316 NAC 35-406. ALLOWABLE EXPENSES

REG-35-406 ALLOWABLE EXPENSES 406.01 A licensed organization may spend a portion of the gross proceeds derived from the lottery or raffle activity for allowable expenses. A licensed organization is limited to spending no more than ten percent of the gross proceeds of each lottery or raffle activity for allowable expenses of operating each lottery or raffle; except that no expense limitation is imposed upon a lottery or raffle being conducted under a special permit. Allowable expenses shall mean and include: 406.01A All costs associated with the purchase, printing, or manufacturing of any items to be used or distributed to participants such as the tickets themselves or calendars for a calendar lottery. This shall include any imprinting or delivery charges and any sales tax required to be paid by the licensed organization in connection with the lottery or raffle; 406.01B All costs associated with office expenses. This shall include any salary, wage, or fee paid to any person operating the lottery or raffle or keeping the books and records, postage costs, office supplies such as paper, notebooks, pencils, any utility charges for the office, and any other expense incurred with the operation of the lottery or raffle; 406.01C Any lease or rental expenses for equipment or facilities used in connection with the conduct of the lottery or raffle. This would include for example, the rental of a ticket tumbling cage; 406.01D All promotional expenses including the purchase of signs, flyers, or any other type of advertising expense; 406.01E License and permit fees for the organization and utilization of funds member and the lottery or raffle tax on gross proceeds prescribed in section 9-429 of the Nebraska Revised Statutes, as amended; 406.01F Any fee paid to any person associated with the operation of the lottery or raffle, such as ticket sellers or business outlets paid to sell lottery or raffle tickets; and 406.01G Any fee or tax imposed pursuant to section 9-433 of the Nebraska Revised Statutes, as amended, such as a local lottery or raffle tax or permit fee. (Sections 9-402, 9-403, 9-404, 9-407, 9-411, 9-415, 9-427, 9-429, and 9-433, R.R.S. 1997. Sections 9-410, 9-418, and 9-426, R.S.Supp., 2002. November 12, 2002.) REG 35-407 LOTTERY AND RAFFLE TAXES 407.01 A nonprofit organization conducting a lottery with gross proceeds in excess of $1,000.00, or a raffle with gross proceeds in excess of $5,000.00, is required to remit to the Department, a tax of two per cent of the gross proceeds of such lottery or raffle. 407.02 A licensed organization is required to report within thirty (30) days of the end of each calendar quarter, its gross proceeds and tax due on a form prescribed by the Department and to remit any tax due for that quarter, even though the gross proceeds for a particular quarter do not exceed the $1,000.00 or $5,000.00 threshold. If the total gross proceeds derived from the sale of lottery or raffle tickets does not exceed the $1,000.00 or $5,000.00 threshold at the conclusion of the lottery or raffle activity, the taxes paid on the gross proceeds are refundable. The licensed organization should submit an amended return to the Department requesting a refund or credit of the lottery or raffle taxes paid to the Department. 407.02A The lottery and raffle tax is to be reported on the Nebraska Lottery and Raffle Tax Return, Form 51. 407.03 Failure to file a quarterly tax return or remit the tax due by the due date will subject the licensed organization to assessment of a penalty of $25.00 or ten percent of the tax due, whichever is greater. In addition, interest will be imposed at the rate specified in section 45-104.02 of the Nebraska Revised Statutes, as amended, from the due date to the date paid. 407.03(A) Quarterly returns filed after the due date which indicate a zero amount of proceeds and/or a zero balance of tax due, shall not be subject to the penalty as previously described. 407.04 If the due date for filing the quarterly tax return falls on a Saturday, Sunday, or a day considered a holiday by the state, the return will be considered to be timely filed if it is postmarked no later than twelve o'clock midnight of the next working day following the due date. Postmarks not made by the United States post office will not be recognized for purposes of this regulation. 407.05 A licensed organization is not required to charge, collect or remit sales tax on the purchase price of a lottery or raffle ticket unless such ticket is connected in part with the purchase of some other tangible personal property or an admission charge which is subject to such tax. Examples of tangible personal property which may be connected to the purchase of a lottery or raffle ticket are items such as a calendar or a dinner. 407.06 Nebraska withholding tax is required on payments of lottery or raffle winnings which are subject to federal withholding and that are paid from a Nebraska source to a resident or nonresident individual. 407.06A On or before February 15 following the close of each calendar year, a payor of such gambling winnings must furnish to each winner for state purposes two copies of a completed and legible Statement for Recipients of Certain Gambling Winnings, Federal Form W-2G, or a federally approved substitute. One of the copies must be labeled "state copy", to be submitted with the winner's Nebraska income tax return, and one copy must be labeled "winner's copy", for the winner's records. 407.06B On or before March 15 following the close of each calendar year, the payor must file with the Nebraska Department of Revenue a Nebraska Reconciliation of Income Tax Withheld, Form W-3N, in accordance with the instructions contained in Withholding Tax Regulation 21-013. A copy of the Federal Form W-2G furnished to each winner which shows the Nebraska tax withheld from winnings during the prior calendar year must be submitted with the Form W-3N. Those payors of gambling winnings who are also required to withhold state income tax on behalf of employees may file only one Form W-3N to transmit state copies of both Form W-2 and Form W-2G. (Sections 77-2706, 77-2708, and 77-27,125, R.R.S. 1996. Sections 9-402, 9-403, 9-406, 9-407, 9-411, 9-415, 9-429, and 45-104.02, R.R.S. 1997. Sections 9-410, 9-418, 77-2703, 77-2702.16, 77-2704.12, and 77-2704.15, R.S.Supp., 2002. November 12, 2002.)