I believe that 501(c)(19) organizations should be exempt from the new charitable gaming regulation. Eligibility for most tax-exempt organizations is open to a huge percentage of, if not the entire, population. Veteran service organizations (VSOs) have an extremely limited eligibility requirement. Only about 7% of Virginia is comprised of Veterans and only a small percentage of those have served in a combat zone. Eligibility for each of the VSO’s ranges from 7% veterans to combat zone veterans only. Our pool of prospective members is small, but our mission is enormous.
IRS Pub 3386, Tax Guide for Veterans’ Organization, opens with the following statement: “Veterans’ organizations occupy a special place in the world of exempt organizations. Not only are most veterans’ organizations exempt from tax, but contributions to them may also be deductible, and some are permitted to set aside amounts that are used to provide insurance benefits for members. This combination—tax-exempt status, deductibility of contributions and the ability to pay benefits to members—is relatively rare and is evidence of Congress’ intent to provide special tax treatment for veterans’ organizations.”
IRS Pub 3079, Tax-Exempt Organizations and Gaming, opens with: “For many years now, exempt organizations have operated these and many other types of games as a part of their activities. Why do organizations “game”? Probably the number one reason is to raise funds – either to help cover the cost of running their organizations or to support worthy causes. For some organizations, gaming also permits its members to socialize with each other and fosters fellowship.” Pub 3079 further states that for 501(c)(19), a veterans’ organization must be operated for one or more of the following purposes:
1. To promote the social welfare of the community; We accomplish this through scholarships open to all school kids, teacher and first responder recognition programs, sponsoring community baseball and softball leagues, letting other community organizations and military units use our facilities free of charge and numerous other programs and community activities.
2. To assist disabled and needy war veterans and members of the U.S. Armed Forces and their dependents and the widows and orphans of deceased veterans; We maintain a fund to assist veterans and their families in need on short or no notice. We provide service officers to help with disability claims and to navigate the VA system. We adopt active-duty units and assist military units with welfare and moral activities among other support functions.
3. To provide entertainment, care and assistance to hospitalized veterans or members of the U.S. Armed Forces; Our VSOs perform a multitude of activities in VA Hospitals, nursing homes and assisted living facilities; we hold bingo sessions, Monte Carlo nights, Christmas parties, spring fairs and outings to our local posts for meals and camaraderie and much more.
4. To carry on programs to perpetuate the memory of deceased veterans and members of the Armed Forces and to comfort their survivors. We raise money for local and national memorials, perform Memorial Day remembrances, conduct programs in local schools, churches, and other organizations. Sponsor Veterans Day ceremonies and parades.
5. To conduct programs for religious, charitable, scientific, literary or educational purposes. • To sponsor or participate in activities of a patriotic nature. The prior four statements cover this requirement.
6. To provide insurance benefits for its members or dependents of its members or both. We provide accidental death and dismemberment insurance to the members of the VFW, free of charge.
7. To provide social and recreational activities for its members. Our post home/social quarters provide a safe environment for veterans of all ages to get together and continue the comradeship that they experienced in service to our country. They share experiences and feelings that most of the country can never understand. Many of our veterans have no other place to go, this is the only place that feels like home to them. We provide activities like meetings, dinners, celebrations, funerals, field trips and a general sense of belonging…being part of the family, that many do not have locally. We are one of the first lines of suicide prevention and veterans’ health and welfare.
Congress and the IRS recognized the important work of VSO and even tailored the IRS code to facilitate the important work we do. We fill an incredibly special requirement in our community, taking care of our ALL veterans, military, and their families, while promoting patriotism and remembrance of our veterans. VSOs provide a service that no other organization can provide.
The Veterans Service Organizations and the Virginia Department of Veterans Service have a long and important partnership of helping our veterans and families in need, promoting patriotism and remembrance, providing comradeship among veterans, and supporting our guard, reserve and active-duty military members and families.
That is in jeopardy with the proposed gaming changes that include 501(c)(19) that have charitable gaming. VSO posts that offer public gaming fully comply with all regulations, but social quarters proceeds, for the last 20+ years, have been left for us to use for our posts, members, community, and the benefit of ALL veterans. Under the current proposal and Use of Proceeds (UOP) we will not have the funds to accomplish our mission. We use those proceeds to execute our charter of helping veterans and providing social and recreational opportunities for them.
Using last year's stats of our VFW posts throughout the state; we contributed $2.1 million and 253,174 hours for a total of an astounding $9 million in community service. This is a service the DVS or state didn’t have to provide. We provided $515,967 in unmet needs grants for veterans that needed a hand up and we provided $285,171 in scholarships through our Help a Hero, Voice of Democracy and Patriot Pen programs. These were numbers for the VFW, and I imagine the other VSOs have similar numbers.
While these numbers are impressive and show our commitment to veterans and our communities, it won’t be possible if we are not permitted to include our buildings, equipment, utilities, wages, and members in use of proceeds from gaming. Charitable gaming is what enables us to fulfill our mission and maintain the infrastructure required, they go hand in hand.
Therefore, the VSOs should be exempt from regulations of proceeds from gaming in the social quarters and for all UOP to include the infrastructure required to run charitable gaming. We need them to execute our charter of helping veterans.