South Carolina for three years before a bingo
license may be issued. In addition, questions have also been asked concerning the
issuance of bingo licenses to auxiliary entities of organizations already licensed to
conduct bingo.
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DOMICILE REQUIREMENTS:
Example 1 - An organization, upon incorporation, filed its charter with the Secretary of
State. After ten years, it is administratively dissolved by the Secretary of State for failure
to comply with the law. A year later the organization files for reinstatement with the
Secretary of State; files all its delinquent returns (if any); and pays all taxes, fees,
penalties and interest due the State. The organization is reinstated and immediately
applies for a bingo license.
Example 2 - After five years, an organization voluntarily dissolves by notifying the
Secretary of State. Later the organization files for reinstatement with the Secretary of
State; files all its delinquent returns (if any); and pays all taxes, fees, penalties and interest
due the State. The organization is reinstated and immediately applies for a bingo license.
Example 3 - After seven years of operation, an organization is administratively dissolved
by the Secretary of State for failing to comply with statutory provisions. The
organization, a local chapter or post of a national veterans organization, claims that
according to the records of its national headquarters it is a viable chapter or post in good
standing. It has not yet filed with the Secretary of State for reinstatement, but it has
applied for a bingo license.
ORGANIZATIONAL REQUIREMENTS:
Example 4 - A church has received an Internal Revenue Service letter of exemption under
IRC Section 501(c), and has three subordinate churches, located in different cities, under
the same exemption letter. The subordinate churches have the same federal employer
identification (FEI) number and the same Board of Directors as the "main" church. The
"main" church has a bingo license. The three subordinate churches are each applying for a
license to play bingo.
Example 5 - A local chapter or post of a national veterans organization has a women's
auxiliary. The local chapter has a bingo license, and the women's auxiliary is applying for
a bingo license so they may conduct games at a separate location.
Discussion:
DOMICILE REQUIREMENTS:

1. The first issue that must be addressed applies to the facts set forth in Examples #1
   through #3. Essentially, we must determine how the dissolution and reinstatement of an
   organization under the laws administered by the Secretary of State effect the issuance of a
   bingo license.

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Code Section 12-21-4070 reads:
No license, as provided by this article, may be issued to any
organization or individual that has not been domiciled in this State for at
least three years immediately preceding the license application. In the
case of the organization, the organization must also have been active in
this State for at least three years.
The State Supreme Court, in Army-Navy Bingo, Garrison #2196 v. Plowden, 281 S.C.
226, 314 SE 2d. 339 (1984), held a similar provision under the prior bingo law was within
the police powers and policy interests of the State and was constitutional.
Furthermore, Code Section 12-21-3920 defines the term “nonprofit organization” to mean
an entity which is organized and operated exclusively for charitable,
religious, or fraternal purposes which is exempt from federal income
taxes pursuant to Internal Revenue Code Section 501(c)(3), 501(c)(4),
501(c)(8), 501(c)(10), or 501(c)(19).
To fully understand the issue, we must also consider the statutory provisions concerning
dissolution and reinstatement of an organization under the laws administered by the
Secretary of State.
Chapter 14 of Title 33 of the South Carolina Code of Laws establishes the statutory
provisions for a corporation to voluntarily dissolve or for the Secretary of State to
administratively dissolve a corporation.
A corporation may dissolve by delivering to the Secretary of State, for filing, articles of
dissolutions setting forth various information as required under Code Section 33-14-103.
The corporation is dissolved upon the effective date of its articles of dissolution.
However, Code Section 33-14-104 allows the corporation to revoke its dissolution within
120 days of its effective date. In addition, this section reads:
(e) When the revocation of dissolution is effective, it relates back to and
takes effect as of the effective date of the dissolution and the corporation
resumes carrying on its business as if dissolution had never occurred.
Furthermore, Code Section 33-14-105 states that "[a] dissolved corporation continues its
corporate existence but may not carry on any business except that appropriate to wind up
and liquidate its business and affairs, . . ." The corporation is required to wind up and
liquidate its business and affairs "as expeditiously as practicable."

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A corporation may also be administratively dissolved for failing to comply with certain
statutory provisions (Code Sections 33-14-200 and 33-14-210). As with a corporation
that is voluntarily dissolved, Code Section 33-14-210(d) provides that the corporation
"continues its corporate existence but may not carry on any business except that
appropriate to wind up and liquidate its business and affairs". In addition, Code Section
33-14-220 allows an administratively dissolved corporation to apply for reinstatement.
This section also provides that "[w]hen the reinstatement is effective, it relates back to
and takes effects as of the effective date of the administrative dissolution and the
corporation resumes carrying on its business as if the administrative dissolution had never
occurred."
In considering both the bingo law and the corporate law, the following quote from 73
Am. Jur.2d, Statutes Section 188 provides guidance:
Under the rule of statutory construction of statutes in pari materia,
statutes are not to be considered as isolated fragments of law, but as a
whole, or as parts of a great, connected, homogenous system. Such
statutes are considered as if they constituted but one act, so that sections
of one act may be considered as though they were parts of the other act,
as far as this can reasonably be done. Indeed, as a general rule, where
legislation dealing with a particular subject consists of a system of
related general provisions indicative of a settled policy, new enactments
of a fragmentary nature on that subject are to be taken as intended to fit
into the existing system and to be carried into effect conformably to it,
unless a different purpose is shown plainly.
Therefore, while the domicile of an organization in this State is uninterrupted by its
"temporary" dissolution if it is reinstated by the Secretary of State, it may not be issued a
bingo license since it has not been active for at least three years immediately preceding
the license application and it has not been “operated for charitable, religious, or fraternal
purposes as required by the statutory definition of the term “nonprofit organization.” A
license may be issued once the organization has been active and operating for charitable,
religious, or fraternal purposes for a period of three consecutive years immediately
preceding the application.
ORGANIZATIONAL REQUIREMENTS:

2. The second issue that must be addressed applies to the facts set forth in Examples #4
   and #5. The issue in question is whether or not the subordinate churches, or the women's
   auxiliary of the local chapter of a national veterans organization, are separate
   organizational entities from the main church or chapter. This is important since Code
   Section 12-21-4040 states that “[n]o nonprofit organization may hold more than one
   bingo license.”

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The State constitution allows nonprofit organizations, that are organized for religious,
fraternal, or charitable purposes, to conduct bingo games as a means of raising money for
their organizational purposes.
In implementing the Constitution, the General Assembly has provided in Code Section
12-21-3940 that:
(A) Before conducting a game of bingo, a nonprofit organization shall
file with the department a written application in a form prescribed by the
department, executed and notarized which must include:
(1) the name, address, and telephone number of the
applicant and sufficient facts relating to its incorporation
and organization to enable the department to determine
whether it is an authorized organization;
(2) a copy of the organization's corporate charter and the
Internal Revenue Service's statement exempting the
applicant from federal income taxes ....;
(3) the name, addresses, and telephone numbers of the
organization's officers;
Also, the department in SC Revenue Ruling #89-23 held, in part, that:
The local chapter of a national organization may not use the [I.R.S.]
exemption letter issued to the national organization, unless the I.R.S. has
issued to the organization a "Group Exemption Letter" which includes
the applicant organization as a local chapter, association, or organization
falling within the provisions of the "Group Exemption Letter". The
burden of proof that the applicant organization falls within the
provisions of a Group Exemption Letter falls upon the applicant
organization.
As stated earlier, "statutes are not to be considered as isolated fragments of law, but as a
whole, or as parts of a great, connected, homogenous system." 73 Am. Jur.2d, Statutes
Section 188.
In determining the eligibility of an applicant to conduct bingo, we must determine
whether the applicant is a separate location of an organization that already has a bingo
license or a separate organizational entity. Such a determination must be made on a case
by case basis considering various factors, including those set forth in the statute.

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Conclusions:
DOMICILE REQUIREMENTS:
While the domicile of an organization in this State is uninterrupted by its "temporary"
dissolution if it is reinstated by the Secretary of State, it may not be issued a bingo license
since it has not been active for at least three years immediately preceding the license
application and it has not been “operated for charitable, religious, or fraternal purposes as
required by the statutory definition of the term “nonprofit organization.” A license may
be issued once the organization has been active and operating for charitable, religious, or
fraternal purposes for a period of three consecutive years immediately preceding the
application.
Therefore, the bingo license applicants, as described in the Examples 1, 2, and 3 in the
Facts, do not qualify for a bingo license under the bingo laws of this State. Once these
organizations have actively been operating for charitable, religious, or fraternal purposes
for three years immediately preceding the license application, such organizations may be
issued a bingo license provided they meet all other requirements of the statute.
ORGANIZATIONAL REQUIREMENTS:
An organization may only hold one bingo license. Therefore, it must be determined if the
applicant is a distinct organizational entity and not merely a separate location of an
organization that already has a bingo license. Such a determination must be made on a
case by case basis considering all the facts and circumstances, including those set forth in
the statute.
Factors that may be considered include, but are not limited to:
(1) Does the applicant operate under a separate charter from any related
entity?
(2) Has the applicant received an exemption from the I.R.S., either
under its own name or as a listed organization, chapter, post, church, etc.
under a Group Exemption Letter from the I.R.S.? In other words, does
the I.R.S. consider the applicant to be a separate and distinct
organizational entity?
(3) Does the applicant have a management group which makes the day
to day decisions of the applicant? Is this management group separate
from any management group of a related entity? Are the officers the
same as or different than the officers of a related entity?

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(4) Does the applicant maintain a bank account, other that the one set up
in anticipation of playing bingo, separate from any related entity?
(5) Do the minutes of any meetings indicate the applicant is a separate
entity from any related entity?
(6) What does the membership list of the applicant indicate? Are the
members the same as or different than the members of a related entity?
(7) What do any other records, public or private, indicate? (i.e. deeds,
leases, contracts)
Therefore, it can not be determined if the bingo license applicants, as described in the
Examples 4 and 5 in the Facts, qualify for a bingo license under the bingo laws of this
State. Such a determination can only be made after considering the applicant's individual
facts and circumstances as discussed above.
Note: In considering the above list of factors, a "negative" answer to one or more of the
above questions will not necessarily prevent an organization from being classified as a
separate and distinct organization eligible for a bingo license. All facts and circumstances
must be considered to determine the organizational status of the applicant.

SOUTH CAROLINA DEPARTMENT OF REVENUE

s/Burnet R. Maybank III
Burnet R. Maybank, III, Director

July 22
, 19 97
Columbia, South Carolina

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