GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1999

H	4 

HOUSE BILL 19
Committee Substitute Favorable 2/24/99
Committee Substitute #2 Favorable 3/18/99
Fourth Edition Engrossed 3/25/99

Short Title:  Gambling Boats Regulated.	(Public)

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Sponsors:

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Referred to:  

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February 3, 1999

A BILL TO BE ENTITLED
AN ACT TO PROHIBIT CASINO BOATS FROM OPERATING IN NORTH CAROLINA, TO REGULATE CERTAIN GAMBLING BOATS THAT OPERATE IN NORTH CAROLINA PURSUANT TO FEDERAL LAW, TO LEVY A PRIVILEGE TAX ON GAMBLING BOATS OPERATING IN NORTH CAROLINA, AND TO REQUIRE WITHHOLDING FROM CERTAIN GAMBLING BOAT WINNINGS.
The General Assembly of North Carolina enacts:
Section 1.  Article 37 of Chapter 14 of the General Statutes is amended by adding a new Part to read:
"Part 4.  Casino Boats.
"§ 14-309.30.  Definitions.
The following definitions apply in this Part:
(1)	Casino boat. – A vessel that meets both of the following conditions:
a.	Embarks from a point within this State and disembarks at the same or another point within this State without making an intervening stop.
b.	Is operated or maintained for the purpose of gambling and carries or operates gambling devices for the use of its passengers or otherwise provides facilities for the purpose of gambling.
(2)	Gambling. – A game of chance at which money, property, or some other thing of value is bet, whether the same be in stake or not.
(3)	Gambling device. – A device as defined in 15 U.S.C. § 1171 and any other device used to facilitate gambling, such as a gaming table and a punchboard.
(4)	Intervening stop. – When a vessel does all of the following:
a.	Docks at a port within the boundaries of another state, possession of the United States, or foreign country.
b.	Remains continuously at that port for at least six hours.
c.	Allows passengers to disembark the vessel for sightseeing, shopping, or other similar tourism-related activities at that port.
(5)	Operate. – To manage, supervise, control, or own, either alone or in association with others.
(6)	Vessel. – A boat, barge, ship, vessel, or watercraft.
"§ 14-309.31. Casino boats prohibited.
(a)	Unlawful Activity. – It shall be unlawful to do any one or more of the following:
(1)	To operate a casino boat.
(2)	To manufacture, recondition, repair, sell, transport, possess, or use a gambling device on a casino boat.
(3)	To solicit, entice, induce, persuade, or procure, or to aid in soliciting, enticing, inducing, persuading, or procuring a person to visit or embark on a casino boat.
(b)	Penalty and Conviction. – A person who violates subsection (a) of this section shall be guilty of a Class A1 misdemeanor.  Upon conviction, a court of competent jurisdiction shall enter an order directing the seizure, forfeiture, and sale of the vessel, along with all of its gear, engines, tackle, and all other nautical, navigation, and safety equipment, furniture, and personal property of any description.  The proceeds of a sale in accordance with this subsection shall be applied, in order, to the costs of seizure, storage, and sale, with the balance paid to the public school fund in the county in which the property is seized.
(c)	Applicability. – This section shall not apply to possession or transportation of gambling devices on United States-flagged or foreign-flagged vessels during travel from a foreign nation or another state or possession of the United States up to the first point of entry into North Carolina waters or during travel to a foreign nation or another state or possession of the United States from the point of departure from North Carolina waters.
(d)	Prosecution for Other Offenses. – Nothing contained in this section shall preclude prosecution for another offense under this Article or for the use of a gambling device on a vessel while docked within the territorial waters of this State.
"§ 14-309.32.  Enforcement.
A law enforcement officer with subject matter and territorial jurisdiction over a vessel may take any one or more of the following actions if the officer has probable cause to believe that a violation of G.S. 14-309.31 is occurring on the vessel:
(1)	Seize the illegal gambling device.
(2)	Seize any monies, other property, or thing of value used in conjunction with or derived from the unlawful use of the illegal gambling device.
(3)	Seize the vessel upon which an illegal gambling device is found.
"§ 14-309.33.  Regulation of gambling boats operating pursuant to federal law.
The operator of a vessel, the operation of which would be illegal in this State except for the exclusions provided in 15 U.S.C. § 1175(b)(2), shall comply with all of the following:
(1)	The applicable provisions of Chapter 105 of the General Statutes.
(2)	The Safety of Life at Sea (SOLAS) standards and requirements normally applicable in international waters.
(3)	The passengers must be at least 21 years of age."
Section 2.  G.S. 105-228.90(b) is amended by adding a new subdivision to read:
"(4)	Gambling boat voyage. – A voyage of a commercial vessel transporting passengers engaged in gambling aboard the vessel, during which passengers embark in this State and disembark only in this State or a contiguous state."
Section 3.  Article 2 of Chapter 105 of the General Statutes is amended by adding a new section to read:
"§ 105-40.1. Gambling boat voyages.
A person engaged in the business of operating gambling boat voyages must pay a tax on the business at the rate of six dollars ($6.00) for each passenger who embarks on a gambling boat voyage in this State.  Within the first 10 days of each month, the taxpayer must report to the Secretary the number of passengers who embarked on the taxpayer's gambling boat voyages during the previous month and must pay the tax at the time the report is due."
Section 4.  G.S. 105-163.1 is amended by adding a new subdivision to read:
"(5a)	Gambling boat operator. – A person engaged in the business of operating gambling boat voyages."
Section 5.  G.S. 105-163.1(14) reads as rewritten:
"(14)	Withholding agent. – An employer, a gambling boat operator, or a payer."
Section 6.  Article 4A of Chapter 105 of the General Statutes is amended by adding a new section to read:
"§ 105-163.3A. Gambling boat operators must withhold taxes.
(a)	Requirement. – Every gambling boat operator who pays a resident of this State more than six hundred dollars ($600.00) in gambling winnings during a gambling boat voyage must deduct and withhold from the winnings paid to the resident the State income taxes due on the winnings as provided in this section.  The amount of taxes to be withheld is seven percent (7%) of the winnings paid to the resident.  The taxes a gambling boat operator withholds are held in trust for the Secretary.
(b)	Returns; Due Date. – A gambling boat operator must file a return with the Secretary on a form prepared by the Secretary and must provide any information required by the Secretary.  The return is due and the withheld taxes are payable by the last day of the first month after the end of each calendar quarter during which the gambling boat operator pays gambling winnings to a resident of this State.  The Secretary may extend the time for filing the return or paying the tax as provided in G.S. 105-263.
(c)	Annual Statement. – A gambling boat operator required to deduct and withhold from a resident's gambling winnings under this section must furnish to the resident duplicate copies of a written information statement.  The statement is due by January 31 following the calendar year and must show the following:
(1)	The gambling boat operator's name, address, and taxpayer identification number.
(2)	The resident's name, address, and taxpayer identification number.
(3)	The total amount of gambling winnings paid during the calendar year.
(4)	The total amount deducted and withheld under this section during the calendar year.
(5)	Any other information required by the Secretary.
(d)	Report to Secretary. – Each gambling boat operator must file with the Secretary an annual report that compiles the information contained in each of the operator's statements to residents and any other information required by the Secretary.  This report is due on the date prescribed by the Secretary and is in lieu of the information report required by G.S. 105-154.
(e)	Records. – If a gambling boat operator does not withhold from any gambling winnings paid to an individual, the operator must obtain from the individual documentation proving that he or she is not a resident of this State.  The operator must retain this information with its records."
Section 7.  G.S. 105-163.9 reads as rewritten:
"§ 105-163.9.  Refund of overpayment to withholding agent.
A withholding agent who pays the Secretary more under this Article than the Article requires the agent to pay may obtain a refund of the overpayment by filing an application for a refund with the Secretary.  No refund is allowed, however, if the withholding agent withheld the amount of the overpayment from the wages, winnings, or compensation of the agent's employees, passengers, or contractors.  A withholding agent must file an application for a refund within the time period set in G.S. 105-266. Interest accrues on a refund as provided in G.S. 105-266."
Section 8.  G.S. 105-163.10 reads as rewritten:
"§ 105-163.10.  Withheld amounts credited to taxpayer for calendar year.
The amount deducted and withheld under this Article during any calendar year from the wages, winnings, or compensation of an individual is allowed as a credit to that individual against the tax imposed by Article 4 of this Chapter for taxable years beginning in that calendar year.  The amount deducted and withheld under this Article during any calendar year from the compensation of a nonresident entity is allowed as a credit to that entity against the tax imposed by Article 4 of this Chapter for taxable years beginning in that calendar year.  If the nonresident entity is a pass-through entity, the entity shall pass through and allocate to each owner the owner's share of the credit.
If more than one taxable year begins in the calendar year during which the withholding occurred, the amount is allowed as a credit against the tax for the last taxable year so beginning.  To obtain the credit allowed in this section, the individual or nonresident entity must file with the Secretary one copy of the withholding statement required by G.S. 105-163.3, 105-163.3A, or 105-163.7 and any other information the Secretary requires."
Section 9.  If any section or provision of this act is declared unconstitutional or invalid by the courts, it does not affect the validity of this act as a whole or any part other than the part so declared to be unconstitutional or invalid.
Section 10.  This act is effective when it becomes law.  Sections 2 through 8 of this act become effective on the first day of the third calendar month after this act becomes law.